The partial reversal of the spike in mortgage rates following the “mini” budget has helped to stem the deterioration in housing market demand. Our measure of the average quoted mortgage rate has fallen from a peak of 5.7% in October to 4.7% in February, …
30th March 2023
EM Drop-In (6th Apr.): Our latest EM online briefing is all about the risks around the recent bank turmoil, including potential economic spill-overs and the state of EM bank balance sheets. Register now . Spill-overs to EMs from the turmoil in the global …
29th March 2023
One of the main channels through which the Gulf countries are exposed to worries about the health of the global banking system in through energy markets, with the price of Brent crude falling by 13% so far this month. If prices were to stay at current …
24th March 2023
Financial markets across Sub-Saharan Africa have struggled – and have underperformed their EM peers – since the global banking sector turmoil erupted. Amid broad risk-off sentiment, African sovereign dollar bonds have sold off nearly across the board and …
23rd March 2023
The turmoil in the global banking sector has not spread to Emerging Europe, but the focus is back on the health of the region’s banks given the not-so-distant memory of the 2008/09 banking crises that swept across the region. The good news is that banks …
Recent data suggest the economy’s strong start to the year was mostly sustained in February, with consumption growth set to accelerate in the first quarter, payroll employment growth robust and, partly reflecting that strength, core inflation still much …
22nd March 2023
Spill-overs from the turmoil in the global banking system to India have been limited so far, but the big unknown is whether difficulties will flare up at home. Bank problems can arise via multiple channels. There may be banks that have not adequately …
Strains in the global banking sector have flared up at a time when Latin America was in the midst of a period of economic weakness. Regional GDP fell in the final quarter of last year and surveys for early 2023 have been soft. Latin America’s banks have …
Even before SVB’s collapse prompted a reassessment of the health of the global banking system, bank credit conditions were already tightening in response to higher interest rates. (See Chart 1.) We have written many notes to help navigate the …
17th March 2023
Stronger-than-expected economic data in January led to a rebound in market interest rate expectations and a jump in mortgage rates from 6.2% at the start of February to 6.8% in March. That drove mortgage applications for home purchase lower and means …
14th March 2023
Recent evidence about the health of the euro-zone economy has been mixed. National figures released so far suggest industrial production rebounded in January but retail sales remained very weak. And while activity surveys now point to a small expansion …
8th March 2023
Overview – We think prices will drop a little further in the coming months as economic slowdowns in advanced economies weigh on commodities demand, even as China’s economic recovery takes hold. However, the prospect of a higher for longer Federal Funds …
2nd March 2023
We think even if some of the recent headwinds that have buffeted emerging market (EM) assets fade, a slowdown in global growth might keep them under pressure in the near term. EM assets have had a fairly tough month . Local-currency and …
28th February 2023
While the ~0.3% return from US dollar cash between 31 st January and 24 th February was hardly impressive, cash nonetheless outperformed all of the other eighteen headline indices that we track. As data pointing to a still-hot US economy and stubborn …
Local governments have stepped up their borrowing since the start of the year. They issued RMB860bn in special bonds over the course of January and February, up from an average of RMB105bn per month during the second half of 2022. Special bonds are …
Asian currencies have dropped back over the past few weeks against the US dollar, with the two worst hit currencies (the Thai baht and the Korean won) down around 6% against the greenback since the start of the month. Renewed concern about inflation in …
27th February 2023
Sub-Saharan Africa’s two biggest economies, Nigeria and South Africa, are both facing slow-burning debt problems. In Nigeria at least, elections on Saturday offer an opportunity to shift towards greater fiscal discipline – especially if opposition …
24th February 2023
The rise in prime property yields accelerated in Q4. Despite gains in all-property rents in most markets, this meant capital values fell across all sectors. Declines were particularly sharp in offices and industrial in Scandinavia and retail in …
Investors seem to have become more worried about inflation recently, with evidence that the global economy is holding up better than expected suggesting underlying price pressures might prove more persistent than hoped. That’s taken a toll on both “safe” …
23rd February 2023
CEE yields continued to rise in Q4, but very strong rental growth prevented all-property capital values from falling for a second successive quarter. (See Chart 1.) This turnaround was driven by retail and industrial performance, while office rents …
Stronger-than-expected data out of the US have pushed up US yields more than elsewhere and drove the greenback higher against most currencies for the first time since its cyclical peak in October of last year. While US economic resilience may keep the …
The recent resilience of economic activity has left us comfortable with our view that the Bank of England will raise interest rates from 4.00% now to a peak of 4.50%, rather than to 4.25% as analysts expect, and keep rates at that higher level all year. …
After a stellar performance for most of 2022, the Gulf economies are slowing. Primarily, that has reflected the impact of oil production cuts agreed with the rest of OPEC+ which is weighing on growth in oil sectors. And in the UAE and Qatar at least, the …
Data for the fourth quarter showed a widespread deterioration in occupier demand in all three sectors. This was worst in some of the big six and West coast metros, with markets like Phoenix, Portland and San Jose joining San Francisco and Chicago in …
22nd February 2023
The latest data suggest that current account deficits in the region’s major economies narrowed towards the end of last year, which is particularly good news for Colombia and Chile. Both were running alarmingly large shortfalls last year which helps to …
