The Central Bank of Nigeria’s (CBN) monetary policy reforms have injected a welcome dose of momentum back into the country’s policy shift. But the minutes to the latest MPC meetings also suggest that a slowdown in growth could prompt a (premature) shift …
24th April 2024
Our China Activity Proxy (CAP) suggests the economy saw a healthy expansion in March, driven by the continued strength of industry. While we think that fiscal support will keep fuelling the economy in the near-term, structural headwinds will start to drag …
You can use the "Table of Contents" feature, found on the top right of the webpage, to navigate this publication quickly. Summary: The rally in equities over the past year or so, driven in no small part by hype around AI, has left stock markets looking …
In a surprise move, Bank Indonesia (BI) today hiked its main policy rate by 25bps (to 6.25%) and made clear that supporting the currency would remain its key priority over the coming months. But there is a good chance this will be a case of “one and …
While EM policymakers haven’t raised concerns about Chinese overcapacity in the same way that their counterparts in the US and Europe have, they too are facing widening trade deficits with China. We suspect EMs will be less likely than DMs to turn to …
This page has been updated with additional analysis since first publication. Signs of life for the German economy The rise in the German Ifo in April, together with the jump in the Composite PMI in the same month, suggests that the German economy may be …
Hike aimed at supporting the currency In a surprise move, Bank Indonesia (BI) today hiked its main policy rate by 25bps (to 6.25%), and made clear that supporting the currency would remain its key priority over the coming months. However, with …
The latest activity data suggest that GDP contracted at the start of the year, but a rebound is very likely over the coming quarters. Goods inflation should keep slowing rapidly, but strong wage growth will keep inflation above the BoJ’s target for most …
Upside inflation surprise bodes poorly for rate cuts With price pressures proving inordinately resilient, there is little scope for the Reserve Bank of Australia to start loosening policy in the near future. The 1.0% q/q rise in consumer prices in Q1 was …
Although the BLS’s new tenant rent index has overstated the speed of the slowdown in shelter inflation, the leading indicators remain unanimous in their message that the slowdown is still coming. Despite some larger monthly rises in core goods and …
23rd April 2024
The latest e-commerce statistics suggest that the pandemic has left US online sales on a permanently higher trend. That will be bad news for retail rents generally, though the detailed data also hint that there may have been a return to physical shopping …
We expect corporate bond yields in the UK and euro-zone to fall as rate cuts in those economies push down risk-free rates and strong risk sentiment narrows spreads further. In contrast to the weaker-than-expected PMI data out of the US today, PMIs for …
The latest flash PMIs suggest that GDP growth picked up in most advanced economies at the start of Q2. But stronger services activity risks keeping price pressures elevated in some DMs. The flash PMIs for April suggest that economic activity picked up in …
Largest increase in new home sales in over a year The large uptick in new home sales in March is consistent with our above-consensus prediction that sales of new homes will climb to 750,000 by year end. The 8.8% rise in new home sales in March took them …
Prime office rent growth in Scandinavia is expected to moderate in the coming years as soft demand and rising supply push up vacancy. But having trailed the other Scandinavian cities in 2023, we think that tighter supply could help rent growth in Oslo …
If sustained, the recent rises in market interest rate expectations and gilt yields may mean that the Chancellor has only around £5bn of fiscal headroom, down from £8.9bn in the March Budget, with which to fund further tax cuts before the next election. …
This publication has been updated with additional analysis since the post-meeting press statement and press conference. MNB shifting down the monetary easing gears The communications accompanying the decision by the Hungarian central bank (MNB) to opt for …
The better-than-expected budget figures out of Argentina at the start of the year are undoubtedly good news and show that the fiscal adjustment is happening more quickly than we’d expected. That said, many of the factors that have helped to flip the …
Geopolitical risk may be ever-present in global commodity markets, but it’s arguably been an even bigger driver over the past year or so. With little sign of an end to conflict in Ukraine and the Middle East, how should investors be gauging the influence …
Germany is in crisis. Even as near-term drags on growth are set to fade, its economy is being buffeted by a host of forces that threaten to leave it struggling through the rest of this decade. How will an aging population, high energy costs and a …
A resurgent nuclear power sector in Japan and a continuously growing one in South Korea coupled with an expansion in renewable power capacities will ensure both countries’ LNG demand will fall throughout the rest of this decade. All this supports our view …
South Africa’s upcoming general election looks likely to result in a much more fragmented parliament and mark a shift to coalition government. The lesson from elsewhere in the emerging world is that this can often lead to a worsening fiscal position. …
The rapid expansion in China’s manufacturing capacity of green technology is a symptom of the country’s investment-led growth model and so there is no reason to believe that any change in tack is imminent. Against this backdrop, western governments will …
Weak end to Q1 Poland’s weaker-than-expected activity data for March suggest the risk to our forecast for GDP growth of 2.5% y/y in Q1 (up from 1.0% y/y in Q4) are tilted to the downside. While we maintain our above-consensus GDP growth forecast of 3.0% …
