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In recent years, and particularly since the start of the pandemic, the pressure on central banks to address climate change has increased. This Update considers the potential implications for financial markets of some of the changes they have made until …
8th April 2021
Minutes from the Fed’s March meeting could reveal strength of the dovish consensus Sweden’s activity data likely to have held up reasonably well in February (08.30 BST) Energy base effects probably drove a sharp rise in Mexico’s inflation last month …
7th April 2021
PMIs in Spain and Italy probably rose in March We think the US trade deficit widened in February (13.30 BST) FOMC minutes may provide some indication of how strong dovish consensus is (19.00 BST) Key Market Themes While any changes to the US tax code may …
6th April 2021
We expect US non-farm payroll to have increased by 700,000 in March (Fri. 2 nd April) Fed and ECB minutes may shed more light on the central banks’ latest thinking (Wed. & Thu.) We think central banks in India and Poland will keep their policy rates on …
1st April 2021
We have become more pessimistic about the outlook for emerging market (EM) assets and currencies as we now expect the 10-year US Treasury yield to rise further over the next two years . EM assets and currencies have come under pressure recently. (See …
We now think that 10-year government bond yields in most developed markets (DMs) will rise further. However, we think that they will climb more rapidly in the US than elsewhere in the developed world. As such, we have revised up our forecast for the US …
31st March 2021
Euro-zone inflation probably increased in March and is likely to keep rising (10.00 BST) We expect the ADP employment report to point to a 700,000 gain in US non-farm payrolls US President Biden to unveil plans for a major infrastructure spending package …
30th March 2021
Japan’s unemployment rate probably stayed low in February (00.30 BST) Euro-zone economic sentiment may have improved this month (10.00 BST) Join us for a Drop-In on the Swiss franc on Tuesday (15.00 BST) Key Market Themes We expect a further divergence in …
29th March 2021
We have recently revised up our end-21 and end-22 projections for the US ten-year Treasury yield, which has prompted us to revise down our forecasts for emerging market (EM) assets and currencies. To recap, we had previously expected EM equities to rise …
26th March 2021
We now expect that the US dollar will strengthen somewhat over the next couple of years as the US economy outperforms and its policy mix diverges from that in most other major economies. Last year, the US dollar went through two distinct phases. The …
High frequency data point to an upturn in UK retail sales volumes in February (07.00 GMT) We expect Germany’s IFO Business Climate Index to have risen in March (09.00 GMT) US real consumption likely to have fallen temporarily last month (12.30 GMT) Key …
25th March 2021
Philippines’ central bank unlikely to cut rates despite economic weakness (08.00 GMT) We think that inflation in Brazil rose sharply earlier this month (12.00 GMT) Falling inflation in South Africa probably rules out a rate hike this week (13.00 GMT) Key …
24th March 2021
In light of our revised forecasts for long-term US Treasury yields, we have raised our forecasts for the yields of 10-year government bonds in most other developed markets. But in most cases we doubt they will rise by as much as yields in the US. We …
We think that UK consumer price inflation nudged up in February (07.00 GMT) Euro-zone composite PMI likely to have declined slightly (09.00 GMT) Severe weather probably weighed on US durable goods orders last month (12.30 GMT) Key Market Themes It is a …
23rd March 2021
We think that the UK’s unemployment rate held roughly steady in January (07.00 GMT) Hungary’s central bank not likely to tighten, despite above-target inflation (13.00 GMT) Key Fed speakers will probably reiterate Powell’s dovish line Key Market Themes …
22nd March 2021
Unlike Brazil, Turkey & Russia, we think most other EM central banks will put off hiking We think flash PMIs in the UK and the euro-zone will point to activity remaining subdued The fall in US personal income & spending in Feb. will probably be reversed …
19th March 2021
