While Latin American central banks seemed to act in unison when raising interest rates (albeit with Brazil a bit ahead of the pack), the raft of interest rate decisions in the region yesterday highlighted that, on the way down, policymakers have very …
1st February 2024
This page has been updated with additional analysis since first publication. Inflation falling but services disinflation stalls January’s euro-zone inflation data were a little stronger than we had expected after the data for Germany and France were …
The Riksbank signalled unequivocally in today’s policy statement that interest rates may be cut sooner than they previously anticipated. While a March rate cut is possible, particularly if the January and February inflation data come in below …
Riksbank on track for May rate cut The Rikbsank signalled in today’s policy statement that interest rates may be cut sooner than they previously anticipated, supporting our view that the first cut is likley to be in May. The decision to leave the key …
CEE industry still struggling, input prices diverge in Turkey and Russia The manufacturing PMIs out of Central and Eastern Europe (CEE) for January remained soft and haven’t changed the broad picture that the region’s industrial sectors continue to …
South Africa makes a poor start to 2024 South Africa’s manufacturing PMI recorded a sharp drop in January as logistics problems and weak demand weighed on activity. We still expect growth to pick up over the course of this year, but this latest data …
The priority for whoever wins Pakistan’s general election on 8 th February will be to agree a new deal with the IMF, which should help put the struggling economy on a more stable footing. But thereafter the country’s dysfunctional political system will …
Finance Minister Nirmala Sitharaman appears to have successfully demonstrated a long-term commitment of reining in the fiscal deficit in the Interim Budget announcement for FY24/25. There is always a chance of fiscal slippage as the general election …
This page has been updated with additional analysis since first publication. Manufacturing activity likely to remain robust The final manufacturing PMI reading for January suggests that activity got off to a strong start this year. Looking ahead, while …
Leading indicators still point to weaker house price growth Although house price gains remained firm in January, we still expect them to soften in the months ahead. While rate cuts are on the horizon, they will do little to improve homebuying capacity. In …
The PMI data for Emerging Asia offered some encouraging signs but remained quite weak overall for most economies. While parts of the region are likely to see an improvement in activity, we expect global growth to slow in the near term and remain cautious …
Powell suggests first rate cut more likely to be May Based on the surprisingly explicit steer provided by Fed Chair Jerome Powell halfway through today’s press conference, we now expect the first Fed rate cut to come at the early-May FOMC meeting rather …
31st January 2024
Fed drops its tightening bias The Fed left its key policy rate unchanged at 5.25% to 5.50% today, but dropped its tightening bias, keeping open the possibility of a rate cut at the next FOMC meeting in mid-March. Admittedly, the new policy statement warns …
High interest rates are still feeding through and we expect both GDP and employment to be flat over the next two quarters. As excess supply builds, a fall in inflation to the 2% target will leave scope for the Bank of Canada to cut interest rates sharply, …
Africa Chart Pack (Jan. 2024) …
Ahead of the first Fed meeting of 2024, we think there are two points for investors to note about how the central bank might affect markets this year. First, while the Fed may be cautious today, we see scope for Treasury yields to drop a bit more. Despite …
Trump’s new tariffs would accelerate global fracturing If he wins this year’s presidential election, Donald Trump’s plans for a universal 10% tariff on all imports and tariffs of up to 60% on imports from China specifically would subtract up to 1.5% from …
We forecast that global lithium demand will roughly double by 2025 (from 2022). But supply will increase at a slower pace, which is why we forecast that prices will rise. Demand for lithium has surged in recent years, from 50,000 tonnes per year in …
We think the recent divergence between the BLS measure of apartment rents and other sources is due to reliability issues with the former, which we expect will be revised higher in future releases. Therefore, while it currently points to a downside risk to …
China’s economy has regained some strength recently. We expect this to continue over the coming months, on the back of support from fiscal policy and a further pick-up in household spending. But with property construction likely to continue to decline and …
Inflation continued to fall sharply across Central and Eastern Europe at the end of 2023, but we think that the disinflation process is entering a more difficult phase in 2024 as demand is beginning to recover. While monetary easing cycles are likely to …
Carbon pricing in the news Amid a flurry of news and action in carbon markets in recent months, this note examines the details and implications of developments around the world, starting in the EU. The EU’s Emissions Trading Scheme (ETS) is the world’s …
Slower wage growth reinforcing disinflationary trend The further slowdown in wage growth evident in the fourth-quarter employment cost index illustrates that easing labour market conditions are helping to push inflation down. With the moderation in job …
GDP growth set to remain well below potential The monthly GDP data imply that the economy returned to growth in the fourth quarter and the strong handover from December reduces the risk of the economy contracting this quarter, despite the weakness of the …
