With all domestic restrictions gone and the booster rollout further severing the link between cases and deaths, the conditions for a reopening bounce are in place. Moreover, consumers have ample room to splash the cash. The household savings rate remained …
19th April 2022
World GDP appears to have expanded at a below-trend pace in Q1 as high inflation limited real consumer spending and supply shortages and Omicron waves continued to disrupt activity. March’s broad-based drop in consumer confidence suggests that consumer …
14th April 2022
Mortgage rates are set to rise to over 5% within the next couple of weeks which will help cool, but not crash, housing market activity. Pent-up demand from the last couple of years as buyers have struggled to find a home, and the continued need for more …
8th April 2022
The risk of stagflation has risen substantially. The latest surveys suggest that the economy held up pretty well in March, but the forward-looking indicators paint a much gloomier picture of the months to come. The Sentix investor sentiment indicator …
7th April 2022
Overview – Commodity prices remain extremely volatile owing to the uncertainty stemming from the ongoing war in Ukraine, and we doubt that they will find a clear direction anytime soon. However, assuming the war-related uncertainty begins to ease somewhat …
5th April 2022
Given that the past couple of months has seen the outbreak of war in Ukraine, surging commodity prices, growing concerns about inflation, and increasingly hawkish noises from the world’s major central banks, it is not surprising that US Treasuries have …
31st March 2022
The rally in the dollar seems to have paused this month, and indeed the greenback has fallen against some major currencies – especially those in Europe – this month. We think this largely reflects the rebound in risk sentiment, the stabilisation of …
Efforts to stabilise China’s financial markets have been a short term success. Although in aggregate March was one of the worst months on record for portfolio outflows from onshore markets, there were signs of a shift after Vice Premier Liu He’s promise …
High commodity prices caused by the war in Ukraine have driven a rally in Latin American currencies and equities this month, and are causing exports to surge. Weekly trade figures from Brazil and Chile show that exports were up by 25-40% y/y in early …
Spillovers from the war in Ukraine will have a varied impact across Sub-Saharan Africa. Large oil producers such as Nigeria and Angola are benefitting from the surge in global oil prices but, for the rest of the region, it is worsening their terms of …
The war in Ukraine has devasted its economy, while Western sanctions are likely to push Russia into a deep contraction, with GDP set to fall by 12% this year. Immediate fears of a Russian sovereign default have not materialised and Russia’s financial …
30th March 2022
As a result of the Russia-Ukraine war and the Fed’s hawkish pivot, we have tweaked our forecasts for most major emerging market (EM) assets. The big picture, though, is that we still think EM equities will generally make small gains over the remainder of …
The spillovers from the war in Ukraine in the form of higher commodity prices will have contrasting impacts on the Gulf and the rest of the region. We estimate higher energy prices will boost Gulf hydrocarbon export revenues by around 10% of GDP this year …
The war in Ukraine has contributed to a tightening in financial conditions that will contribute to weaker GDP growth for the rest of this year and next year. Admittedly, a lot of the initial plunges in UK equity prices and gilt yields have been reversed. …
29th March 2022
Successful vaccination campaigns allowed governments to keep economies open during the recent Omicron waves, and our Mobility Trackers suggest that activity held up much better than we had originally anticipated. Indeed, GDP figures for Vietnam published …
Most leading indicators of housing market activity and house prices remain strikingly buoyant, but the first signs that demand will soften are now appearing. There is no question that house prices will continue to rise apace over the next few months. …
24th March 2022
The war in Ukraine, as well as the hawkish tone adopted by some developed market (DM) central banks, have led us to revise up our end-22 and end-23 forecasts for government bond yields in some DMs and to lower our projections for DM equities generally . …
23rd March 2022
While the war in Ukraine and sanctions on Russian oil mean energy prices will remain elevated and push headline inflation above 8% in March, it will still fall sharply later this year. (See Chart 1.) Energy inflation and inflation in categories that saw …
The surge in interest rate expectations is a key risk to housing. We recently set out how, due to the much larger share of variable rate mortgages than before the pandemic, the Bank of Canada would need to raise its policy rate to 2.5% to achieve the same …
The war in Ukraine will have several economic repercussions for the emerging world. We have lowered our aggregate EM GDP growth forecast for 2022 by 1%-pt, to 3.2%. Russia aside, the biggest downward revisions have been to other Emerging European …
Governor Kuroda admitted last week that inflation could hit the Bank of Japan’s 2% target in April but stressed that “that in no way signifies there will be a revision of our current monetary policy”. Even if rising import costs cause inflation to …
21st March 2022
Commercial property is not showing any signs of slowing down. Rental growth rose further in February, while annual total returns climbed to a level last seen in Q4 2010. Industrial remains the main driver behind overall performance, with retail also …
18th March 2022
The surge in commodity prices as a result of the war in Ukraine will have several repercussions for India’s economy. As a major net commodity importer, its terms of trade will deteriorate and we think the current account deficit could reach almost 4% of …
17th March 2022
We warned at the start of the year that global growth would disappoint, while inflation would surprise to the upside in 2022 and recent events have added to those concerns. The surge in commodity prices related to the war in Ukraine means that headline …
15th March 2022
A rise in mortgage rates to their highest since May 2019 has cooled housing market activity, with mortgage applications for home purchase dropping to a 31-month low in the last week of February. (See Chart 1.) Admittedly, the war in Ukraine pushed …
11th March 2022
