This week’s FOMC meeting supports our view that bond yields will fall back a bit further this year. Overall, financial markets took yesterday’s FOMC meeting and the following press conference as fairly dovish . Arguably, the key point in Chair Powell’s …
2nd May 2024
The EM manufacturing PMI for April showed that industry continued its strong start to the year through to the beginning of Q2. At a regional level, the narrative was largely unchanged: India remains the star performer, while industry in Central Europe …
Many central banks are concerned about the fact that services inflation has remained too high. But we think the risks in Switzerland are skewed to the downside and, in our view, outweigh the upside risks from goods prices. This leaves us comfortable with …
Our forecast that the Bank of Canada will cut interest rates earlier and more aggressively than the Federal Reserve means that the loonie is likely to depreciate, but we doubt the move will be large enough to push up imported goods inflation …
This interactive dashboard allows you to explore all of our forecasts and key data for the US economy. If you have subscriber access to the data underlying this redesigned dashboard, you can download it via the menu options in the top right of each chart …
The Riksbank is likely to kick off its easing cycle next week by cutting its policy rate from 4.0% to 3.75%. Beyond that, our forecast is for 100bp of rate cuts this year which is substantially more than investors are anticipating, as inflation looks on …
Is Saudi Arabia moving away from China’s orbit? Reports that the US and Saudi Arabia are close to a new security pact would, if confirmed, cause us to re-evaluate our view of the Kingdom’s alignment in a fracturing global economy. Prior to the start of …
The revolution in remote work has not been kind to the office sector. But smaller, higher quality offices have performed relatively well over the past couple of years. With fewer workers in the office firms have been able to cut space requirements and …
With downtowns generally suffering most from the growth in remote work, the hardest-hit cities such as San Francisco are now seeing this impact other revenue streams too, not least tourism. While there are promising signs that conversions from office to …
External demand still weak Despite the slump in March, export volumes grew strongly over the first quarter and net trade appears to have been behind about half of the likely 2.5% annualised rise in first-quarter GDP. Nonetheless, the fall in March and the …
Euro-zone construction output picked up at the beginning of this year but we don’t think this was the beginning of a sustained rebound. Surveys suggest that output will decline in the next few months, and while rate cuts should support a recovery later in …
Slight hawkish shift at the CNB, but rates to fall further than most expect The communications accompanying the decision by the Czech National Bank (CNB) to cut its policy rate by 50bp again today (to 5.25%) were slightly more hawkish than expected, but …
Deficit narrows; Productivity growth stalls The trade deficit narrowed slightly in March to $69.4bn, from $69.5bn, with exports down by 2.0% m/m and imports falling by 1.6%. The $5.1bn decline in goods exports included a $1.2bn drop in civilian aircraft …
While Chinese lending to Africa has fallen sharply from its peak last decade, China will remain a big player in the region’s external financing – particularly if some of the foreign exchange generated by China’s enormous trade surplus is recycled in …
Korea is one of the few countries in the region where inflation is still above target. However, with economic growth set to slow and the government stepping up efforts to bring food prices down, we expect the headline rate to fall back to target by the …
On Tuesday we held a Drop-in on the outlook for the German economy. This Update summarises the key points that we discussed and answers some of the questions that we received during the event. 1. Do the Q1 GDP data mean Germany is out of recession? The …
PMI bounces as electricity supply improves South Africa’s manufacturing PMI jumped in April, adding to signs the economy is finally moving on from stagnation as the electricity situation improves. And with price pressures still elevated, the SARB looks …
We envisage cyclical sectors generally continuing to outperform defensive ones in the S&P 500 through the end of 2025. That reflects our view about the economic outlook; our expectation that hype around artificial intelligence (AI) will grow; our forecast …
The weakness in euro-zone investment in Q1 highlights that the pricing correction to date has not been enough to entice investors back to the sector. Lower market interest rates will support the recovery in H2, but we expect further rises in property …
Strong Q1 growth masks lacklustre domestic recovery Hong Kong’s GDP surprised to the upside in Q1, expanding by 2.3% q/q, up from a downwardly-revised 0.4% q/q in Q4 (the Bloomberg median was +0.9 and out forecast was +0.8%). While growth slowed in y/y …
Rapid growth in unit labour costs poses an upside risk to core inflation in many advanced economies. However, firms’ pricing power is weakening and we think that it will continue to do so. As a result, higher labour costs will not be passed on in full and …
This page has been updated with additional analysis since first publication. Industry dragging on the CEE recovery The weak set of manufacturing PMIs out of Central and Eastern Europe (CEE) for April suggest that industrial sectors remained a drag on the …
We’ll be discussing the outlook for Bank of England policy in a 20-minute online briefing at 3pm BST on Thursday 9 th May. (Register here .) Rates on hold at 5.25% and Bank unlikely to provide a strong hint first cut will be soon Faster fall in inflation …
Swiss CPI jumps, but will fall in the coming months The jump in Switzerland’s inflation rate in April was largely due to increases in the volatile food and fuel components. While the data increase our confidence that the SNB will not cut interest rates at …