Panama’s time as a Latin American growth star is set to come to an end this year. This will have a knock-on effect on the government’s revenues and means that the public debt ratio is set to rise further. That could put Panama’s coveted investment grade …
This page has been updated with additional analysis since first publication. Fall in inflation brings rate cuts nearer National data published so far suggest that headline and core inflation in the euro-zone came down a little more than we had expected in …
The drop in inflation across advanced economies has caused real interest rates to rise by even more than nominal rates. While there are various ways to measure real interest rates, they all confirm that policy is now in very restrictive territory, …
Emerging Asia Chart Pack (Jan. 2024) …
The RBA will hold its fire at its meeting next week With inflation falling rapidly, the Bank is likely to dial back its hawkish bias Rate cuts will be on the agenda sooner than most anticipate We expect the Reserve Bank of Australia to leave rates on hold …
Soft annual figure suggests weak end to 2023 The weaker-than-expected 0.2% expansion in Polish GDP over 2023 as a whole suggests that the economy struggled at the end of the year. We think this weakness will prove temporary and that activity should …
GDP growth in Taiwan accelerated further in Q4 and we expect growth to remain strong over the coming quarters, with robust growth in exports of artificial intelligence related goods to more than offset the drag from slower private consumption. According …
2023 a poor year for the Kingdom’s economy, but the recession is over The flash estimate of Saudi Arabia’s GDP for Q4 of last year showed that the economy expanded by 0.4% q/q, the first positive outturn since the period a year before. We expect the …
This page has been updated with additional analysis and charts since first publication. City’s recovery continues to disappoint Hong Kong’s growth picked up only marginally in Q4, underperforming most expectations. And although we foresee some further …
Larger-than-expected increase supports our above-consensus forecast The larger than expected +0.7% m/m gain in house prices in January (consensus: +0.1%, Capital Economics: +0.4%) reflected improving public sentiment about the economy and the housing …
GDP growth remained well above trend in Q4 but we don’t expect this strength to last as the deceleration in credit growth feeds through to domestic demand while the external sector continues to struggle. According to the data published today, GDP rose by …
This report was first published on Wednesday 31st January covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Thursday 1st February and the Caixin services and composite PMIs on Monday 5th February. Surveys starting to …
This page has been updated with additional analysis since first publication. GDP growth will be positive in Q4 Though retail sales was very weak in December, strong industrial production data to close out the quarter reinforces our view that Q4 GDP growth …
30th January 2024
After its sharp fall at the end of 2023, the US dollar has risen against most major currencies so far this year. Interest rate expectations have rebounded a bit in the US and in most places outside Asia, weighing particularly on the region's currencies. …
Typically, US REIT price indices have been a good indicator of the growth path for capital values in the direct market. That said, even though REIT prices rebounded in Q4 2023, we don’t expect the direct market to follow any time soon as the property …
We expect “safe” assets to rally a bit more over the next couple of years, largely informed by our belief that investors are still underestimating how quickly and/or how far many central banks will cut interest rates over 2024-2025. That backdrop of …
The December JOLTS data show a continued painless normalisation in the labour market – with job openings on a downward trend, layoffs unusually low and wage growth set for a sharp slowdown. Job openings have rebounded over the past couple of months …
The US Treasury’s latest borrowing estimates pushed long-dated yields down, and the Quarterly Refunding Announcement (QRA) on Wednesday may add to positive sentiment. But we think that a poor fiscal outlook in the US and more price-sensitive buyers will …
Our latest Global Markets Chart Pack is embedded below. We think that the Fed and several other DM central banks will deliver more policy rate cuts this year and next than investors currently anticipate. As a result, we forecast that Treasury yields will …
Economic growth in the Middle East and North Africa will strengthen a little in 2024 but is likely to come in well below consensus expectations. OPEC+’s cautious approach to oil policy will keep a lid on economic growth in the Gulf over the first half of …
Our forecast that CPI inflation will fall below 1.0% later this year suggests that Bank Rate will be cut from 5.25% now to 3.00% rather than the low of 3.50-3.75% priced into the market, 10-year gilt yields will decline from 3.90% now to around 3.25% by …
Surprise slowdown in house prices in November The marked slowdown in house price growth in November was the first sign of a response in prices to the spike in mortgage rates a month earlier. The 0.2% m/m rise in the seasonally adjusted national …
MNB errs on the side of caution The Hungarian central bank’s (MNB’s) communications following its meeting today confirm that the decision not to accelerate the pace of its easing cycle was due to the recent ratcheting up of tensions between the government …
January’s European Commission business and consumer survey, released this morning, supports our view that the euro-zone economy will stagnate in Q1. But recent increases in services firms’ price expectations could prompt policymakers to wait a little …
Sharp slowdown increases chances of Banxico cut next week The sharper-than-expected slowdown in Mexico’s GDP growth, to just 0.1% q/q in Q4, is likely to be followed by continued sluggish growth over the coming quarters. At the margin, the data increase …
