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 …
13th October 2023
Online briefing about the health of China's economy We'll be online on Wednesday shortly after the release of the September activity and spending data and Q3 GDP. Register here to join us. US export controls about to bite harder The US government is on …
The Hamas-Israeli conflict has so far had relatively little impact on oil prices but has pushed up European natural gas prices by nearly 30% this week, to €53 per MWh at the time of writing. There has been a small direct impact on the supply of gas as …
Investment growth may have slowed in Q3 Data released this week showed that growth in industrial output accelerated from 6.0% y/y in July to 10.3% y/y in August, the fastest in more than a year. And in m/m seasonally adjusted terms, output rose from 0.2% …
Industrial rental growth in the Nordics is set to slow in 2024. But a brighter macroeconomic outlook and tight vacancy will help rent growth to outperform the euro-zone. Further ahead, the current high level of online adoption relative to the euro-zone …
Credit growth has stabilised After slowing sharply in Q2, broad credit growth edged up in August and held steady last month. Although a sharp rebound seems unlikely, we do think credit growth could pick up somewhat over the coming quarters, especially if …
Economy probably won’t overheat The IMF this week revised up its forecast for Japan’s 2023 GDP growth from 1.4% to 2.0%, broadly matching our own. With activity rising much faster than its sustainable rate, any remaining spare capacity in the economy has …
Fall in inflation but Riksbank still not done This page has been updated with additional analysis since first publication. The drop in inflation in September was a little smaller than we and the consensus had anticipated and strengthens the case for the …
What to expect from a change of guard The headlines this week have largely been dominated by the last leg of campaigning ahead of New Zealand’s general election on October 14 th . The latest opinion polling suggests that five parties are likely to cross …
This page has been updated with additional analysis since first publication . Export volumes hit fresh high but prices falling China’s export values continued to contract year-on-year in September. But to the extent that foreign demand has cooled …
This page has been updated with additional analysis since first publication . Deflation fears to dissipate further PPI deflation continued to ease in September. CPI inflation edged down, but core inflation remained at a six-month high, with services …
Large-capitalisation (large-cap) stocks in emerging markets (EMs) have markedly underperformed their smaller counterparts this year, sharply contrasting with the relative performance of large- and small-cap stocks in developed markets (DMs). But our view …
The Monetary Authority of Singapore (MAS) kept monetary policy settings unchanged today which was in line with both our and consensus expectations. While another hold is likely in January, further falls in the core inflation rate and weaker growth are …
An increase in lending to other parts of China’s economy has provided a counter-balance to the slump in in credit demand that was triggered by the property crisis, but it is still only a partial one. That’s not the impression given by a chart that has …
12th October 2023
We still think the Fed and investors are too pessimistic about inflation in the US returning to target. We expect a continued fall in both core and headline inflation to push down US Treasury yields over at least the next year or so. CPI data out of the …
Estimates suggest that the term premium of US 10-year Treasuries has bounced back to positive territory. We think that this can be at least partly explained by demand and supply factors. And we suspect that term premia might rise a bit more, even though …
The outbreak of conflict between Hamas and Israel this week has not yet spilled over into the wider region. But the situation is in flux and, if Iran is pulled into direct conflict, the ramifications for the region would be a lot larger. Since we …
Surging interest rates caused mortgage demand to slump in Q3 at the same time as rising defaults led lenders to tighten mortgage credit conditions. Similarly, it became more difficult to secure commercial real estate loans. We expect availability of …
Construction boom helps to offset manufacturing weakness Mexico’s industrial sector posted a modest 0.3% m/m rise in output in August as another jump in construction output more than offset renewed weakness in manufacturing. But more timely indicators …
This page has been updated with additional analysis since first publication. Core inflation to remain on downward trend The 0.3% m/m rise in core consumer prices in September suggests, at face value, that the downward trend in core inflation may be …
This page has been updated with additional analysis since first publication. CPI inflation drops to within target, but food inflation threat is far from over Headline consumer price inflation dropped back sharply to within the RBI’s 2-6% target range in …
The continued deterioration in South Africa’s budget position in recent months leaves Finance Minister Enoch Godongwana facing an uphill challenge to reassure investors at November’s Medium Term Budget Policy Statement. The focus seems to be turning to a …
