Despite the Bank of England having slowed the pace of its gilt purchases to below that of gilt issuance (see Chart 1), our forecasts that it will expand the size of its quantitative easing programme by a further £250bn and won’t raise Bank Rate above …
22nd July 2020
With coronavirus cases hitting record-highs in Tokyo and rising in other urban areas, the government announced on Monday that it plans to give local governments greater power to request business closures. That could include penalties for firms that ignore …
21st July 2020
The various high-frequency data series that we have been following in our Recovery Trackers have indicated that activity in the Nordic economies has picked up sharply over the past three months. However, the release of monthly GDP data from Norway for May …
13th July 2020
After a brief pause in the second half of June, record low mortgage rates helped push applications for home purchase to an 11-year high in the first week of July. That will help reverse the earlier dip in existing home sales but, with credit conditions …
9th July 2020
Hard data for May generally revealed sharp improvements in activity, particularly retail spending, albeit not to pre-virus levels. This led us to revise our forecasts for several economies including the US, UK and euro-zone, where we now expect falls in …
Euro-zone bank lending growth has jumped in recent months, as firms borrowed to tide themselves over while their revenues collapsed during lockdown. (See Chart 1.) At the same time, banks’ willingness to lend has been boosted by government loan guarantees …
7th July 2020
Overview – Energy prices continued to recover in June, but they remain significantly lower than at the start of the year. What’s more, we do not expect them to recover to pre-virus levels until 2022 at the earliest. Supply will comfortably meet any rise …
Overview – June was another good month for industrial metals. The prices of base metals made further gains, although those used in steel alloys (e.g. zinc and nickel) performed less well as wet weather in Southern China disrupted construction projects, …
3rd July 2020
Overview – The more industrial commodities performed particularly strongly in June on the back of the ongoing revival in global economic activity. We have become more positive on the outlook for industrial metals prices this year given higher …
2nd July 2020
The coronavirus extinguished a nascent surge in London house prices in Q1. Instead, housing demand in the capital collapsed during lockdown, and has been comparatively slow to return. That underperformance is likely to continue in the near-term, as virus …
1st July 2020
A slump in Korea’s automotive sector, which accounts for around 10% of GDP, is weighing heavily on the country’s prospects. The latest industrial production data which were published today show that motor vehicle output fell by 35% y/y in May, compared …
30th June 2020
Restrictions on activity have lifted in both countries. (See Chart 1.) While some states in Australia still limit the size of groups and capacity at restaurants, New Zealand has now lifted all domestic restrictions. The reduction in restrictions has …
While rental values fell sharply in May, this was in part offset by yields increasing at a much slower pace than the previous month. In turn, this led to a less steep fall in capital values, but annual returns remained negative. As the negative impact of …
26th June 2020
Policymakers in the region have started to ease lockdowns but, with daily coronavirus cases still trending higher, restrictions are being lifted much more slowly than in most other countries. And Chile’s government has doubled down on its lockdown in the …
25th June 2020
Market conditions have generally improved in recent months, with government bond yields remaining low, corporate bond spreads almost back to their pre-coronavirus levels and the FTSE 100 recovering almost half of its 33% slump in February and March. (See …
Developments over the past month suggest activity is rebounding strongly as restrictions are lifted. The CFIB measure of small business confidence has now made up most of its post-virus slump, and the Ivey all-economy PMI also rose strongly in May. While …
Governments across MENA have taken steps to re-open economies over the past month and, after a sharp downturn in April and May, daily indicators suggest that economic activity has started to recover. That said, activity remains well below pre-virus …
24th June 2020
China’s exports have held up remarkably well in the face of the sharp slump in global activity. They contracted just 3.3% y/y in US dollar terms in May. The detailed trade data published today show that a large part of that resilience was the result of …
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 …
After tightening dramatically in March following the outbreak of the coronavirus, our proprietary index shows that financial conditions in India have eased substantially over the past couple of months. (See Chart 1.) This is in large part due to the RBI’s …
The recovery in global risk appetite and in commodity prices has eased strains in balance of payments across the region. But conditions remain much worse than the they were before the crisis flared up. And while many EM sovereigns have tapped global …
23rd June 2020
Lockdown measures dealt a heavy blow to economies across the region in April, but the latest data offer encouraging signs that activity has recovered quickly over the past couple of months. Economic activity in the first few weeks of June was at or above …
While the incoming economic data continue to point to a nascent recovery in aggregate EM activity, some countries are being left behind. Recent figures from parts of Asia (China, Korea, Vietnam and Taiwan) and Emerging Europe (notably Poland), where …
19th June 2020
The 17.7% m/m jump in retail sales in May showed that consumer spending is recovering far quicker than most had expected as lockdowns have eased, with headline retail sales reversing their April drop and underlying control group sales back at pre-pandemic …
18th June 2020
The recent spike in COVID-19 cases in Tokyo linked to nightlife establishments in Shinjuku underlines just how slow the road back to normality could be. Renewed outbreaks are likely to prevent a straightforward and swift economic recovery. Indeed, many …
