Switzerland’s government looks set to remain largely unchanged after the federal elections this Sunday, and we do not expect a significant change in economic policy. But voters’ grievances about the failure of Credit Suisse will keep the pressure on …
17th October 2023
House prices heading lower again The renewed increases in mortgage rates and new listings mean we now expect house prices to fall by 5% over the next six months. The big risk, however, is that we are underestimating the degree to which forced sales are …
The full report is available to download from the button at the top right to Global Economics, Global Markets, Asset Allocation and The Long Run subscribers, as well as to CE Advance clients. If this is outside of your current subscription and you would …
Further evidence of economic strength in September The 0.3% m/m rise in industrial production in September is another sign that the real economy remains in solid shape. Production was hit by a slight 0.3% m/m drop-back in utilities output, but that was …
It has been almost a year since Egypt reached a staff-level agreement with the IMF, but progress on key policies that form part of the program has stalled. The pound has been a de-facto peg since January. And the Fund has delayed two tranches of …
This page has been updated with additional analysis since first publication. Fall in inflation to keep Bank on the sidelines The larger-than-expected falls in headline and core inflation in September should be enough to finally persuade markets that there …
This page has been updated with additional analysis since first publication. Consumption solid heading into Q4 The unexpectedly-strong 0.7% m/m rise in retail sales in September continues the theme of consumer resilience in the face of higher interest …
Argentines face the choice between a shock-therapy style approach to tackling the country’s economic issues or more of the same unorthodox policymaking when they head to the polls in Sunday’s presidential election. The latest polls suggest that, while …
What will a world of structurally higher interest rates look like? How will central bank behaviour change in the coming years? What will this mean for market returns? Our senior economist team hosted a special online briefing all about their new work …
Chapter 4: Financial market implications …
Chapter 3: Where will inflation (and nominal rates) settle? …
Chapter 2: How will the savings/investment balance affect r*? …
Chapter 1: Will stronger potential growth boost r*? …
Introduction and framework …
German economy still in the doldrums Although the headline ZEW survey for Germany rose in October it was still very weak, while the low reading for the current conditions index supports our view that the economy is in recession. The jump in the ZEW …
r* and the end of the ultra-low rates era: executive summary …
This page has been updated with additional analysis since first publication. Wage growth passed its peak, but it will fall only gradually Cooling labour market conditions appeared to start feeding through into an easing in wage growth in August. That …
RBA will probably hike rates in November The minutes of the RBA’s October meeting support our view that the Bank will deliver a final 25bp rate hike at its November meeting. While the Bank decided to keep rates unchanged at that meeting, it kept …
This page has been updated with additional analysis since first publication. RBNZ to remain on hold as inflation continues to soften With price pressures on track to moderate further, we think that Reserve Bank of New Zealand won’t lift rates any higher. …
16th October 2023
Market jitters around the war between Hamas and Israel appear to have stabilised today. But given that the uncertainty on that front is unlikely to fade entirely any time soon, it is worth taking stock of the warning signs evident in commodity markets. …
The reported deal that is close to being reached to lift US sanctions on Venezuela’s oil sector in return for competitive elections would help to raise the country’s oil output from very depressed levels. But the sector requires enormous investment to …
The Bank of Canada’s quarterly surveys show that businesses’ inflation expectations continue to decline, albeit slowly, and point to a growing risk that the economy will fall into recession. Accordingly, we continue to doubt that the Bank will raise …
September saw sharp drawback in lending The jump in lending in August proved temporary as net lending to commercial property totalled just $13.5bn in September, below the average for 2023 thus far. This took total outstanding real estate debt to $5.5trn. …
Manufacturing losing momentum The surprise fall in manufacturing sales volumes in August reduces the chance of GDP rising by any more than the initial preliminary estimate of a 0.1% m/m gain, and means a second consecutive contraction is still on the …
All else equal, our view that the AI revolution will lead to faster productivity growth in the late-2020s and early 2030s implies that greenhouse gas emissions will be higher during this period than we previously expected. That said, the net impact of AI …
Saudi Arabia’s economy is in a recession and, with oil output cuts extended until the end of this year at least, GDP will contract further. We think that the economy will shrink by 1.3% this year which is towards the bottom of the consensus range and …
The exit poll from Poland’s parliamentary election on Sunday suggests that the incumbent PiS will fall short of forming a majority and that the pro-EU opposition will be able to form a coalition government. This would help to improve relations with the EU …
