Inflation in Switzerland fell below zero for the first time in nearly three years in October and business surveys suggest that it will remain in negative territory until at least early 2020. (See Chart 1.) As it happens, we suspect that a combination of …
15th November 2019
Despite the softness in economic activity, occupier demand generally held up in Q3. And while there are signs that the cyclical slowdown in the euro-zone is starting to hit CEE markets, given their historically low vacancy rates, we think that rents could …
A fall in office and industrial yields supported all-property capital value growth in Q3. However, the slowdown in the retail sector weighed on all-property rental growth. With economic growth softening, we think that rental growth will slow further. …
EM equities have continued to rise over the past month, seemingly driven by optimism about an imminent US/China trade deal and some improvement in the economic data. But we are sceptical that the rally will last, and forecast that EM equities will tread …
13th November 2019
After a brief mid-year recovery, economic and political uncertainty is once again discouraging housing market activity. In all, the near term outlook for both housing sales and house prices is therefore weak. But beyond that, even if Brexit uncertainty …
8th November 2019
Given Q3 national accounts data from early-reporting countries and monthly data from other economies, it looks like world GDP growth actually picked up a touch last quarter to just over 3% annualised. And there have been some encouraging signs about the …
The jump in the unemployment rate in September is evidence that the labour market has entered a loosening phase. (See Chart 1.) The Bank of Japan reiterated that the output gap was its key gauge of price pressures in the economy at its meeting last week. …
7th November 2019
Although we estimate that the 0.2% q/q contraction in GDP in Q2 was followed by a 0.4% q/q rise in Q3, it is clear that the economy is spluttering rather than firing on all cylinders. We think that GDP will rise by just 0.2% q/q in Q4. Seeing as the …
6th November 2019
Although the euro-zone economy grew by more than expected in Q3, helped by solid growth in France and Spain, the overall picture remains fairly gloomy. Euro-zone GDP expanded by only 0.2% q/q, and survey data, such as the Composite PMI, suggest that it …
A cocktail of an apparent softening of US-China trade tensions coupled with several supply outages pushed the prices of most base metals higher in October. Perhaps somewhat unusually, the price of gold also gained ground as investors remain concerned …
Summary: The 30-year mortgage rate increased to an eight-week high in October, which helps explain why mortgage applications for home purchase have been trending down since mid-September. A lack of inventory, slowing economy and tightening credit …
5th November 2019
Overview – Despite signs that the global economy continued to slow in October, only coal prices fell. While we expect global growth to remain subdued in the year ahead, we think that a recession will be avoided, which underpins our forecast of somewhat …
Overview – The apparent thaw in the US-China trade dispute gave a lift to the prices of most industrial commodities in October. However, we are sceptical that a lasting resolution to the trade conflict will be reached. Instead, we think that the ongoing …
31st October 2019
Political risk grabbed the headlines this month, with protestors taking to the streets across the Andes and Argentina electing a new Peronist president. Demonstrations in Ecuador and Chile will weigh on growth in Q4 and have already forced policymakers to …
Policymakers in South Africa and Angola admitted the severity of their countries’ economic problems this month, while their Nigerian peers moved further down the road to autarky. South Africa’s finance minister revised his government’s deficit and debt …
In its latest World Economic Outlook, the IMF predicted Australia’s economy to expand by 1.7% in 2019 and by 2.3% in 2020. While the 2019 forecast is consistent with our own expectations, their forecasts assume a larger bounce in GDP growth next year than …
Campaigning ahead of Sri Lanka’s presidential election, to be held on 16 th November, is well underway. President Maithripala Sirisena has already confirmed he will not stand again and will step down when his term ends on 9 th January. Altogether 35 …
30th October 2019
The corporate earnings season currently underway in China has been disappointing. Admittedly, the Q3 results published so far point to a slight improvement in year-on-year growth in earnings per share of domestically-listed firms. But the recovery was …
Large interest rate cuts and dovish comments from central banks in Russia and Turkey this month drove rallies in both countries’ local currency bond markets. The yields on sovereign 10-year local currency debt have dropped by 60bp since the start of this …
29th October 2019
The Business Outlook Survey painted a mixed picture ahead of the Bank of Canada’s October monetary policy decision. The Future Sales Indicator (FSI) – which includes firms’ expectations for future sales as well as their assessment of order books, advance …
The focus on political risk and Lebanon’s growing debt problem have meant that the sharp slowdown in growth across large parts of the region has gone unnoticed. The latest figures suggest that the economies of Saudi Arabia, Qatar and Lebanon were all …
This rise in all-property rental value growth in September was not enough to prevent capital values falling on an annual basis for the fifth consecutive month. (See Chart 1.) The fact that the chance of a no deal Brexit has reduced is positive for the …
25th October 2019
Local bond yields have dropped over the past few months (see Chart 1) as the Reserve Bank has continued easing monetary policy, but we think they will start rising again before long. Fiscal policy has been loosened substantially - the finance ministry …
23rd October 2019
If Boris Johnson’s Brexit deal is approved in Parliament soon, we expect the pound would rise from $1.29 now to about $1.35 and 10-year gilt yields would increase from 0.72% to around 0.90% by the end of the year. While a lot of good news is already baked …
22nd October 2019
The news of an apparent trade “deal” between the US and China has pushed back the threat of further tariffs and helped to un-invert the yield curve, but economic growth still appears to be slowing. Our tracking estimate suggests that growth slowed to 1.5% …
21st October 2019