The January CPI data provided mixed signals about developments in underlying inflation. The CPI excluding food and energy and the CPI excluding the eight most volatile components each rose by just 0.1% m/m, which were the lowest gains since early 2021. …
The first year of the war in Ukraine has had an enormous impact on the country’s economy and left it highly dependent on financing from allies. Russia’s economy has contracted too, but it weathered the impact of Western sanctions better than expected and …
The war in Ukraine, which marks its one year anniversary on Friday, has had a profound impact on the emerging world. Ukraine’s economy has collapsed, while Russia’s has contracted too even though the imposition of sanctions has not been as severe as …
The resurgence in activity and employment in January means that there is little chance of the economy falling into recession in the first quarter and we now expect GDP growth of 1.5% annualised. That said, the retail sales data in particular appear to …
21st February 2023
In a crowded field given the FY23/24 Union Budget and the RBI’s more-hawkish-than-expected policy announcement, the Adani short-selling crisis has been the main story over the past month. So far at least, there are few signs of broader contagion. Foreign …
While the recent economic data have surprised on the upside, property market indicators were broadly worse than expected in Q4. Occupier demand softened, particularly in the office and apartment sectors, as concerns about the outlook weighed on firms …
17th February 2023
Capital value falls accelerated in Q4 as euro-zone all-property yields surged higher. And although rents increased in both offices and industrial, the outsized jump in yields meant euro-zone all-property capital values fell by about 8% q/q – the …
A raft of strong data out of the US have poured cold water on the idea that its economy has tumbled into recession at the start of 2023. And this comes after GDP data revealed that the euro-zone and UK economies (narrowly) avoided outright contraction …
16th February 2023
The survey data suggest that the modest decline in mortgage rates since October falls a long way short of what would be required for house prices to bottom out. The fall in market interest rates since the “mini” budget has allowed the average quoted …
The 6.9% annual rise in Australia’s trimmed mean CPI in Q4 was stronger than the RBA’s November forecast and has prompted some hawkish rhetoric from the Bank at its February meeting. Indeed, we now expect the cash rate to peak at 4.10% in May instead of …
15th February 2023
The government formally nominated Kazuo Ueda as the next Bank of Japan Governor at yesterday’s Diet session. Since the initial announcement of his candidature last Friday , analysts and investors have been looking for clarity on Mr Ueda’s views. So far …
Since the full effects of the previous surge in energy prices and the hike in interest rates have yet to be felt, we still think the economy will succumb to a recession this year. Admittedly, pandemic savings and the government’s handouts appear to have …
8th February 2023
The latest business surveys suggest that the euro-zone will stagnate or suffer only a mild recession, but the money and credit data paint a much gloomier picture. Net lending was negative in December and lower than in any month since 2014, when the …
7th February 2023
Overview – We think prices will ease back in the coming months as optimism about China’s reopening is tempered and slower economic activity in advanced economies weighs on demand. However, the prospect of Fed easing and stronger economic growth in 2024 …
3rd February 2023
The broad-based rally in “risky” assets that got underway in Q4 of last year has continued in 2023 so far, with global equities, developed market (DM) REITs, corporate bonds and industrial metals all off to a strong start to the year. Those gains have …
31st January 2023
While the economic outlook in much of the world has turned less downbeat in recent weeks, the prospects for Sub-Saharan Africa’s two biggest economies have, if anything, got gloomier due to homegrown economic troubles. In South Africa, power cuts – a …
The further falls in the Egyptian pound over the past month will push up inflation and prompt the central bank to deliver more monetary tightening, but there are already signs that the benefits of a weaker currency are materialising. The government …
We think the rapid economic recovery in China will lead to further gains in equities in China and other emerging markets (EM) this year. Despite some recent weakness, equities in China have rallied since the end of October, as a shift toward living with …
The outlook for Latin America has turned more positive at the start of the year as China has shifted away from its zero-Covid policy and commodity prices have rallied. But this comes against a backdrop in which regional growth is showing clearer signs …
30th January 2023
Although there has been some good news for risky assets over the past couple of months, we still think they will struggle before long as economic growth disappoints in major advanced economies. The global equity market rally that began at the back end of …
The Lunar New Year holiday wasn’t quite back to normal this year as fears of spreading COVID to elderly relatives prevented many households from returning to their hometowns – long-distance journeys, while the highest since the start of the pandemic, …
Asian currencies have continued to rebound against the US dollar over the past month, and most are now up by around 5-15% against the greenback since early November. Optimism around China’s reopening and expectations for a Fed policy pivot have been the …
Yields have continued to surprise on the upside, with the all-property equivalent yield rising by 106bps in the three months to December. That matches the worst months of the GFC, and even though rental growth has held up capital values ended the year …
27th January 2023
Optimism around China’s rapid re-opening and stronger-than-expected data out of Europe have put continued pressure on the US dollar over the past month or so. In turn, we have revised down our forecasts for the greenback against major currencies. But we …
26th January 2023
The growth outlook for 2023 across Central and Eastern Europe has brightened a bit over the past month. Wholesale European natural gas prices have continued to fall sharply and survey measures of activity have generally improved. The outlook for external …