The sharp rise of US yields in response to this year’s shift in US fiscal policy and rapid progress on vaccinations – and the Fed’s apparent willingness to accept higher long-term interest rates – have prompted us to raise our end-2021 and end-2022 …
The BoJ may tweak some of its policy settings, including its yield curve target tolerance band UK government borrowing is likely to have remained high in February (07.00 GMT) We expect Russia’s central bank to keep its policy rate on hold at 4.25% (10.30 …
18th March 2021
Fed’s Powell likely to reiterate dovish message (18.00 GMT, Wed.) We expect Turkey’s central bank to hike its one week repo rate by 100bp (11.00 GMT, Thu.) BoE could emphasise dovish rates guidance, but not likely to up QE buying (12.00 GMT, Thu.) Key …
17th March 2021
We had expected Brazil’s stock market to be among the best performers in the world this year, but with the virus still running rampant and populist policymaking on the rise, we now think its underperformance will continue for some time. In general, we …
Headline inflation in Canada likely edged up in February (12.30 GMT) We think the Fed will reaffirm its intention to keep policy accommodative (18.00 GMT) We expect that Brazil’s central bank will start tightening policy with a 50 bp hike (21.00 GMT) Key …
16th March 2021
Despite the recent turmoil in bond markets, we continue to expect developed market (DM) equities to gain ground in the rest of this year as real yields remain quite low and economic growth stays strong . DM equities have held up well recently, despite …
Severe weather probably weighed on US retail sales in February… (12.30 GMT) … but industrial production may have held up slightly better (13.15 GMT) Fed, BoJ and BoE meetings this week may shed more light on their thinking about rise in yields Key Market …
15th March 2021
We think that high FX-hedged yields on 10-year US Treasuries will encourage more purchases from non-US investors and may help to limit the rise in US government bond yields even as the economy recovers. Since the start of the year, the prospects for the …
12th March 2021
We expect the Fed to reiterate that policy tightening is still far away (Wed.) Central banks in Brazil and Turkey look likely to hike their policy rates (Wed. & Thu.) US industrial production and retail sales growth probably weakened in February (Tue.) …
UK economy is likely to have contracted by 3% m/m in March (07.00 GMT) We think that euro-zone industrial production grew by 0.7% m/m in January (10.00 GMT) US consumer confidence probably rose in early March (15.00 GMT) Key Market Themes The ECB ’s …
11th March 2021
Just as we expect China’s economy to slow later this year even as growth picks up rapidly elsewhere, we think China’s financial markets could stand out from those in the rest of the world in the coming months. This year we forecast a significant contrast …
US House of Representatives set to give final approval to Biden’s stimulus package later today We think inflation in Brazil rose in February, pointing to a rate hike next week (12.00 GMT) The ECB’s policy meeting likely to focus on how it responds to …
10th March 2021
Risks to Brazil’s sovereign bond market building Bank of Canada likely to reiterate commitment to keep policy loose for a long time We think that consumer price inflation picked up in the US, but remained subdued in China Key Market Themes We doubt the …
9th March 2021
We think that the recent outperformance of the MSCI Japan Index relative to the MSCI USA Index will continue as the world slowly gets back to normal. After lagging for most of 2020, the MSCI Japan Index has been one of the best-performing developed market …
The US Senate is likely to pass President Biden’s $1.9 fiscal stimulus over the next few days We think credit growth in China softened, consistent with activity slowing later in 2021 (Sun.) The BoE and ECB will probably respond to higher yields with …
5th March 2021
The rise of government bond yields in the US and other developed markets (DMs) this year has made a significant impact on currency markets and, if it continues, would challenge our forecast for a weaker dollar. For most of last year, the primary driver of …
We expect US non-farm payrolls to have risen by 500,000 in February (13.30 GMT) China’s government to present budget as National People’s Congress kicks off Read our highest-conviction macroeconomic and financial market forecasts here Key Market Themes We …
4th March 2021
