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While the valuations of emerging market (EM) equities look high relative to their past levels we don’t think that this will necessarily prevent them from rising further, provided that the continued spread of the coronavirus pandemic doesn’t derail the …
15th July 2020
ECB to leave its policy setting unchanged but reiterate that it is willing to do more (12.45 BST) We think that US retail sales rose by 5.3% m/m in June (13.30 BST) China’s GDP probably expanded by 3.0% y/y in Q2 (03.00 BST) Key Market Themes Yesterday’s …
A handful of frontier market governments have issued Eurobonds over the past few months, but these could create vulnerabilities further down the line, particularly in Egypt, Ukraine and Bahrain. Moreover, many frontiers remain locked out of global capital …
14th July 2020
China’s import data are likely to point to stronger domestic demand in June Activity in the UK and Euro-zone probably rebounded in May (07.00 BST & 10.00 BST) We think core consumer prices in the US ticked up last month (13.30 BST) Key Market Themes The …
13th July 2020
Global economic and market analysis from Capital Economics We think that the BoC, the BoJ, Bank of Korea and the ECB will stand pat (Wed. & Thu.) … … but expect the central bank of Indonesia to cut its policy rate by another 25bp (Thu.) Spending & …
10th July 2020
Despite talk of a bubble in “risky” assets, we do not think that their valuations are particularly stretched and will prevent them from gaining further ground over coming months . As the prices of risky assets have continued to recover over the past few …
We think employment in Canada increased by an above-consensus 1m in June (13.30 BST) Brazil’s headline inflation likely to have risen from 1.9% to 2.2% in June (13.00 BST) We expect US producer prices to have rebounded in June (13.30 BST) Key Market …
9th July 2020
Eurogroup meeting could provide further details on the EU’s €750bn recovery fund We think that China’s inflation ticked up in June (02.30 BST) US initial jobless claim figures may suggest the economic recovery is losing steam (13.30 BST) Key Market Themes …
8th July 2020
While we remain optimistic about the outlook for equities and other risky assets, the rapid increase in new coronavirus cases, especially in the US, poses a key downside risk to our generally optimistic forecasts. As we set out here , our forecasts for …
News that a major US shale oil producer filed for bankruptcy last week has raised concerns about a new wave of coronavirus-induced corporate defaults. But even if the default rate does pick up in the coming months, we don’t think this will prevent credit …
7th July 2020
UK government set to announce further fiscal stimulus measures Russia’s headline inflation likely to have risen from 3.0% to about 3.3% in June (17.00 BST) We think Norway’s GDP rebounded by 10% m/m in May (07.00 BST) Key Market Themes The yield of …
We expect the composite PMIs for Spain & Italy to have rebounded in June… … and the euro-zone composite PMI to be revised up from its flash estimate (09.00 BST) Turkey’s headline inflation probably edged up from 11.4% to 11.5% in June (08.00 BST) Key …
2nd July 2020
We think that US non-farm payrolls rose by 5 million in June (13.30 BST) The euro-zone unemployment rate probably rose from 7.3% to 7.6% in May (10.00 BST) We expect Swiss core inflation to have remained in negative territory last month (07.30 BST) Key …
1st July 2020
Sweden’s Riksbank likely to stand pat on Wednesday, but cut rates later this year (07.30 BST) The ISM manufacturing survey will probably point to a strong rebound in June (15.00 BST) The Fed’s June minutes may give further clues on yield curve control …
30th June 2020
We continue to think that central bank backstops make a re-run of the March panic in financial markets unlikely, a key assumption underpinning our view that “risky” assets will recover further ground in the second half of 2020. While equity markets have …
China’s official PMIs will probably show that infrastructure construction accelerated We think that US consumer confidence rebounded in June (15.00 BST) Colombia’s central bank is likely to cut its policy rate to 2.25% (16.00 BST) Key Market Themes The …
29th June 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
While the euro and many euro-zone assets have rallied significantly over the past two months, we think that there is scope for them to make more headway this year . To recap, during this period the euro has gained ground against the US dollar and is now …
26th June 2020
We think that real personal spending in the US increased by 12% m/m in May (13.30 BST) ECB data to reveal whether bank lending growth in the E-Z continued to rise in May (9.00 BST) We expect Mexico’s central bank to cut its policy rate by 50bp to 5.00% …
25th June 2020
We think that central banks in Turkey, Egypt and Mexico will cut rates further … … but expect monetary policymakers in the Philippines to remain on hold (09.00 BST) US equipment investment may have started to rebound in May (13.30 BST) Key Market Themes …
24th June 2020
With monetary policy likely to remain loose for a very long time and the world’s largest economies gradually re-opening, we think that developed market (DM) “risky” assets will continue to recover from their pandemic-induced Q1 slump. To reflect this, we …
The odds that Joe Biden wins this year’s US presidential election, and that the Democrats also win full control of Congress, have risen recently. While we expect US equities to fare reasonably well over the next few years regardless of the result of the …
22nd June 2020
We think that the Markit Flash PMIs will show a marked improvement from May … … especially in the US where we forecast both PMIs to be above 50 Hungary’s central bank is likely to stand pat for now, but more easing is coming in our view Key Market Themes …
If we are right that commodity prices will make up more ground as economies continue to reopen, the rally in commodity currencies may have further to go. Australia, Canada, New Zealand and Norway are heavily reliant on exports of commodities (see Chart …
19th June 2020
Flash PMIs are likely to suggest that economic recoveries continued in June We expect central banks in Mexico, Turkey, Thailand and Egypt to cut rates next week… …but those in New Zealand, the Czech Republic, Hungary and the Philippines to stand pat Key …
