This page has been updated with additional analysis since first publication. Resilient activity to encourage BoE to double down on high for longer The rise in the flash composite activity PMI, from 50.7 in November to 51.7 in December, increased the …
15th December 2023
The drop-back in the euro-zone Composite PMI in December provides more evidence that the economy is in recession as domestic and foreign demand contracts. The fall in the euro-zone Composite PMI from 47.6 in November to 47.0 in December left it lower than …
This page has been updated with additional analysis and charts since first publication. Recovery still underway The main bright spot was a healthy pick-up in industrial output thanks to the strength in exports. Retail sales and fixed investment remained …
This page has been updated with additional analysis since first publication. Recession unlikely The composite PMI rebounded in December, which means we think there will unlikely be an incoming recession. The manufacturing PMI edged down further but the …
Rates on hold, February may be too soon for first rate cut Mexico’s central bank left interest rates unchanged at 11.25% again today and there was no further tilt away from the hawkish bias in the accompanying statement. The likelihood that Banxico will …
14th December 2023
A third consecutive decline in sales volumes The slump in manufacturing sales volumes in October suggests that there are downside risks to the flash estimate that GDP rose by 0.2% m/m at the start of the fourth quarter. The 2.8% m/m decline in …
This page has been updated with additional analysis since first publication. Solid consumption growth supports soft landing The rebound in retail sales in November provides further illustration that the continued rapid decline in inflation is not coming …
ECB holding the line for now The ECB’s decision to leave its deposit rate unchanged at 4.0% today and make only limited changes to the policy statement suggests that policymakers are pushing back against market expectations for rate cuts to begin in March …
Few signs Bank of England is starting to contemplate rate cuts The Bank of England sprung no surprises, leaving interest rates at 5.25% for the third time in a row and pushing back against the prospect of near-term interest rate cuts. While the recent …
Rise in inflation likely to be short lived Saudi Arabia’s headline inflation rate rose a touch, from 1.6% y/y in October to 1.7% y/y in November (see Chart 1), which is still low by the standards of the past two years. And we think disinflation will …
Tightening cycle comes to an end Today’s decision by Norges Bank to hike its policy rate by 25bp to 4.50% marks the end of its tightening cycle. Looking ahead, we have pencilled in a faster pace of rate cuts next year than policymakers currently …
SNB leaves rates unchanged, but policy loosening is imminent The SNB kept rates on hold at 1.75% at today’s policy meeting, but the monetary policy statement was dovish as policymakers placed less emphasis on selling FX assets and reduced their inflation …
Taiwan’s central bank (CBC) left its policy rate unchanged again today, but with economic growth set to slow sharply and inflation on its way down, we expect the CBC to start cutting rates from June. The decision to leave the policy rate unchanged, at …
Heading in the right direction The larger-than-expected fall in all the main measures of Swedish inflation in November will not prompt the Riksbank to cut interest rates at its next meeting but it does make us more confident in our call that rate cuts …
Rates on hold, cuts coming sooner than most expect The central bank in the Philippines (BSP) today left its main policy rate unchanged (at 6.50%), and hinted that it would be necessary to keep monetary conditions tight for the foreseeable future. …
This page has been updated with additional analysis since first publication Labour market will continue to loosen Even though employment growth remains strong, job creation isn’t fast enough to absorb the surge in the labour force. Accordingly, we expect …
This page has been updated with additional analysis since first publication. Domestic demand to remain weak The rise in “core” machinery orders in October is a sign that business investment may rebound in Q4 after falls in q/q terms in both Q2 and Q3. In …
This page has been updated with additional analysis since first publication A double-dip recession is back in play Output slumped anew in Q3, and we suspect it remained in contractionary territory this quarter as well. Accordingly, we think the RBNZ will …
13th December 2023
Copom sticking to 50bp cuts The statement accompanying the Brazilian central bank’s decision to lower the Selic rate by 50bp, to 11.75%, was slightly more dovish than the last one from November. But not enough has changed to make policymakers consider …
Stubborn Fed demonstrates the SEP’s shortcomings The Fed’s reluctance to acknowledge that it will need to begin cutting its policy rate soon – to prevent a run-up in real rates – was predictable enough based on its intransigence ahead of previous turning …
Broad based weakness signals a weak end to 2024 September’s activity data for South Africa suggest that economy continued to struggle at the start of Q4. But we think that a combination of easing electricity outages and less restrictive fiscal policy will …
This page has been updated with additional analysis since first publication . A smaller-than-expected acceleration Broad credit growth continued to rise in November thanks to a pick-up in government bond issuance, but it still came in below expectations. …
Inflation drops back, but SARB to remain hawkish as core rate rises South Africa’s headline inflation rate dropped back to a slightly lower-than-expected 5.5% y/y in November, but the fresh rise in core inflation reinforces our view that the Reserve Bank …
Economy slowing at the start of Q4 The further softening in Turkish retail sales and industrial production growth in October suggests that the slowdown in the economy continued at the start of Q4. We think it’s possible that GDP contracts outright this …
Contraction in October sets scene for stagnation in 2024 Note: We’ll be discussing the Fed, ECB and Bank of England December decisions and the policy outlook for 2024 in an online briefing on Thursday, 14 th December . Click here to register for the …
