Spare capacity is opening up The ABS published a flurry of data this week, which prima facie suggest the labour market is still running red hot. Nevertheless, we remain confident in our decision to call time on the RBA’s tightening cycle . That’s largely …
17th November 2023
With a lot of pessimism seemingly already priced in to China’s “risky” assets, we suspect a thawing in US/China relations could give them a boost. But we think their longer-term outlook is less rosy. Meanwhile, we don’t think US/China tensions will have …
House price declines likely to worsen The fall in new listings in October may ease some concerns about forced home sales but, with the sales-to-new listing ratio declining again, it is still likely that the pace of house price declines will accelerate. …
16th November 2023
A thawing in China/US tensions could, in our view, help “risky” assets in China for a while by reducing the “China risk premium” that seems to have emerged. But we doubt it would fully reverse the recent underperformance of China’s equity markets relative …
Sovereign debt risks across Frontier Markets have eased slightly since last quarter. But dollar-bond spreads in Ethiopia have jumped following its request for debt-service suspension earlier this week. And we think that the risk of default over the coming …
Recent developments will have given policymakers at Norges Bank food for thought ahead of December’s interest rate decision. While we had initially rejected the central bank’s guidance that it would hike once more, we now think three key upside risks have …
Europe Commercial Property Chart Pack (Q4 2023) …
Output temporarily depressed by UAW strike The 0.7% m/m decline in manufacturing output in October was entirely due to the now-resolved UAW strike, which translated into a temporary 10.0% m/m fall in motor vehicle output. With the UAW securing lucrative …
Saudi’s new Civil Code another step to attract FDI In a month’s time, Saudi Arabia’s new Civil Code will come into force in a bid to further entice foreign investors to the Kingdom, but more is required to hit Vision 2030 targets. The Civil Code contains …
While the world’s major central banks now appear to have ended their tightening cycles, we think the Riksbank will raise its policy rate by 25bp again next week, to 4.25%, because of the strength of domestic inflation and weakness of the krona. And we now …
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
Israel holds up well in Q3, but sharp drop coming in Q4 The slight slowdown in Israeli GDP growth to 2.8% q/q annualised in Q3 was more or less in line with expectations but comes before a likely sharp drop in Q4 amid the impact of the war with Hamas. …
Surging interest rates have not been kind to commercial property investment activity, which recently slumped to a 10-year low. But there are some reasons to think transactions will see a decent, if not spectacular, recovery in 2024. Falling interest rates …
Rates on hold, tightening cycle at an end The central bank in the Philippines (BSP) today left its main policy rate unchanged (at 6.50%), but warned it remained ready to raise interest rates further if necessary. However, with inflation likely to ease …
This page has been updated with additional analysis since first publication. The rise in unemployment has further to run Although jobs growth gained momentum in October, a renewed uptick in the unemployment rate should ensure that the RBA doesn’t feel the …
Growing external and domestic headwinds suggest to us that Brazilian financial markets will come under pressure over the short term and are unlikely to resume their outperformance beyond that. Brazilian assets have fared relatively well amid the ongoing …
15th November 2023
We expect growth to slow and inflation to drop to central bank targets in major DMs in 2024. But the latest business expectations surveys on the face of it suggest that the risks to our forecasts are tilted towards activity and inflation being more …
Investors seem to be banking on a “Goldilocks” US economic environment which, if sustained, might lead to bull markets for most bonds, equities, and currencies. But we think this is a bit optimistic. Financial markets are having a great time since the …
Economy overheating, central bank has more work to do The rise in Russian GDP growth to 5.5% y/y in Q3 was larger than expected and adds to evidence that the economy continued to overheat last quarter. With fiscal policy set to loosen further and …
This page has been updated with additional analysis since first publication . Struggling for momentum The softer-than-expected 0.2% q/q rise in Colombian GDP in Q3, coming alongside signs that the economy was weakening towards the end of the quarter, …
Measures of cross-asset volatility and risk premia suggest that investors are increasingly discounting a fairly rosy market environment over the coming months. This leaves them at risk of disappointment if, as remains our central forecast, the US economy …
November’s IPF Consensus Survey showed that, although euro-zone office rental growth is expected to slow next year, forecasts remained unchanged on average from the May survey. In contrast, given the ongoing deterioration in office leasing and the weak …
Manufacturing and wholesale trade GDP broadly unchanged in September The slightly better-than-expected gains in manufacturing and wholesale sales in September do not change the big picture that GDP in each sector was probably largely unchanged, supporting …
Despite the indefatigable consumer, price pressures fading fast Retail sales values fell by 0.1% m/m in October, but the decline was principally due to a price-related drop back in gasoline station sales and a modest 1.0% m/m decline in motor vehicle …
The squeeze on Russia’s budget and current account positions has eased over the second half of this year, largely thanks to a rise in oil prices. Higher energy revenues next year should help to limit the impact of a surge in military spending on the …