Perceptions matter at least as much as actual policies in determining fiscal stability. Accordingly, the surge in bond yields over the past month poses the greatest risk to those countries where the government’s commitment to fiscal rectitude over the …
This page has been updated with additional analysis since first publication . Inflation accelerates once again, setting the stage for Central bank hikes Nigeria’s headline inflation rate rose again to an almost-18 year high of 26.7% y/y in September, …
Global bond markets have clawed back some of the wrenching losses of recent weeks, but yields remain far above levels seen over much of the post-global financial crisis period. This shift upwards reflects a painful adjustment from the zero interest-rate …
The job-to-applicant ratio has usually signalled earlier than the Tankan that the labour market has taken a turn for the worse. But despite the recent fall in the number of jobs relative to applicants, we still think that the labour market will soon start …
There are growing indications that household finances are coming under pressure as mortgagors struggle with rising debt-servicing costs. Although households benefit from substantial liquidity buffers, we suspect they won’t be rushing to run those down to …
The surprise attack on Israel by Hamas last weekend upended a lot of geopolitical assumptions, but what will this mean for the economic and markets outlook? Liam Peach , a senior economist on our Macro team, and Chief Commodities Economist Caroline Bain …
13th October 2023
After another topsy-turvy week in financial markets, the dollar appears to be back on the front foot. In part, that probably reflects Thursday’s US CPI print, which came in a touch higher than expected. That led to a rebound in US Treasury yields, which …
Spanish inflation doubled from 1.6% in June to 3.2% in September and is likely to rise to over 4% by the end of the year. However, ECB policymakers won’t be too concerned as the increase is largely due to rising energy inflation while core inflation looks …
Ghana rate cuts more likely as inflation falls Annual inflation in Ghana eased again to 38.1% y/y over September which gives the central bank some leeway to consider cutting rates at its next meeting. The drop in inflation last month was down from 40.1% …
The fall in house prices in September shows just how quickly conditions in the housing market have shifted and the plunge in the sales-to-new listing ratio points to more weakness to come. That is another reason to expect the Bank of Canada to cut …
We don’t expect a rise in earnings expectations to give the S&P 500 much of a near-term boost, but think the picture is more positive further ahead. Although US earnings season is getting under way, corporate profits probably haven’t always been front of …
Cobalt is likely to keep its position as a leading battery metal for years to come, but its high cost compared to alternative metals means that cobalt demand won’t grow as fast as overall battery production. This is a key reason why we think that the …
Malaysia budget to weigh on GDP, add to inflation Malaysia’s budget for 2024, which was unveiled in parliament today, envisages a modest tightening of fiscal policy, with the deficit set to narrow from an estimated 5.0% of GDP this year to 4.3% in 2024. …
It was a mixed week for prices, with energy, agricultural and precious metals outperforming industrial metals. (See Chart 1.) Chart 1: S&P GSCI Sub Indices (3 rd Apr. 2023 = 100) Source: Refinitiv Capital Economics Energy prices rose on the back of the …
Ecuador’s presidential run off Ecuadorians head to the polls on Sunday in a run-off vote for the country’s next president that pits left-wing candidate Luisa González against centre-right businessman Daniel Noboa. Whoever wins will serve the remainder of …
Confidence suffers from renewed inflation concerns The sharp fall in the University of Michigan consumer sentiment index to a five-month low of 63.0 in early October, from 68.1, probably reflects the hit from recent financial market moves, as well as …
We think the macroeconomic environment will continue to play the key role in the outlook for emerging markets (EM) dollar-denominated sovereign bonds this year and next. Despite country-specific risks, we expect the yields of most of those bonds to fall …
We set out our initial thoughts on the potential implications of the conflict between Israel and Hamas earlier this week here . It’s hard to know how things will develop from here, but we think that there are four key points worth making at this stage. …
There appears to be growing support at the Fed for the idea that the recent sell-off in long-term Treasuries reduces the need for further policy rate hikes, but the more persuasive reason for the Fed to pause is that inflation is continuing to ease …
Almost as fast as gilt yields rose (see here ) they have subsided. After surging from 4.68% on 2 nd October to a 21-year high of 5.11% last Friday, the 30-year gilt yield dropped to 4.72% on Thursday, although it has since ticked up to 4.85% on the back …
China imported fewer key commodities in September than in August, but its underlying demand for commodities, especially fossil fuels, remains strong and is only likely to strengthen from here. China’s preliminary trade data, released today , showed m/m …
Economists from our China and financial markets teams held an online briefing about the Q3 economic data release and outlook for the Chinese economy and markets. During this 20-minute session, the team answered client questions as they addressed key …
The latest activity and survey data have provided even more evidence that the resilience in activity in advanced economies over the first half of 2023 is now fading. High interest rates are clearly weighing on credit growth, and a further rise in debt …
