Figures released today suggest that economic growth remained broadly stable last quarter, but we don’t have much faith in the official data. Our own in-house activity tracker shows that the economy is performing worse than what the official data suggest. …
6th November 2023
Group Chief Economist Neil Shearing is back to discuss what the recent data say about the global economic outlook – including October US payrolls and China PMIs – and what to expect from the Fed, ECB and Bank of England following their decisions to keep …
3rd November 2023
After a remarkably slow October in currency markets – for all the fireworks in bond and equity markets, most major currencies were roughly unchanged on the month – November has started with a bang. Between a relatively dovish FOMC and a spate of softer US …
The Riksbank’s request for a capital injection from the government is not a good look for an independent central bank. But its QE-related losses will be smaller than those of many other central banks: the “bailout” is required because of its accounting …
AGOA conference begins as Uganda kicked out Officials are discussing the future of a key US-Africa trade act at a conference in Johannesburg that started today. Uganda is already set to lose duty-free access to the US which, although not a major blow, is …
We think today’s big moves in markets in the wake of October’s US Employment Report are a sign of things to come over the next twelve months or so. More evidence that the labour market in the US is cooling and that wage growth there is moderating (see …
Energy and precious metal prices will remain volatile while there is a risk that the war between Israel and Hamas expands to include other countries in the region. For now, energy supplies have been largely uninterrupted, and prices should remain close to …
There is now mounting evidence that the economy is set for a renewed slowdown in the fourth quarter and that inflationary pressures from the labour market continue to ease. Although markets have already moved to price out any real chance of further rate …
Employment edged up in October but the broad-based weakness of GDP growth, the depressed business surveys and the rapidly weakening housing market all suggest that the economy is in the early stages of recession. GDP probably contracted again last quarter …
Oil prices continued to fall this week, perhaps reflecting less concern that the Israel-Hamas conflict will expand to other countries in the region and that Middle East oil supply will be negatively affected. Consistent with this, the price of gold fell …
Copom cuts, but fiscal risks return to the spotlight Fiscal risks are rearing their head again in Brazil after President Lula suggested that the government may no longer aim for a balanced primary budget next year as previously pledged. Finance Minister …
Energy prices will remain historically high over the remainder of this year. The Israel-Hamas conflict has increased volatility in energy markets, but supply has not been disrupted. Oil prices will remain high as OPEC+ output cuts keep supply constrained. …
Turkey’s central bank continues to impress Turkey’s central bank (CBRT) governor delivered another convincing message at this week’s Inflation Report briefing and suggested that further policy tightening will be delivered over the coming months. Governor …
Slowdown spreads to services sector The ISM services index fell to a five-month low of 51.8 in October, from 53.6, adding to the evidence that economic growth is slowing after a blockbuster third quarter. Unlike the renewed slump in the manufacturing …
ECB policymakers stressed this week that rate cuts are a distant prospect. Dutch central bank governor Knot said that rates should remain at their current “cruising altitude” for some time. And governor of the Bank of France Villeroy de Galhau noted that …
Urban households still feeling positive As always, we need to treat Indian labour market statistics with caution, but unemployment data from private think-tank CMIE released this week were noteworthy. They showed that the overall unemployment rate soared …
Looser labour market driving softer wage pressures This page has been updated with additional analysis since first publication. The more modest rise in employment and essentially unchanged hours worked in October suggest that labour demand is easing …
This page has been updated with additional analysis since first publication. Third-quarter strength fading rapidly The muted 150,000 gain in non-farm payrolls in October is another sign that the economy’s strength in the third quarter is likely to unwind …
We can understand if the phase “the lady doth protest too much” sprang to mind when listening to the Bank of England after it left interest rates at 5.25% for the second meeting in a row on Thursday. Indeed, the Old Lady of Threadneedle Street stressed so …
Over half of cross-border settlement now in RMB Earlier this week, the People’s Bank published its annual report on renminbi internationalisation. The message from the 84-page document is that global use of China’s currency has been gaining momentum …
Wage growth looks to finally be slowing in the euro-zone amid weaker economic growth and falling inflation, but it remains too high for comfort. As a result, we think the ECB will wait until a more marked slowdown becomes evident to begin cutting interest …
Headline inflation rises again Figures published this week for Korea show that headline inflation rose from 3.7% y/y in September to 3.8% last month – a third consecutive monthly rise. Inflation has now been above the BoK’s target for 31 consecutive …
This week we held a drop-in on the prospects for commercial property investment in the UK and Europe, which can be found here . This Update provides answers to the most interesting questions that emerged from the discussion. Will prime offices outperform? …
Inflation eased a touch, peak approaching soon Turkish inflation unexpectedly fell to 61.4% y/y in October and while we think inflation is likely to rise again in the coming months, the peak is probably not too far away. The central bank’s aggressive …
