Today, OPEC+ announced that it will deepen its oil output cut by 0.5m bpd to 1.7m. More surprising, is that it looks as though Saudi Arabia will cut supply by a further 167,000, despite the fact that it is already producing well below quota . This could …
6th December 2019
Three months after the September policy package, no change is likely next week. The spotlight on Thursday will be on Ms Lagarde herself, and her policy review. Further ahead, we still expect more ECB easing, prompted by low inflation. With little chance …
5th December 2019
There has been mounting speculation that OPEC+ is set to agree deeper cuts at its upcoming meeting. However, we still think Saudi Arabia’s concerns about its loss of market share, and little appetite for increased cuts in Russia, will win the day. …
4th December 2019
Looser financial conditions & improving economic data mean no further cuts needed Fed will not want to repeat the mistake of raising rates prematurely With inflation set to remain low, Fed is now on prolonged hold The Fed’s less dovish language, against a …
Further slowdown in growth in Q3 would seal the deal for another rate cut MPC will look past above-target inflation resulting from supply disruptions But in contrast with consensus, we expect modest hikes towards the end of 2020 We agree with financial …
28th November 2019
Economic data have been weak but RBA will wait for Q3 GDP data before cutting Subdued growth and inflation will force the RBA to cut rates to the 0.25% floor in 2020 Governor Lowe set a higher bar for QE but we expect that bar to be reached next year The …
27th November 2019
Some signs that economic weakness is spreading to service sector But Bank will be increasingly concerned by resurgent housing market Unchanged policy now the most likely outcome for the next few quarters The labour market is starting to show cracks and …
26th November 2019
OPEC+ has complied with its output quota so far … … but there is a high chance that it won’t comply in the coming months We think that this makes deeper output cuts less likely There is a high risk that a ramp-up in production in Russia pushes OPEC+ …
25th November 2019
Loose financial conditions make a recession unlikely The risk of a recession occurring within the next year appears to have faded – with the yield curve un-inverting, financial conditions loosening and the incoming economic data still comfortably above …
20th November 2019
OPEC turns a bit more positive on 2020 OPEC’s November Report, and recent comments by the organisation’s secretary general, suggest OPEC is becoming more optimistic about the prospects for demand for its crude in 2020. This may be an indication that …
14th November 2019
While the Fed seems to have pressed pause, we wouldn’t rule out a December cut. Policy will be loosened further in the euro-zone, Australia and several EMs. But the impact will be modest, particularly in advanced economies. Following a wholesale shift …
11th November 2019
Economic data has been in line with RBNZ forecasts… …so we think the Bank will hold for now. But sustained economic weakness means rates will be cut to 0.5% next year. The economic data have been better than the Bank anticipated in their last set of …
6th November 2019
The economy may be on a path that would eventually prompt the MPC to cut rates… …but the chance of a Brexit deal in January will keep the toolbox in the closet for now Unless the headwinds of weak global growth and Brexit uncertainty fade, the next move …
31st October 2019
Despite rebound in house prices, GDP growth set to remain subdued Rising unemployment will push underlying inflation further below 2% We now expect the Bank to cut rates to 0.25% and launch quantitative easing next year Falling unemployment and steady …
30th October 2019
Bank to remain on the side-lines next week But latest surveys point to below-potential GDP growth and lower inflation Markets underestimating the chance of a December rate cut There is little reason to expect the Bank to alter its policy rate next week …
24th October 2019
Outlook for both domestic and external demand has worsened a little But financial stability concerns still stand in the way of interest rate cuts Bank will probably focus its efforts on steepening the yield curve via its bond purchases The economic data …
Officials have not pushed back on expectations for a 25bp cut this meeting Further slowdown in economic growth will prompt one final 25bp cut in December Rates would end up back at zero in a recession, but few signs one is imminent With the markets still …
23rd October 2019
Riksbank and Norges Bank set to leave policy on hold this week. SNB to push the boundaries of policy easing in early 2020. Central bank of Iceland to continue its easing cycle over the coming months. We expect the Riksbank and the Norges Bank to leave …
22nd October 2019