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
Available data suggest that world GDP will fall by around 8% q/q in Q2. While China has seen some recovery, GDP in southern Europe probably fell by as much as 25% on the quarter and India appears to have seen a similar drop. (See Chart 1.) Thankfully, …
15th June 2020
The latest high frequency data indicate that economic activity in the Nordic economies has continued to recover in recent weeks, with trips to shops and restaurants now close to pre-crisis levels in Sweden, Denmark, and Norway. (See Chart 1.) Sweden’s …
12th June 2020
While the housing market has reopened, there are still limited data on the pace of improvement. Given the economic damage, uncertainty and weak pipeline of in-progress housing sales, we expect the recovery in activity to be gradual. Meanwhile, the main …
10th June 2020
By the end of May, mortgage applications for home purchase had fully reversed their earlier drop. (See Chart 1.) New home sales have also performed better than expected, with a surprise month-on-month rise in April. However, with credit conditions …
9th June 2020
Overview – The gradual easing of coronavirus-related lockdown restrictions around the world, along with falling global production, has supported the price of oil recently. By contrast, persistent oversupply and lacklustre demand continue to weigh on coal …
5th June 2020
The latest high frequency data show that economic activity has picked up a bit in the past few weeks. Consumers have been returning to the shops and restaurants. (See Chart 1.) But some sectors such as tourism and hospitality are yet to get back on their …
“Risky” assets have comfortably outperformed “safe” ones over the past month, even as evidence of the scale of the economic damage caused by the coronavirus outbreak has continued to mount. We suspect that this will continue for a while yet . We argued …
4th June 2020
While the most restrictive period of the lockdown is behind us, the measures enforcing business closures and social distancing are only being eased very gradually. According to the ONS “Business Impact of Coronavirus Survey”, the number of businesses …
Overview – May was a good month for metals prices. (See Chart 1). The ongoing revival in economic activity in China helped to lift the prices of most industrial metals, while investment demand for precious metals remained strong. We think that industrial …
3rd June 2020
Overview – The prices of most commodities rose in May on the back of the ongoing recovery in China’s economic activity and a gradual easing of lockdown conditions in the US and Europe. We think that most prices will make further gains from here, but they …
2nd June 2020
Timely data suggest that April may have been the trough for EM GDP (see Chart 1), and activity at an aggregate level should recover – albeit slowly – in the coming months. But this is likely to mask a big divergence between regions. Large parts of …
29th May 2020
Yields rose again in April and there is more of the same to come over the summer months. While rental values fell slightly, the rise in yields meant that capital values declined by 1.8% m/m in April. This saw annual returns turn negative for the first …
The coronavirus has continued to spread rapidly across much of the region, with Brazil now registering the most new cases per day of any country in the world. And on a per capita basis, the surge in Peru and Chile look particularly alarming. High …
Governments across much of Sub-Saharan Africa have moved towards lifting coronavirus containment measures in recent weeks but, with the exception of South Africa, this has much more to do with economic concerns than success in controlling the virus’ …
As the lockdowns have largely come to an end in both countries, output is starting to recover. In New Zealand, most activity is now allowed to resume, though gatherings are limited to 100 people. In Australia, states are easing restrictions at different …
The rapid spread of the coronavirus in the region means that plans to lift lockdowns have come later than in many other EMs and the damaging economic effects of social distancing have persisted. The Gulf economies have also suffered from the effects of …
28th May 2020
With new infections falling sharply across the region and with lockdowns being eased, economic activity is starting to recover. However, the latest high-frequency data that we track, including routing requests from Apple and mobility data from Google, …
Much like the rest of Europe, shifts in prime rents and yields in CEE were relatively muted in Q1. The lack of movement was mainly due to thin deal evidence and market uncertainty. But looking ahead, given that the worst hit to economic activity from the …
The coronavirus crisis has dealt a heavy blow to the economies of Emerging Europe over the past few months but the worst of the downturn now appears to have passed. As infection curves have flattened, most countries have eased lockdowns in recent weeks …
27th May 2020
The government’s annual work report published on Friday made clear that policymakers will engineer an acceleration in credit growth this year. The report didn’t offer an explicit target for aggregate financing (AFRE), the official measure of broad credit, …
Despite the contraction in economic activity in Q1, property values in Scandinavia and Switzerland held broadly steady. However, in a large part this reflected uncertainty and low deal flow, which meant that it was not possible for agents to provide a …
The Labour Force Survey shows that the number of hours worked dropped by 28% between February and April. As the bulk of the hours lost have been in relatively low-productivity sectors, GDP should not fall by that much. But we still expect a total decline …
26th 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 …
21st May 2020
Measures to slow the spread of the virus have had a hugely detrimental impact on the US economy. This began to hit occupier demand in Q1, but is yet to be reflected in dramatic changes in vacancy or falls in rents. Nevertheless, valuers have already …
20th May 2020
