Both bond and equity markets have started the year on the back foot. But, while a pause after the rapid rally in most asset prices over the last two months of 2023 would not be surprising, we think the outlook for both bond and, especially, equity prices …
2nd January 2024
The Erdogan government’s turn back to macroeconomic orthodoxy is showing early positive signs: inflation pressures have eased; the current account deficit has narrowed; and foreign investment has picked up. But is this the latest in a string of false …
Employment growth reliant on non-cyclical sectors After the near 200,000 gain in payroll employment in November, which included the return of 47,000 workers who had been on strike, we expect a more muted 150,000 increase in December. We also anticipate a …
We expect apartment markets to perform poorly over the next two years, with all our 17 metros seeing capital values lower at the end of 2025 than they are now. However, there will be substantial differentiation. At the top end, we think Houston apartment …
China PMI surveys suggest that the economy lost momentum in December, but we suspect that the surveys are not reflecting economic reality. Activity and import data all point to resilient commodity demand. Either way, the construction PMI rose again last …
Data released this morning showed that bank lending in the euro-zone picked up towards the end of last year. But we doubt that this is the start of a sustained turnaround. We expect the impact of tight monetary policy to weigh on lending and keep the …
This page has been updated with additional analysis since first publication. Further weakness in CEE, but Russia continues to overheat The manufacturing PMIs out of Central and Eastern Europe (CEE) and Turkey for December suggest that industrial sectors …
The December PMIs for most economies in Emerging Asia stood well inside contractionary territory. The outlook for manufacturing in the region remains bleak in the near term as high inventory levels, softening labour markets at home and renewed weakness in …
This report was first published on Tuesday 2 nd January, covering the official PMIs and Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Thursday 4 th January. Rebound led by services and construction The official …
Housing market still set to cool Australia’s housing market showed signs of life in December. However, we still think an affordability crunch will temper house price gains in the months ahead. Allowing for seasonal swings, house prices across the eight …
Economic growth in Singapore accelerated in Q4 but the economy is set to enter a period of renewed weakness in the near term as support from external demand fades while domestic demand remains weak. According to the advanced estimate published today, GDP …
Flat prices in December confirm 2023 resilience Unchanged house prices in December ensured that over the course of 2023 they fell by much less than forecasters had expected. With mortgage rates falling, it is increasingly likely that house prices avoid …
29th December 2023
GDP growth in Vietnam picked up in Q4 but this strength is unlikely to last if, as we expect, exports weaken and commercial banks pull back on lending in response to a sharp rise in non-performing loans. With inflation likely to remain within target, we …
We expect the sharpest fall in apartment completions in 2025-26 in Boston, Denver, NYC and Seattle. Those cities will also be joined by Sunbelt markets where oversupply is already denting rents, including Austin and San Antonio. By contrast, there is …
28th December 2023
Canada Chart Pack (Dec. 2023) …
China’s economy has regained some strength recently. We expect this to continue into 2024, 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 exports set …
While we got mortgage rates and lending roughly right in 2023, house prices fell by less than we expected as longer mortgage terms, strong demand from cash buyers, and tight supply came together to support them. There is little reason to think that these …
Industrial output has usually fallen rather sharply whenever firms were as pessimistic about the production outlook as they are now. That’s consistent with our view that GDP growth next year will be weaker than most anticipate. One thing that stood out …
This page has been updated with additional analysis since first publication. GDP will rebound this quarter While the November activity data were a mixed bag, they strongly suggest that the economy dodged a recession. Taking industrial production first, …
27th December 2023
Emerging Asia Chart Pack (December 2023) …
This page has been updated with additional analysis since first publication Labour market should tread water from next year The unemployment rate stayed unchanged in November, following consecutive falls in the previous two months. We think it should …
25th December 2023
Zambia secures latest IMF tranche as debt talks drag Zambia received the latest $187m tranche of its IMF deal this week as it continues to make progress with its fiscal performance despite a tough external backdrop. This may help to push long-running debt …
22nd December 2023
Data this week showed that the population jumped by 430,000 in the third quarter alone, almost as much as the official full-year permanent resident target of 465,000. Nonetheless, the November CPI data showed a much-needed slowdown in rent inflation, …
This week saw a renewed attempt from some Fed officials to push back against market expectations for interest rate cuts but, with core PCE inflation running at an annualised pace of below 2% over the past six months, this final flurry of hawkishness isn’t …
The final week ahead of the holiday period is drawing to an end with the US dollar somewhat weaker across the board. Unlike last year, the BoJ’s final policy meeting proved a(nother) damp squib, with policymakers equivocating somewhat on the timing of …