We expect Japan’s stock market to underperform that of the US in both local- and common-currency terms over the next couple of years. The effective abandonment of Yield Curve Control by the Bank of Japan has helped yields there continue to climb over this …
Too soon to signal the all-clear Data released this week showed that the Australian consumer isn’t on the skids just yet. Indeed, with retail turnover having surged in September, sales values rose by a solid 0.8% q/q in Q3, their strongest quarterly …
Threat of yen intervention remains As we had expected, the Bank of Japan retained its 1% cap for 10-year yields at this week’s meeting . However, by downgrading that cap to a “reference” and by stopping its daily fixed-rate operations offering to buy an …
CBE stands pat as all eyes turn to post-election meeting The Central Bank of Egypt (CBE) left its overnight deposit rate at 19.25% today but, with pressure on the pound mounting and inflation still well above target, there’s a good chance that …
2nd November 2023
October’s manufacturing PMIs suggest that global industrial activity continued to contract at the beginning of Q4 and forward-looking indicators point to further weakness ahead. The output component of the global manufacturing PMI fell from 49.7 in …
Our Long Run Returns Monitor provides our updated long-term projected returns for major asset classes. All projections in this publication are as of 1st November 2023. Our latest projections have been influenced by the recent body of work that we’ve done …
The SNB has been uncharacteristically active this week, making a string of announcements about monetary policy, its balance sheet, minimum reserve requirement and lessons from the Credit Suisse debacle. None of these change the big picture, but they do …
Egypt’s gas troubles after Israel cuts supplies Egyptian officials confirmed this week that imports of gas fell to zero after Israel turned off the taps, which will curtail efforts to restart LNG exports. And with gas being cut to energy-intensive …
The rise in the US homeownership rate has stalled, driven by a drop in the proportion of under-35s that own their home. That’s down to higher mortgage rates reducing the number of first-time buyers (FTBs) that can afford to buy. Our forecast is for …
The yields of UK government bonds (Gilts) have dropped back in recent days, and we think that they will fall further over the next year or so, even if they settle far above their post-pandemic lows. UK government bond yields have fallen a bit further …
Most EM manufacturing PMIs for October were weaker than expected, largely driven by sluggish domestic and external demand. This weakness has, at least, resulted in input and output price components dropping back, which supports our view that the EM easing …
We think the Bank of Japan’s continued steps towards policy normalisation are consistent with somewhat higher JGB yields and a significant rebound in the yen over the coming quarters. To recap, the BoJ made another tweak to its Yield Curve Control (YCC) …
The underperformance of wind and solar equities since early 2021 has largely been driven by higher interest rates, which disproportionately affect the cost of renewables projects. But while the days of ultra-low financing costs are behind us, our …
We’ll be discussing the latest Fed, ECB and Bank of England policy decisions in a 20-minute Drop-In webinar at 3pm GMT today. (Register here .) The Bank’s decision to leave interest rates at 5.25% for the second time in a row and to double down on the …
This publication has been updated with additional analysis from the post-meeting press statement and press conference. CNB in ‘wait and see’ mode The Czech National Bank’s (CNB’s) decision to leave interest rates on hold again today, at 7.00%, was …
Although consumer spending has remained remarkably resilient in the US so far this year, it has weakened in other advanced economies. And as the lagged effects of high interest rates filter through to households in an environment of low consumer …
Productivity acceleration bearing down on unit labour costs Data today confirmed that the surge in GDP in the third quarter was driven by a 4.7% annualised jump in productivity, the biggest gain since 2020. While it remains to be seen whether this is the …
The AI revolution will make EM income convergence – or “catch-up growth” – harder as richer economies are better equipped to deploy the technology on a wide scale. It poses a particular headwind to the services-driven economic development path pursued by …
Bank doubles-down on rates staying high for long The Bank’s decision to leave interest rates at 5.25% for the second time in a row and the doubling down on the message that rates cuts are a long way away supports our view that Bank Rate will stay at 5.25% …
We have just published new in-depth analysis which tracks a worrying path for Italian public debt out to mid-century, showing how the country’s fiscal position is set to become only more fragile in an environment of higher rates but still-sluggish …
Brazil’s central bank (BCB) cut the Selic rate by 50bp, to 12.25%, at yesterday’s Copom meeting and signalled again that further similar reductions lie in store over the next few meetings. Even so, with strong wage growth set to keep inflation above …
We think that the decision today by Norges Bank to leave its policy rate on hold at 4.25% signals the end of its tightening cycle. Contrary to the Bank’s communication, we do not expect a hike in December given that inflationary pressures should continue …
We expect industrial rents in Belgium to outperform the rest of the euro-zone on the back of a brighter economic outlook, very tight supply and a larger rise in e-commerce. We forecast annual average rental growth to reach 3.5% p.a. for the period …
Although Treasury yields have fallen back in recent days, the big picture is that they are still much higher than they were when headline and core inflation peaked more than a year ago in the US. In this Focus , we examine the role of inflation in the …