We don’t expect the recent rise in US bond yields to turn into a rerun of the 2013 Taper Tantrum. But even if US real yields continued to grind higher, we think that EM assets and currencies would be better placed to cope than in 2013 . The recent …
Virus restrictions probably weighed on euro-zone retail sales in January (10.00 GMT) We expect Malaysia’s central bank to cut its policy rate by 25bp (07.00 GMT) View our highest conviction macro calls and their market implications here Key Market Themes …
3rd March 2021
A fresh allocation of IMF Special Drawing Rights (SDRs), if implemented, would provide a welcome boost to the depleted foreign exchange reserves of some distressed frontier economies. But an allocation wouldn’t address underlying dire debt dynamics, …
UK Budget likely to focus on further economic support, not tax hikes (12.30 GMT) US ISM services index probably edged up in February (15.00 GMT) We expect the central bank of Poland to cut its policy rate by 10bp, to 0.00% Key Market Themes While the …
2nd March 2021
The RBA may push back against expectations of policy tightening at its meeting (03.30 GMT) We think euro-zone inflation picked up in February (10.00 GMT) Canadian GDP probably continued to grow in December despite lockdowns (13.30 GMT) Key Market Themes …
1st March 2021
The US ISM Manufacturing Index probably remained strong in February (Mon.) The UK Budget is likely to focus on extending support rather than deficit reduction (Wed.) We think that US non-farm payrolls rose by 500,000 in February (Fri.) Key Market Themes …
26th February 2021
Given our latest forecast for oil prices, we now expect the Canadian dollar to rise further in 2021 than we previously thought, but to drop back a bit in 2022. Despite already rising more than 15% against the US dollar from the last year’s low, we think …
25th February 2021
Even if nominal government bond yields kept rising this year, we suspect that this would be driven by rising inflation compensation rather than real yields, in contrast with the past couple of weeks. Chart 1 breaks down the increases in 10-year government …
India’s economy was probably around 1% smaller than a year earlier in Q4 (12.00 GMT) We think that US personal income and spending surged in January (13.30 GMT) View our highest conviction macro calls and their market implications here Key Market Themes …
The pound has performed better than all other G10 currencies so far in 2021 (see Chart 1), rising from $1.36 at the start of January to almost a three-year high of $1.41 now. We expect the strength of sterling against the US dollar to continue and have …
24th February 2021
We still expect emerging market (EM) “risky” assets and currencies to make further gains this year, despite growing concerns about another “taper tantrum”. EM assets and currencies have made significant gains since their troughs last year. And we think …
23rd February 2021
We think the RBNZ will not cut rates tomorrow, and that its easing cycle is over (01.00 GMT) Inflation probably rose in Brazil and Mexico in the first half of February Read our highest conviction macro calls and their market implications here Key Market …
While we expect that EM currencies in general will rise further this year due to strong appetite for risk and a recovering global economy, we think several headwinds will limit their appreciation. For a start, EM currencies as a group have already …
19th February 2021
Johnson to set out how COVID-19 restrictions in the UK will be eased (Mon.) South Africa’s government not likely to announce end of austerity in budget speech (Wed.) Biden could unveil further details of fiscal plans at State of the Union Address (Wed.) …
Retail sales in the UK probably edged down in January due to virus restrictions (07.00 GMT) Euro-zone flash PMIs likely to show manufacturing activity remains resilient… (09.00 GMT) …while flash PMIs in the US are likely to point to a strong recovery …
18th February 2021
In our view, central banks’ cautious approach to tightening means that the yields of 10-year government bonds will rise only slowly in the next few years, even as the global economy recovers further. Since the last DM Markets Chart Book on 16 th December, …
We expect Bank Indonesia to cut its policy rate by a further 25bp… (07.20 GMT) …but the rally in the lira may convince Turkey’s central bank to stand pat (11.00 GMT) Euro-zone consumer confidence probably remained in the doldrums in February (15.00 GMT) …
17th February 2021