The UK is not as exposed to the economic consequences of the war in Ukraine as the rest of Europe. Even so, in response to the surge in global commodity prices caused by the war we have dramatically revised up our inflation forecasts and modestly revised …
9th March 2022
RBA Governor Lowe noted in a recent speech that the Bank no longer has specific criteria for deciding whether inflation is sustainably in the target range. But he highlighted that along with the actual rate of inflation and the outlook, the breadth of …
7th March 2022
The war in Ukraine has prompted us to revise our forecasts for euro-zone GDP, inflation and monetary policy. Russia’s downturn in 2015 had no obvious impact on euro-zone GDP and Russia has become less important as an export market since then. But we …
4th March 2022
The dollar has generally strengthened since Russia’s invasion of Ukraine, while European currencies have generally been the hardest hit by the war. But unlike in most risk-off episodes, the currencies of commodity exporters have benefitted from a spike in …
The Gulf economies are key beneficiaries from the rise in energy prices caused by the Russia-Ukraine crisis. On an annualised basis, oil at $100pb would increase hydrocarbon export revenues by 7-10%-pts of GDP across the Gulf (relative to 2021). This …
28th February 2022
Elevated commodity prices on the back of the Russia-Ukraine crisis will almost certainly add to inflationary pressures across Sub-Saharan Africa. High prices for energy, metals and agricultural products that African countries export seem to have shielded …
As well as a geopolitical quagmire for China’s leadership, the Russia-Ukraine conflict has become a headache for the PBOC. It has been signalling its dissatisfaction with the strength of the renminbi in recent months. But the renminbi is one of very few …
The recent jump in oil prices poses a significant upside risk to our inflation and interest rate forecasts for this year. Central banks would normally “look through” a one-off jump in the price level and try and cushion the blow to real incomes by keeping …
Russia’s military invasion of Ukraine has caused turmoil in financial markets across the region. Western nations have imposed sanctions on Russia, including targeting some of its largest banks and their access to the international financial system. …
25th February 2022
This is our first US Commercial Property Metros Chart Book, which forms part of a set of publications that extends our existing analysis to a wider set of metros. As well as greater coverage of office and apartment metro markets, this publication also …
24th February 2022
The easing of Omicron waves, and loosening of restrictions, across Latin America will have given a lift to recoveries in recent weeks, but the fallout from the Russia-Ukraine crisis presents a fresh headwind to the region. While the recent surge in global …
Sharp falls in property yields and an improvement in rental growth pushed CEE all-property values in Q4 up almost 5% q/q, the strongest quarterly growth rate since 2007. (See Chart 1.) This was largely driven by the strength of industrial, but office …
Homeowners appear to be pressing ahead with plans to move house even though stamp duty is now fully reinstated. Transactions inevitably dipped last October as sales were rushed through in September to take advantage of the tax relief. But since then, they …
23rd February 2022
The evidence of broadening inflationary pressures and the further rise in oil prices suggest that the balance of risks to our inflation forecast lies to the upside. The January consumer price data showed a surprisingly large rise in headline inflation, to …
Net portfolio outflows from Indian financial markets have picked up over recent weeks as the growing prospects of war between Ukraine and Russia and tighter global monetary policy have caused risk appetite to sour. Outflows from the equity market have …
There was a material improvement in the Scandinavian and Swiss property markets over 2021. Prime office and industrial capital value growth accelerated. And while prime retail values still declined, this was at a slower pace than in 2020. Oslo was an …
21st February 2022
Yields on 10-year Swiss government bonds have moved in lockstep with those of Bunds since the start of the pandemic, and thus followed their German counterparts above zero in January. (See Chart 1.) While the Swiss yield has dropped back a bit since …
Services spending jumped to only 3% below its pre-virus level in Q4 2021 despite having begun the quarter on a weak footing with curfews still in place for bars and restaurants across many regions in October. (See Chart 1.) It will have been knocked …
The threat of sanctions has weighed on Russia’s stock market recently, but even if tensions abated we wouldn’t expect it to make big gains over the next couple of years. Russia’s equities have been volatile lately, but the big picture is that the tensions …
18th February 2022
While economic indicators point to slower growth this year, investors have so far been unperturbed, piling into the market in Q4 and driving record quarterly and annual investment totals. That was led by record activity in industrial and apartments, which …
The further rise in CPI inflation to 7.5% in January and hawkish comments from Fed officials have seen markets rush to price in a series of aggressive interest rate hikes this year. But recent weeks have also brought tentative signs that better news on …
17th February 2022
Euro-zone commercial property markets ended 2021 on a stronger note. Prime rental growth picked up in the office and industrial sectors, while retail rents held steady for the third consecutive quarter. Combined with further declines in property yields, …
Even if tensions between Russia and Ukraine abated, we wouldn’t expect risky assets to gain all that much over the rest of this year and next, mainly because we think ongoing monetary tightening would continue to keep a lid on any rally. Risky assets have …
16th February 2022
While data from the past month have been consistent with global economic activity picking up some pace towards the tail end of 2021, timely data point to a weak turn of the year as the Omicron wave took its toll. For example, virus caution and government …
11th February 2022
Rising inflation has put major DM central banks under pressure and interest rate expectations have risen. But most emerging markets look relatively well placed to weather a period of DM policy tightening. Current account deficits are generally small or in …