The continued decline in core inflation across many emerging markets supports our view that most central banks’ easing cycles have further to run. Our measure of EM core inflation fell to 2.8% y/y last month (see Chart 1), the weakest rate since our …
18th October 2019
We still think that returns from many “safe” assets, including most developed market government bonds, will fail to beat those from US dollar cash over the rest of 2019, even as “risky” assets, notably equities, REITs and corporate bonds, struggle against …
A sharp rise in consumer spending in the run up to the 1 st October sales tax hike will almost certainly be followed by a plunge in consumption this month. However, on a quarterly basis the swing in spending is likely to be more muted than around previous …
17th October 2019
While the Swiss and Swedish economies appear to have contracted in Q3, mainland GDP growth in Norway is chugging along nicely. And even though activity is set to slow in 2020, Norway will remain a bright spot over the coming years. This comparatively …
Summary: A slowing economy has increased concerns around job security, which has weighed on mortgage applications for home purchase even as mortgage interest rates have stayed close to three-year lows. Coupled with low levels of home inventory, that will …
11th October 2019
Available data suggest that world GDP growth was stable at around 3% annualised in Q3, which is below the ten-year average of 3.5% but stronger than the 2.5% pace recorded in the second half of last year. (See Chart 1.) Growth looks to have accelerated in …
10th October 2019
There have been one or two positive signs in the past week or so, such as the increase in German industrial production in August. But the overall picture remains gloomy. Indeed, at face value the Composite PMI, which is one of the most reliable timely …
8th October 2019
After some fleeting optimism on the back of an apparent easing in US-China trade tensions in September, the recent run of weak US survey data saw demand concerns return to the fore. We think that global economic growth will slow further over the coming …
3rd October 2019
Overview – Energy prices diverged in September. There were strong gains in European gas and coal prices in part owing to strikes at France’s utilities at a time when seasonal demand is also picking up. Meanwhile, oil prices have been falling amid fears …
Overview – Oil prices dipped in September despite the attacks on Saudi Aramco. In contrast, the prices of most other commodities increased owing to a rise in investor risk appetite. However, we expect US equities to fall in the coming months, which should …
1st October 2019
The central banks of Brazil and Mexico loosened policy this month, and we expect that they will continue to cut rates in Q4. Inflation in both countries is below target, and both economies are struggling and in need of policy support. In Mexico, dovish …
30th September 2019
Events this month have highlighted the risks posed by politics to the region’s two largest economies. While Saudi Arabia initially suspended around half of its daily oil output following attacks on its oil facilities, it looks like there won’t be any …
Economic growth has continued to ease in both countries in the first half of 2019. In Australia, GDP growth eased to 1.4% y/y in Q2. And while the government’s tax cuts may mean that consumption supports a pick-up in growth in the coming months, the …
The economies of Central and Eastern Europe (CEE) shrugged off ongoing troubles in the euro-zone economy for most of 2019 but the latest data offer evidence that this now taking a bigger toll. Industrial production growth in Poland and the Czech Republic …
26th September 2019
Figures released over the past month brought bad news for almost all of Sub-Saharan Africa’s key economies. After a surprisingly-strong rebound in Q2, growth in South Africa seems to have slowed at the start of Q3. And leading indicators in South Africa, …
In August, stronger rental value growth in the office and industrial sectors meant that annual all-property rental value growth held steady. (See Chart 1.) This is consistent with the recent improvement in economic activity, following the contraction in …
The brief rise in London buyer activity proved to be short lived, suggesting that the capital’s housing market malaise has further to run. Indeed, even if a no-deal Brexit is avoided, we expect London’s house price decline to intensify, with prices to end …
24th September 2019
Households appear to be taking advantage of recent strong income gains to strengthen their finances. Over the past year, real incomes increased by 3.0% but real consumption increased by just 1.4%. (See Chart 1.) Reflecting this, the household saving rate …
PBOC Governor Yi Gang today appeared to pour cold water on the prospect of imminent monetary easing. He said that the PBOC would not rush to follow the US Fed and ECB in cutting rates and that “China’s monetary policy will maintain its prudent …
The Indonesian government’s budget for 2020 came a step closer to being passed this week after the parliament’s budgetary committee approved President Joko Widodo’s spending plans for the coming year. Although spending is set to rise by 8.5% next year, …
Equity markets have recovered much of their losses in recent weeks and, after hitting multi-year lows at the start of September, sterling and bond yields have also rebounded. (See Chart 1.) This is partly due to signs of a temporary détente in the …
23rd September 2019
The strong performance of US equities this year has continued to be, at least in part, fuelled by expectations that growth in corporate earnings there will be much faster than elsewhere. Nonetheless, given our view that the US economy will slow further in …
20th September 2019
For all the talk of a global slowdown, the incoming data from the emerging world have been encouraging. Having bottomed out in Q2, GDP growth held steady at around 3.5% y/y at the start of Q3. EM manufacturing growth picked up, while exports stabilised. …
The latest activity data for India have been disappointing but, despite the economy’s recent soft patch, developments over the past month should boost optimism over long-run prospects. In late August, the government announced that it was easing …
19th September 2019
The Fed will look through any rise in headline inflation resulting from the recent jump in crude oil prices, but the acceleration in core CPI inflation, to an 11-year high in August, is harder to ignore. (See Chart 1.) Tariffs on Chinese imports explain …
18th September 2019