Euro-zone coming out of recession The bigger-than-expected increase in the Composite PMI for April suggests that the euro-zone is coming out of recession, but this will not prevent the ECB from cutting interest rates in June. The increase in the euro-zone …
The UAE’s economy outperformed the other Gulf economies in 2023 and we think that this outperformance will continue this year. While we are still waiting for the full 2023 GDP data from the UAE, we can piece together the data from Abu Dhabi and Dubai, the …
This page has been updated with additional analysis since first publication. Easing services prices may encourage BoE to cut rates in the coming months Although the unexpected rise in the composite activity PMI in April suggests the economy grew faster at …
This page has been updated with additional analysis since first publication. Limited scope for tax cuts March’s public finances figures show that public borrowing in 2023/24 came in £6.6bn higher than the OBR predicted only a month ago, casting further …
This page has been updated with additional analysis since first publication. Activity strong on eve of election The flash composite PMI reading for April suggests that the strength of economic activity over the past few quarters has continued through to …
A week spent visiting client s, contacts and friends in Beijing and Shanghai has underlined the extent of the pessimistic shift in sentiment within China. At first glance, China’s economy is doing fine . The streets of Beijing and Shanghai are bustling …
We now expect services inflation to remain around 2% this year as a fading tailwind from soaring hotel and package tour prices will be offset by stronger labour cost growth. The upshot is that the Bank of Japan will probably lift its policy rate once more …
This page has been updated with additional analysis since first publication. A strong rebound in Q2 GDP is likely The composite PMI continued to rise strongly to a eight-month high in April, suggesting that a strong rebound is on the cards for Q2 GDP …
Stock markets are having a tough start to the quarter, but we think that they will rebound, notably in the US, thanks to renewed enthusiasm about artificial intelligence (AI). While they have bounced back a bit today, equities in the US and elsewhere have …
22nd April 2024
New more granular MSCI data shows that the outperformance of residential property over the past decade was primarily down to student housing. Indeed, only in the past couple of years have multifamily returns exceeded that of all property. But with overall …
A weak labour market and high interest rates will continue to weigh heavily on Korea’s consumer sector this year. The poor prospects for consumer spending is one of the main reasons we think overall GDP growth will remain subdued. Korea’s recovery from …
Recent currency falls and higher oil prices are unlikely to put significant upward pressure on consumer prices across Asia. We continue to expect inflation in the region to remain low over the coming year. Consumer price inflation has fallen back sharply …
The past few weeks have brought a flurry of data and speeches from central bankers. What have we learned about the health of the global economy and the outlook for monetary policy? It’s important not to place too much weight on a single data point, …
Despite another large y/y fall in green technology export values from China in March, falling solar panel and battery prices mean that China’s export volumes of the so-called “New Three” were close to the peak recorded in September 2023. After the 12.8% …
Bank will probably revise up its inflation forecasts at upcoming meeting Ueda sounds keen on another rate hike However, window for tightening is closing as underlying inflation set to fall below 2% Governor Ueda sounds keen in tightening policy further …
Financial markets have largely taken the latest escalation in the Middle East over the past week in stride. Having spiked from $87pb to $90pb on the news of today’s attack, Brent crude oil has now fallen back to below $88pb. Similarly, the big moves in …
19th April 2024
Protectionism seen as a vote winner by both parties After Fed Chair Jerome Powell acknowledged this week that there has been a “lack of further progress” on lowering inflation this year, markets dialled back rate cut expectations, with the first 25bp …
Will the naira’s rebound last? The sharp recovery in the naira in recent weeks has been somewhat of a surprise and it has come at the expense of a steep decline in FX reserves. Without substantial improvements in the current account position or capital …
All nine constituents of the S&P 500 diversified banks index have now released their earnings reports for Q1. While the performance of their shares has typically been underwhelming of late, in some cases that can be only partly attributed to the lukewarm …
GDP breakdown points to stronger services activity The better-than-expected Q1 GDP figures released earlier this week added to wider evidence that the economy has regained some momentum recently. The detailed sectoral breakdown, published a day after the …
In a week that started with Iran’s drone and missile attack on Israel and which ended with Israel’s retaliatory strike on Iran , it is somewhat surprising that the price of Brent crude fell by over 3% w/w. It would be easy just to explain the move by …
Budget 2024 made a bit of a splash thanks to the unexpected changes to capital gains taxes, but we do not think the new net spending measures were large enough to change the outlook for GDP growth or interest rates this year. The encouraging March CPI …
Currency falls another headache for central banks The reassessment of interest rate expectations in the US combined with tensions in the Middle East has put substantial downward pressure on EM currencies this week, with some in Latin America hit …
Tensions increase, but hopes for de-escalation Tensions between Israel and Iran ratcheted up this week as both sides launched military strikes at one another, raising concern about a broader regional conflict. (Read our research here .) Following Iran’s …