This page has been updated with additional analysis since first publication. Rate cuts approaching The weaker-than-expected monthly GDP figures raise the risk that the economy contracted again this quarter and are another reason to think that the Bank of …
This page has been updated with additional analysis since first publication. Post-pandemic inflation is over; Fed rate cuts coming soon The confirmation that core PCE prices rose by just 0.06% m/m in November means that, over the past six months, core …
While the robusta price had the largest gain this week (~11%) due to ongoing drought and dry conditions in Vietnam and Brazil, the rebound in oil prices captured most of the attention, as this was seemingly driven by the shipping chaos . A perfect storm …
Argentina: Milei takes a chainsaw to the state Having announced large cuts to public spending as well as a steep devaluation of the peso last week, this week President Milei took a first big step towards fulfilling his campaign promise of reducing the …
Below-consensus growth Most countries in Asia will record faster economic growth next year, but 2024 still promises to be a difficult year for the region. Exports from the region have rebounded in recent months, but this is unlikely to last, if as we …
Fiscal rules no game changer for CEE public finances EU finance ministers agreed on a new set of fiscal rules this week, but this doesn’t change our view that concerns about public debt dynamics will grow in parts of Central and Eastern Europe (CEE) over …
PBOC moving cautiously to ease further The Loan Prime Rates (LPR) were left unchanged for a fourth consecutive month on Wednesday. But today’s coordinated reductions in commercial bank deposit rates suggest that the PBOC is still on an easing path. Lower …
Revised data showing that real GDP contracted by 0.1% in Q3 has fuelled the debate as to whether the UK entered a technical recession over the second half of this year. But focussing on small falls (or increases) in GDP misses the point: the bigger …
Will the RBI follow the lead of other central banks? India’s economy has held up exceptionally well in 2023 due to strong government spending and investment. Meanwhile, timely data show a renewed surge in food prices. This is a worry for the RBI as the …
This page has been updated with additional analysis since first publication. Dose of festive cheer for retailers, but unlikely to last into new year The 1.3% m/m rebound in retail sales volumes in November may have paused the recent retail woes as Black …
This page has been updated with additional analysis since first publication. Mildest of mild recessions may have begun in Q3 The final Q3 2023 GDP data release shows that the mildest of mild recessions may have started in Q3. But whether or not there is a …
Wage growth poised to lose momentum Earlier this week, we found out that Westpac’s leading index edged up once again in November and is consistent with a pickup in economic growth over the next six months. That raises the risk that labour demand will be …
Policy rate hike in January now looking unlikely It came as a surprise to no one that the Bank of Japan left policy settings unchanged at this week’s meeting . Even so, yields on 10-year JGBs plunged by nearly 10bp since then, whereas 10-year Treasury …
This page has been updated with additional analysis since first publication. Inflation will only return to 2% by end-2024 The plunge in inflation in November was broad-based, but with the large drag from energy prices turning into a boost as energy …
21st December 2023
The high profile announcements from COP28 around renewable capacity pledges and fossil fuel usage are ambitious, but strike us as either overly optimistic or vague. While we think renewable energy consumption will increase markedly, fossil fuel usage is …
We think “risky” assets could struggle relative to “safe” ones in the near term if, as we expect, growth disappoints, although we still think they’ll outperform over next year as a whole. At the time of writing, Thursday’s drop in equity prices had …
The rerouting of trade ships away from the Red Sea has come at a time of disruption to shipping elsewhere in the world, but it is unlikely to alter the broad pattern of falling core inflation in 2024. We expect the recent rise in oil prices to prove …
Another monthly fall in China, but the US and India to remain at full blast The monthly falls in China’s steel production continued in November, but output over the year is almost certain to be higher than in 2022. Production in India grew quickly and …
Consumption growth better than feared The strong rise in retail sales volumes in October suggests that consumption growth will accelerate this quarter. That presents an upside risk to our forecast that GDP will edge down again, although we remain …
This page has been updated with additional analysis from the post-meeting press statement and press conference. CNB kicks off its easing cycle The Czech National Bank (CNB) maintained a hawkish tone as it started its easing cycle today, but we still think …
Red Sea crisis adds to Egypt’s external strains Attacks on cargo ships in the Red Sea have prompted major shipping companies to reduce their traffic through the Suez Canal. This deals a blow to Egypt’s hard currency revenues when it desperately needs …
ECB is talking but investors aren’t listening This week brought more pushback from ECB policymakers against expectations for rates to start falling in the first half of next year. But investors have largely ignored them, and arguably for good reason. …
Leaving the door open for one more hike Turkey’s central bank (CBRT) delivered a 250bp interest rate hike, to 42.50%, at today’s meeting and didn’t close the door on the tightening cycle. We’ve now pencilled in one more 250bp hike at the next meeting in …