Higher interest rates weighed sharply on households’ demand for mortgages in Q3 and banks expect demand for mortgages to fall further in Q4. This is a clear sign that higher interest rates are working. And our forecast that mortgage rates will stay above …
The conflict between Hamas and Israel will negatively affect Israel’s natural gas exports. However, the bigger concern for global natural gas prices is the risk of the conflict spreading. The European natural gas price has risen by about 30% w/w to €48 …
The US dollar has risen against most currencies since the start of the year, while most of our estimates of the greenback’s “fair value” are little unchanged. Taken together, this leaves the dollar somewhat overvalued in our assessment. At this point, we …
In contrast to the past few years, when the risks to the euro-zone inflation outlook have been consistently skewed to the upside, those risks now look more balanced. So in this Focus , we explore the downside risks and how the ECB might respond to them. …
China’s recent commodity demand has been stronger than might have been expected given the weakness of its economy and commodity-intensive property sector in particular. This partly reflects a step-up in infrastructure spending and resilience in …
We think euro-zone equities’ recent run of underperformance relative to those in the US will extend over the next couple of years, as bond yields fall back and enthusiasm around “AI” continues to grow. With the bond market sell-off seemingly having abated …
This page has been updated with additional analysis since first publication. August’s resilience won’t prevent contraction in GDP in Q3 The 0.2% m/m rise in real GDP in August followed July’s 0.6% m/m contraction and will raise hopes that the economy has …
Most of the recent surge in net migration has been driven by the increased arrival of foreign students, who generally spend less, work fewer hours and demand less housing than the average Australian. On balance though, the surge in net migration probably …
This page has been updated with additional analysis since first publication. Non-residential investment probably declined in Q3 Machinery orders are on track for a fall across the third quarter, consistent with our forecast of a decline in business …
Minutes stress uncertainty over economic outlook Despite the ‘higher for longer’ message from the Fed’s updated rate projections last month, the minutes from the September FOMC meeting suggest that officials’ confidence in those forecasts is limited, with …
11th October 2023
Surveyors reported the most widespread price falls since February 2009 in September as mortgage rates of over 5% took their toll. Looking ahead, a further slide in house prices appears inevitable. The drop in the past prices balance to a fresh 14-year low …
Overview – The outlook for offices is negative across all markets, but we expect substantial differences across the 17 metros we forecast. We now think Seattle, San Francisco and Austin will see vacancy rise by more than 5%-pts over 2023-25, taking the …
Inflation now starting to take off The larger-than-expected rise in Russian inflation to 6.0% y/y in September will concern policymakers at the central bank and suggests that price pressures are now well and truly building in the economy. We think the …
The price of wheat and corn will stay historically high for now, as Russia’s withdrawal from the Black Sea Grain Initiative has re-ignited concerns about supply from Ukraine. We think that prices will drift lower into 2025 as supply from other producers …
The fall in Treasury yields since last Friday has pushed corporate bond yields down and equities up in the US. But while we think that Treasuries will keep rallying, we suspect that corporate bonds and equities will fare quite poorly in the near term. …
Note: We previewed Poland’s election and the economic and financial market issues surrounding it in a Drop-In on Thursday, 12 th October . Watch the 20-minute recording here . The outcome of Poland’s parliamentary election this Sunday will likely have a …
Tightness in Mexico’s labour market continues to fuel wage pressures, with real wages now rising at their fastest pace since the early 2000s. But this isn’t being matched by productivity growth and, in turn, threatens to keep inflation above Banxico’s …
There may be more political support for the creation of a Central Bank Digital Currency (CBDC) in the European Union than in some other economies. However, it is still uncertain whether it will ever see the light of day or whether there would be much …
The recent strength of core inflation compared to that in the US is mainly due to a rebound in durable goods prices. That has little to do with demand, which has weakened to a greater extent in Canada, suggesting that either the earlier depreciation of …
We’ve long argued that EMs were well placed to weather the Fed’s tightening cycle and episodes of rising US Treasury yields – and that has largely been borne out. And, as it happens, the latest sell-off in global bond markets has started to reverse over …
This page has been updated with additional analysis since first publication . Services inflation remains stubbornly strong The further rise in Brazilian inflation to 5.2% y/y probably marks the peak in this mini-inflation cycle and the headline rate …
Headline inflation has jumped across much of Emerging Asia over the past couple of months on the back of rises in food and fuel prices. This won’t prompt central banks to resume tightening (the Philippines is the exception). However, the rise in inflation …