Our forecasts for commercial real estate values remain well below consensus, even after the latest downgrade. While our sector rankings are consistent with the consensus, we are predicting a more substantial rise in cap rates by end-2025, which will see …
The latest Saudi GDP data paint a downbeat picture in which the recession has deepened amid oil output cuts. But the good news is that the recession looks to be coming to an end. And we think the economy will begin to recover over the coming quarters as …
With the government still languishing far behind in the opinion polls and an election required before the end of January 2025, the Chancellor, Jeremy Hunt, is under more pressure than ever to pull something out of the bag at the Autumn Statement on …
Inflation quickens again, putting more pressure on the CBN to act Nigeria’s headline inflation accelerated again to 27.3% y/y in September, as the removal of fuel subsidies and the naira’s struggles continued to feed through. The central bank will need to …
Retail recovery helping to offset industrial weakness September’s activity data for South Africa suggest that the economy probably stagnated over Q3 as a whole. Some of the recent drags on the economy, such as loadshedding, are likely to ease in 2024 but …
This publication has been updated with additional analysis. Output to continue falling Euro-zone industrial production fell in September and is likely to continue contracting in the final quarter of the year, primarily due to weak demand. The 1.1% m/m …
We think that bonds in Emerging Markets (EMs) will struggle in the next couple of months. Further ahead, though, we expect their yields to fall, as both “risk-free” rates and spreads drop. The yields of EM local-currency and dollar-denominated bonds have …
This webpage has been updated with additional analysis, as well as a Chart and Table of key data. Saudi Arabia’s headline inflation rate edged down from 1.7% y/y in September to 1.6% y/y in October, the weakest pace of inflation in nearly two years, and …
This page has been updated with additional analysis since first publication. Slower progress ahead after big plunge The fall in CPI inflation from 6.7% in September to 4.6% in October was a bit bigger than expected (consensus and BoE forecasts 4.8%, CE …
This page has been updated with additional analysis and charts since first publication. Note: Join our Drop-In briefing on Thursday 16th November on the Xi-Biden meeting, the fracturing of the global economy, and what this means for Saudi Arabian …
This page has been updated with additional analysis since first publication . Wage growth has likely peaked Notwithstanding the acceleration in wage growth last quarter, we doubt that the Reserve Bank of Australia will tighten policy any further. The 1.3% …
GDP (Q3 2023, Preliminary) Tepid Q3 GDP outturn sets the tone for 2024 GDP growth weakened sharply in the third quarter and we expect it to remain soft next year. The 0.5% q/q contraction in Q3 GDP (-2.1% annualised) was much weaker than the analyst …
14th November 2023
While past dips in the 10-year Treasury yield since inflation peaked proved to be short lived, we think that yield will continue to fall from here. Investors have taken the softer-than-expected US CPI data for October, published today, as confirmation …
While wage growth will continue to slow, the smaller-than-expected fall in September supports our view that the Bank of England will keep rates on hold at their current level of 5.25% until late in 2024. Wage growth eased more slowly than we and most had …
This page has been updated with additional analysis since first publication. Downward pressure on core inflation resumes The softer 0.2% m/m rise in core consumer prices in October makes it even less likely that the Fed will raise rates any further, and …
A lack of appropriate regulation may be one reason why ESG bond issuance has slowed over recent years, and why the premium that investors are willing to pay for ESG bonds over conventional bonds has all but evaporated. We think that improved regulations, …
This page has been updated with additional analysis since first publication. Weak economy will cool labour market from here We do not think the slight acceleration in employment growth in Q3 is a sign of things to come. With business surveys deep in …
Past the worst Q3 GDP figures out of Central and Eastern Europe (CEE) showed a mixed performance across the region, but as a whole CEE economies appear to be past the worst of the downturn. With households’ real incomes rising again after last year’s …
Rise in target measure of inflation supports case for another hike The increase in the Riksbank’s target measure of inflation in October was broadly as anticipated and does not change our view that, while it will be a close call, policymakers are most …
This page has been updated with additional analysis since first publication. Wage growth continues to ease, but only slowly With wage growth continuing to ease and signs that a further loosening in the labour market lies ahead, higher interest rates …
Moody’s decision to revise down its outlook for the US sovereign credit rating may add to the growing sense that market participants are becoming more worried about the fiscal outlook in the US. So, it is worth assessing to what extent such concerns are …
13th November 2023
Economists from our UK, Markets and UK Housing teams recently held a special post-Autumn statement online briefing. During this 20-minute session, Chief UK Economist Paul Dales and the team answered client questions and addressed key issues, including: …
Data over the weekend showed that Egypt’s inflation rate slowed, confirming that September marked the peak, and our baseline scenario is that it will continue to drop back as we head into 2024. The main risk to our view is that there is a disorderly …