This page has been updated with additional analysis since first publication. Strong Tankan suggests Japan won’t slip into recession The continued improvement in the Tankan suggests that the drop in Q3 GDP was just a blip, but we still expect GDP growth …
This page has been updated with additional analysis since first publication. Stronger rise in core prices buys Fed a little more time The slightly stronger 0.28% m/m rise in core consumer prices in November suggests the Fed may be able to hang onto its …
12th December 2023
This page has been updated with additional analysis since first publication. Elevated food inflation suggests no chance of imminent loosening Headline consumer price inflation rose to a three-month high of 5.6% y/y in November amid a renewed rise in food …
This page has been updated with additional analysis since first publication . Another 50bp rate cut on the cards tomorrow The small fall in Brazil’s headline inflation rate in November, to 4.7% y/y, makes another 50bp interest rate cut (to 11.75%) at …
This page has been updated with additional analysis since first publication. Sharp fall in wage growth will further fuel market rate cut expectations The sharp fall in wage growth in October will probably further fuel investors’ expectations that interest …
Sharp fall in inflation, but rates likely to be left on hold next week The fall in Czech inflation to 7.3% y/y in November means that the start of a monetary easing cycle at next week’s policy meeting is still very much a close call. But at this stage we …
11th December 2023
This page has been updated with additional analysis since first publication. Sticky inflation to force Norges Bank into one final hike The rise in the headline rate and slight fall in the core rate in November was broadly in line with the central bank’s …
This page has been updated with additional analysis since first publication . Decline in services inflation a concern CPI fell deeper into deflationary territory last month. The main culprit continues to be food and energy prices – the rate of core …
Price pressures continue to mount The rise in Russian inflation to 7.5% y/y in November is likely to be followed by further increases in the coming months as the economy continues to overheat. We think this CPI release supports the case for a 100bp …
8th December 2023
Inflation concerns easing The plunge in the University of Michigan’s consumer inflation expectations measures in December will give reassurance to the Fed ahead of its meeting next week that there are few signs of inflationary pressures reigniting. …
Payrolls boosted by returning strikers The 199,000 increase in November payroll employment included 47,000 workers returning from strikes (30,000 UAW members and 17,000 SAG Aftra members). Stripping out that one-off boost, the 152,000 gain was roughly the …
RBI in no rush to loosen policy The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone. Against a backdrop of robust economic growth and a renewed rise in food inflation, we doubt the central bank will loosen …
This page has been updated with additional analysis since first publication. Wage growth will stay strong Regular wage growth accelerated in October and we expect it to stay strong in the coming months as the virtuous cycle between prices and wages …
7th December 2023
Stubborn services inflation means Banxico to tread slowly with cuts Although Mexico’s headline inflation rate was weaker than expected last month (at 4.3% y/y), uncomfortably strong services inflation supports our view that Banxico’s easing cycle (likely …
This page has been updated with additional analysis since first publication. Industrial recession continues The fifth successive monthly fall in industrial output in October suggests that industry will again be a drag on economic activity in Q4 and will …
Halifax confirms that prices are on the rise again The second consecutive monthly rise in the Halifax house price index in November mirrored the increase in the Nationwide index, confirming that house prices have not only stabilised, but are rising. …
This page has been updated with additional analysis since first publication . Export volumes reach new high China’s export values rose year-on-year for the first time since May while the level of export volumes hit a fresh high, supported by exporters …
Net trade could remain a drag on growth in Q4 Notwithstanding the slight expansion in the goods trade surplus in October, net trade could subtract from growth this quarter. The rise in the goods trade surplus from a downwards-revised $6.2bn in September …
Bank maintains tightening bias, but next move likely to be a cut The policy statement from the Bank of Canada was a bit more hawkish than we expected, with the Bank reiterating that it is still concerned about the outlook for inflation and “remains …
6th December 2023
Imports and exports set for further growth in Q4 Despite the widening in the trade deficit in October, net trade looks set to be only a modest drag on fourth-quarter GDP growth. But the survey evidence suggests renewed weakness in exports may still lie …
Slump in imports only partly due to UAW strike The slump in import volumes in October was partly due to the knock-on effects of the UAW strike in the US, but it also suggests that firms are now drawing down their inventories as demand weakens. That raises …
Easing cycle paused The National Bank of Poland (NBP) left interest rates on hold as expected today, and we think the easing cycle will remain on pause until the end of Q1. With the economy recovering and the disinflation process likely to stall over the …
Falling rates allow mortgage demand to recover Falling mortgage rates sparked a modest uptick in mortgage applications for home purchase in November. Recent falls in Treasury yields mean further falls in mortgage rates are imminent, so the trough in …
This page has been updated with additional analysis since first publication. Construction PMIs once again below 50 in November The headline CIPS construction PMI barely changed in November, settling at 45.5 from 45.6 in October, and was still below the 50 …
GDP growth will continue to disappoint GDP growth was softer than most expected in Q3 and with that weakness set to continue, we think that the RBA is done tightening policy. The 0.2% q/q rise in output fell short of the analyst consensus of 0.4% as well …
