We think the Fed and most other DM central banks will deliver a bit more policy rate cuts this year and next than investors currently anticipate. As a result, we forecast that Treasury yields will end 2024 slightly below their current levels, putting …
28th February 2024
The RBNZ’s decision to keep its policy rate on hold today illustrates how the bar for further rate hikes has become increasingly high for most central banks, even in the face of upside surprises to inflation. With money markets in New Zealand, and most …
Although the US’ trade in electricity with Canada and Mexico is small compared to its overall energy trade, it should grow as clean energy capacity rises and grid connections improve. Canada should continue to be a net exporter as hydropower flows south …
Economy maintains strong momentum The latest activity data for January suggest that Russia’s economy maintained solid growth at the start of this year, which supports our forecast for above-potential GDP growth of 3.0% over the course of 2024. Retail …
Romania’s large twin budget and current account deficits remain a key concern. One near-term risk is that fiscal policy stays very loose (or is loosened further), particularly in view of elections taking place later this year. This could cause risk …
We expect strong returns from European equities in the next couple of years, but we think they will continue to underperform those in the US. The MSCI Europe Index has underperformed all other MSCI major regional indices so far this year, in both …
We are revising up our end-2024 and end-2025 forecasts for the 10-year Treasury yield by 25bp, to 4%. This reflects recent changes to our projections for the federal funds rate . Nonetheless, our new forecast for the 10-year yield still implies a small …
Africa Chart Pack (Feb. 2024) …
The disinflation story is largely over in Switzerland, and rising rent inflation may actually cause headline inflation to increase in the summer. However, this will not stop the SNB from cutting its policy rate on the 21 st March by 25bp to 1.5%. …
The latest crane survey reported the highest volume of London office starts on record. In part that reflects a refurbishment boom as developers retrofit their buildings to meet MEES standards and benefit from the green premium. New development is also …
Emerging Asia Chart Pack (February 2024) …
Sentiment edges lower, but still points to recovery The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally fell in February, but still point to regional GDP growth strengthening in Q1. Economic sentiment …
A version of this report was originally published as an opinion piece in The Times on 28th February 2024. The government will reportedly unveil an initiative to encourage lenders to offer 99 per cent mortgages in the spring budget. If implemented, it …
EC Survey points to stagnant economy and still-high price pressures The EC business and consumer survey for February reinforces the message that the economy is close to recession and that, although price pressures in the services sector eased slightly, …
Given the signs that cyclical and structural forces will raise tin demand this year, set against a backdrop of tightening supply due to the mining ban in Myanmar, we forecast the tin price to rise in 2024. The tin price has, for the most part, been …
Today’s budget maintains a supportive fiscal stance, and contains major steps to revitalise the property sector. Spending to attract foreign visitors to Hong Kong and support businesses was stepped up too. Taken together, these measures should prevent the …
This is an updated checklist which takes into account our latest expectations for the Spring Budget. The checklist helps clients keep track of the key policies and forecasts announced during the Chancellor’s Spring Budget at 12:30pm (GMT) on Wednesday 6 …
The Reserve Bank of New Zealand handed down another hawkish hold at its meeting today. However, with inflation on track to return to its 1-3% target by mid-year, we still expect the Bank to start cutting rates by August. The RBNZ’s decision to leave its …
RBNZ holds rates steady while retaining hawkish bias As had been widely expected, the Reserve Bank of New Zealand left its official cash rate unchanged at 5.50% today. 28 out of 29 analysts polled by Reuters, including ourselves, correctly predicted the …
Inflation will continue to undershoot RBA's expectations The weaker-than-expected inflation print for January all but ensures that the RBA won’t hike rates any further, even if it does retain its hawkish bias at its next meeting in March. And with price …
While enthusiasm over AI probably explains much of the “Magnificent Seven’s” outperformance in the US, the outperformance of the largest stocks in other markets is indicative of a broader shift in investors’ preferences towards larger stocks. That helps …
27th February 2024
The $35bn deal struck between Egypt’s government and the Abu Dhabi sovereign wealth fund, ADQ, will go some way towards alleviating acute balance of payments strains and pave the way for an enhanced IMF deal to be signed off soon. A devaluation of the …
Larger government stimulus during the pandemic and a higher propensity to run down “excess savings” have contributed to particularly strong growth in the US. On the other hand, a significant terms of trade shock from the war in Ukraine and feeble …
Mexico’s President López Obrador’s cloak of fiscal prudence is being shed this year as Morena tries to bolster its support ahead of June’s election. As some of the factors supportive of the public finances in recent years also fade, the debt-to-GDP ratio …