EU leaders set to discuss the EC’s proposal for a €750bn joint recovery fund (09.00 BST) Russia’s central bank is likely to cut its policy rate to a post-Soviet low of 4.50% (14.00 BST) May UK retail sales data to give first indication of the speed of the …
18th June 2020
While much of the rebound in EM currencies is now probably behind us, we think that many of them will rise a bit further against the US dollar as risky assets generally continue to recover. (See Chart 1.) We have revised up our forecasts for many emerging …
17th June 2020
We think that central banks in Brazil, Indonesia and Thailand will cut their policy rates further The Bank of England is likely to expand its QE programme by £100bn (12.00 BST) US initial jobless claims probably fell further last week (13.30 BST) Key …
While we think that much of the rebound in emerging market (EM) currencies is now behind us, we still expect that most of them will make a bit more headway against the dollar in the second half of the year. Last week we revised down our forecast for the …
16th June 2020
Central bank of Brazil likely to cut its policy rate by 75bp to 2.25% We think that headline inflation fell from 0.8% to 0.6% in the UK last month … (07.00 BST) … and that it remained in negative territory in Canada (13.30 BST) Key Market Themes Even if …
US retail sales and industrial production probably rebounded in May (13.30 BST & 14.45 BST) We expect the Bank of Japan to expand its lending schemes Central banks in Poland and Chile likely to stand pat on Tuesday Key Market Themes Concerns about a …
15th June 2020
BoE likely to announce more QE, while BoJ may expand its lending programmes We think US retail sales rebounded in May (Tuesday) Fiscal stimulus probably pushed up China’s investment growth in May (Monday) Key Market Themes Neither the Fed ’s latest …
12th June 2020
We now expect that the US dollar will depreciate further as risky assets resume their rebound and the global economy recovers from the coronavirus pandemic. At the start of the year, we forecast that the dollar would strengthen further in 2020 as …
We expect a 20% m/m drop in UK’s GDP in April (07.00 BST) Euro-zone’s industrial production is likely to have plunged in April (10.00 BST) The University of Michigan consumer confidence index probably continued to rebound in June Key Market Themes We …
11th June 2020
With monetary policy likely to remain loose for a long time and the world’s largest economies gradually re-opening, our view remains that equity markets will continue to make ground over the coming years. Back in March , when global equities were down by …
While sovereign bond yields in most developed markets are unlikely to reach new lows and, in our view, will stay around their current levels for some time, local-currency sovereign bond yields in some emerging markets could yet fall further, especially if …
5th June 2020
Fed likely to strengthen its forward guidance on interest rates (Wednesday) China’s exports probably fell by 2.0% y/y in May (Sunday) We think that Brazil’s headline inflation fell from to 2.4% to just 1.8% in May (Wednesday) Key Market Themes Today’s far …
Germany’s industrial orders for April are likely to have slumped (07.00 BST) US non-farm payrolls probably fell by 9 million in May (13.30 BST) We think that inflation in Russia picked up a bit, but remained below target (14.00 BST) Key Market Themes The …
4th June 2020
We think the ECB will expand its asset purchases under the PEPP (12.45 BST) US jobless claims figures could point to the labour market turning a corner (13.30 BST) Deflation in Switzerland probably deepened in May (07.30 BST) Key Market Themes The …
3rd June 2020
We think that the euro-zone’s unemployment rate jumped in April, despite retention schemes Bank of Canada may announce an expansion to its corporate bond purchases (15.00 BST) US ISM non-manufacturing index likely to have bounced back only slightly in May …
2nd June 2020
Strains on the financial system have eased further as central banks have continued to backstop key markets. In our view, their support will remain essential to maintaining that calm and sustaining the recovery in risky assets as economies gradually …
May PMIs likely to show activity is recovering in most economies, albeit slowly (Mon.-Wed.) We expect the ECB to agree a further €500bn of asset purchases and an extension of the PEPP US non-farm payrolls may have fallen by a further 9 million in May …
29th May 2020
Additional stimulus from China strengthens our view that the rebound in equities will continue, especially in emerging markets. But the effect is unlikely to be as big as in 2008-09, and China’s increasingly-tense relationship with the US risks …
We think US real personal spending fell by about 14% m/m in April (13.30 BST) We expect euro-zone headline inflation to have held steady at 0.3% in May (10.00 BST) Japan’s unemployment rate is likely to have risen from 2.5% to 2.8% in April (00.30 BST) …
28th May 2020
The EC’s economic sentiment indicator probably rebounded in May (10.00 BST) We think that policymakers in Poland and Korea will cut their policy rates further US initial jobless claims may have declined to around 2 million last week (13.30 BST) Key Market …
27th May 2020
Although the S&P 500’s rally over the past two months is remarkable, we don’t think that it reflects excessive optimism among investors. In our view, equities can rise further from here. The S&P 500 has risen by over 30% from its intraday low on 23 rd …
European Commission set to publish its proposal for an EU joint fiscal stimulus package The central bank of Korea may launch quantitative easing (Thursday) We think economic sentiment in the US and the euro-zone started to recover in May Key Market Themes …
22nd May 2020
China’s National People’s Congress set to announce 2020 economic targets We think UK retail sales contracted by 30% m/m (07.00 BST) Japan’s headline inflation probably fell to 0.0% in April (00.30 BST) Key Market Themes A lot has been made of the …
21st May 2020
While the rally in developed market (DM) equities has lost some steam over recent weeks, we think that they will make up some further ground in the coming months provided that the global economy starts to recover. We suspect that the stock markets with a …
FOMC meeting minutes to provide further insight into the Fed’s crisis response (19.00 BST) Flash PMIs may indicate what effect the gradual easing of lockdown measures is having We think that Turkey’s central bank will cut rates by a further 50bp (12.00 …
20th May 2020