The PMIs from Emerging Asia remained weak in April. We think manufacturing activity across most of Asia will remain subdued in the near term but output in Taiwan and Korea is likely to hold up better than that in the rest of the region. The weighted …
Fed biding its time Fed Chair Jerome Powell argued in his post-FOMC press conference that, despite the stickiness of inflation in recent months, additional interest rate hikes were still “unlikely”. Moreover, while he admitted that the strong start to the …
1st May 2024
Fed statement acknowledges inflation rebound; announces QT taper The Fed admitted in the statement issued after today’s FOMC meeting that “in recent months, there has been a lack of further progress toward the… 2% inflation objective”. Otherwise, today’s …
Dollar’s strength not a threat to US economy The dollar’s rise is attracting a lot of attention, but is nowhere near big enough yet to have any significant impact on US inflation, although it does appear to be weighing on exports. In real trade-weighted …
Chinese policymakers won’t risk reliving the turmoil of 2015 by engineering a sudden devaluation of the renminbi . They may allow the currency to weaken gradually over the coming years to help industry deal with oversupply or to offset the impact of new …
We doubt the recent rise in US bond yields will continue much further, or significantly undermine the prospects of US equities. The 10-year Treasury yield has fallen back a bit today ahead of the FOMC’s policy announcement, as the US Treasury’s Quarterly …
This interactive dashboard allows you to explore all of our forecasts and key data for major economies. If you have subscriber access to the data underlying this redesigned dashboard, you can download it via the menu options in the top right of each chart …
The March JOLTS data showed clearer signs that labour market tightness is continuing to ease. Slower downward progress in wage growth could be concerning, but for now it still appears to be moving broadly in line with the forward-looking indicators, which …
Manufacturing struggling for momentum The fall in the ISM manufacturing index back below the theoretical 50.0 no-change level in April suggests that the nascent recovery in the manufacturing sector may already have gone into reverse. While the further …
This Rapid Response has been updated with additional analysis, as well as a chart and table of key data. Growth to strengthen over 2024 Saudi Arabia’s flash estimate of GDP showed that the economy exited recession in Q1 and we expect the recovery to …
Higher mortgage rates continue to hit prices The second consecutive decline in the Nationwide house price index in April confirms that the rise in mortgage rates since the start of the year will prevent further near-term price gains. But as we think Bank …
House prices continue to temper their gains The housing rebound that began early last year continued to lose momentum in April. With affordability likely to remain stretched for the foreseeable future, house price growth will only ease further in the …
This page has been updated with additional analysis since first publication. Spare capacity continues to open up in the labour market The labour market loosened more forcefully than we had expected in Q1. With subdued activity weighing on labour demand, …
30th April 2024
The US dollar has made further gains against most major currencies over the past month or so. Interest rate expectations have continued to pick up in the US and in most places outside Asia, weighing particularly on that region's currencies (prompting …
We think that the recent weakness in the Mexican peso was partly a symptom of stretched positioning. Given that risk premia still appear unusually low and the outlook for the “carry trade” is gradually worsening, we think that the peso will depreciate …
The anti-dumping duties that the EU is likely to impose on Chinese imports in the coming months will have little macroeconomic impact. But more goods will be targeted in the next couple of years with significant implications for some sectors and …
South Africa’s general election on 29 th May is likely to be the most consequential for its economy and financial markets since the end of Apartheid. With the ANC set to lose its majority, how should investors be preparing for the approach of coalition …
We expect equities to outperform most other assets as a bubble fuelled by AI-enthusiasm continues to inflate, supported by a backdrop of resilient economic growth and monetary easing cycles. In particular, we expect US equities to continue to lead the …
China’s PMI surveys for April suggest the economy continues to grow at a faster pace than a few months ago which is providing support for commodity demand. Today’s Politburo statement signalled that the policy support that has lifted the economy will be …
While we expect Chinese bonds and equities to make more gains in the near term, w e think the outlook further ahead is not as bright for the latter. Chinese government bonds have been quite volatile in recent days. The 10-year yield recorded on Friday one …
Is progress stalling on efforts to get inflation under control? Why are price pressures proving more stubborn than expected? When will central bankers get the genie back in the bottle? Our Global Economics team hosted an online briefing about the global …
Momentum in house prices continues The substantial shortage of existing homes for sale fueled a robust 0.4% m/m rise in house prices in February, consistent with our above-consensus call that house price growth will end 2024 at 5% y/y. The increase in the …
Strong Q1, but growth likely to slow in the second quarter Despite the weaker-than-expected rise in GDP in February, first-quarter growth still looks to be close to 2.5% annualised. The weaker flash estimate for March points to less momentum going into …
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. EM risks ease further, but fiscal risks remain acute Higher US bond yields and a stronger dollar have put some EM …
Wage growth now looks a little sticky too The persistence of wage growth is another reason for the Fed to take its time on rate cuts. According to the first-quarter employment cost index, civilian wages increased at a 1.1% non-annualised pace and the …
Emerging Asia Chart Pack (April 2024) …