House price data playing catch up Another small rise in house prices in December suggests the extremely backward-looking data are still capturing a slowdown in price growth following the October peak in mortgage rates. That’s mainly due to the fact …
Drop in durable goods orders will not derail business investment The sharp drop in durable goods orders in January was mostly driven by volatile transport orders, with the fall in core orders much more moderate. The strengthening in underlying capital …
New MPC delivers large rate hike After a seven-month hiatus, the Central Bank of Nigeria’s (new-look) Monetary Policy Committee stepped up to the plate and hiked interest rates by 400bp, to 22.75%, as it showed greater appetite to tackle the inflation …
Step up in pace of easing will soon be reversed The decision by the Hungarian central bank (MNB) to step up the pace of its easing cycle today, with a 100bp interest rate cut, will probably be followed by further large interest rate cuts over the next few …
Monthly industrial production data have been overstating the decline in German industry. Nonetheless, the more accurate gross value added measure still shows that activity has been falling. German industrial production has been on a clear downward trend …
Further signs that underlying inflation isn’t easing The breakdown of Brazil’s February mid-month inflation reading of 4.5% y/y showed that core services inflation remained elevated. And while further 50bp cuts in the Selic rate next month (to 10.75%) and …
Talk of the South African Reserve Bank’s inflation target being lowered has reared its head again. In this Update , we answer five key questions on what this could mean for the economy. In the near term, the adoption of a lower target would prompt us to …
January’s money and credit data are consistent with our view that the improvement in the data towards the end of last year was not the beginning of strong recovery. After falling sharply throughout most of last year, the money and credit data improved a …
This page has been updated with additional analysis since first publication. Inflation will jump above 2% in February Inflation at the national level held up better in January than the Tokyo CPI would have suggested, which brings a March rate hike back …
26th February 2024
As markets continue to speculate on the timing of the first rate cuts, our regular briefing on the latest policy decisions from these major central banks will walk you through what to expect on the policy front in the coming weeks and months. During this …
Equities in Emerging Asia have outperformed those elsewhere in recent weeks, and we think that they’ll keep doing well during the rest of the year. Chart 1 shows that, while EM equities had a difficult start to the year (see blue bars, which show …
All-property valuations saw the largest quarterly increase in over a decade in Q4, as property yields rose across all sectors and the 10-year Treasury yield saw its sharpest quarterly decline since Q1 2020. At the sector level, industrial still looks …
Rebound in new home sales slightly slower than we were anticipating The sharp fall in mortgage rates at the end of last year helped new home sales regain some more momentum in January. But so far the rebound has been slightly slower than we were …
BoI stands pat as inflation risks remain strong Israel’s central bank opted to leave interest rates on hold at 4.50% today – in contrast to the consensus view for a cut – and the communications continued to emphasise upside inflation risks. Policymakers …
Deflation in China has added to disinflationary forces in the advanced economies as its export prices have fallen sharply. The direct impact has not been huge, accounting for only a small fraction of the 4ppt drop in DM headline CPI inflation last year, …
Economic growth in the Middle East and North Africa will strengthen a little this year but is likely to come in well below consensus expectations. OPEC+’s output cuts should gradually reverse from the end of this quarter but will keep a lid on economic …
Long-term forecasting is perilous ground for economists. Predictions of what will happen in the long run tend to revert to the mean, implying that trend growth returns to an average recorded over the previous several years. It’s another way of saying that …
The outlook for the UK economy is unlikely to be very different depending on which of the possible combinations of UK Prime Ministers and US Presidents this year’s elections deliver. Even so, there may be some nuances. This Update establishes a framework …
We estimate that in the near-term, the drag on Japan’s exports resulting from of a universal 10% US import tariff could be nearly offset by Japan gaining market share at the expense of China in response to a much higher US tariff on Chinese imports. …
While we think that American exceptionalism in stock markets will continue this year as a bubble fuelled by enthusiasm around AI keeps inflating, we expect equities in other developed markets (DM) to fare quite well. Nvidia and the other “Magnificent 7 ” …
23rd February 2024
Key takeaways from South Africa’s Budget South Africa’s finance minister recommitted to fiscal restraint in this week’s Budget, but an inability to resist calls greater spending ahead of and after the election is likely to derail these fiscal ambitions, …
Wage data still offering reasons for caution The latest wage data released out of Poland and Hungary this week showed that labour cost pressures have remained very strong in parts of Central and Eastern Europe (CEE). So despite another slew of …