Clashes on Governing Council will cast a shadow over Draghi’s farewell party. No chance of policy action next week, but we think policy will be loosened next year. Forthcoming review to change inflation target and possibly communication strategy. Mario …
17th October 2019
Low production still not enough to lift prices OPEC’s September production data were distorted by the attacks on Saudi oil facilities, but overall output remained subdued. Deeper supply cuts are likely to be discussed at OPEC’s December meeting, but we …
10th October 2019
Strikes at South African mines would hit global supply of platinum and palladium hard But given stronger demand growth and lower stocks in the palladium market … … strikes would give much more of a boost to the price of palladium There is a significant …
4th October 2019
With interest rates near the lower bound, central banks are experimenting with tiers. But they reduce the impact of rate cuts and do little to support banks’ profitability. Such efforts add to signs that monetary policy is near its limits. Recent weeks …
26th September 2019
Another rate cut next week looks a done deal… …but MPC may opt for more traditional 25bp rate cut rather than 35bp In contrast to markets, we expect modest hikes next year The key question ahead of the MPC meeting that concludes on Friday 4 th October is …
Demand should start to recover next year With subdued growth in supply, the market is likely to move into deficit But stocks are high, which will act as a lid on prices In this Commodities Watch , we are initiating coverage of natural rubber . As it …
25th September 2019
Labour market still set to ease further But outlook for GDP growth has improved as house prices have started to rebound Forceful policy response lowers likelihood of unconventional policy being deployed The continued rise in the unemployment rate will …
24th September 2019
Recession risk still elevated Our composite model suggests that the risk of a recession in 12-months’ time has fallen slightly to 17.9%, from above 20% a few weeks ago, as the rebound in the 10-year Treasury yield has reduced the inversion of the yield …
23rd September 2019
Table of Key Forecasts Overview – Inflation has fallen in most economies, due partly to lower energy inflation. Our forecast that oil prices will stabilise in the months ahead is subject to upside risks from tensions in the Middle East. But against the …
20th September 2019
Economic activity in Q2 was in line with RBNZ forecasts… …so we think the Bank will hold for now. But sustained economic weakness means rates will be cut to 0.75% by early next year. Following the dramatic 50 basis point cut in August, we suspect the …
19th September 2019
MPC may be a bit less concerned about a no deal Brexit… …but will still hold off on raising rates It seems almost certain that the MPC will keep interest rates at 0.75% at its next meeting on Thursday 19 th September. The minutes may be slightly more …
12th September 2019
GDP growth has held up and the labour market remains extremely tight Leading indicators suggest that the economy has turned for the worse But concerns over financial stability still stand in the way of interest rate cuts There are mounting signs that the …
Fed to deliver widely-expected 25bp cut; data still too strong to justify 50bp We expect a further economic slowdown to prompt a final 25bp cut in December Further significant loosening unlikely in the absence of a recession The Fed looks set for another …
11th September 2019
Saudi Arabia likely to keep oil output low OPEC kept output below quota in August. We think that it will continue to under-produce in 2020, particularly as the Saudi Aramco IPO nears, and that this will be one factor supporting prices . The OPEC Monthly …
We think the ECB will cut its deposit rate by 10bp and introduce tiering next week. More QE is probably on the way too, but may not be agreed until October. The Bank is also likely to further strengthen its forward guidance. After policymakers spelt out …
5th September 2019
The next round of US tariffs on Chinese imports pose a key risk to metals demand While the direct effects across the base metals will vary, tin is likely to suffer most But the indirect effects of an escalating trade war will weigh on metals prices …
29th August 2019
Healthy Q2 GDP growth and at-target inflation to keep Bank on hold next week Downside risks to the outlook have increased Bank to cut interest rates in October We expect the Bank of Canada to present a more dovish policy statement next week, setting the …
28th August 2019
RBA to leave rates unchanged in September But renewed increase in unemployment should prompt the Bank to cut in November Conditions need to deteriorate much further for RBA to launch QE The Reserve Bank of Australia hasn’t learned much on the state of the …
27th August 2019
The hurdle to further production cuts is high While another cut in Saudi Arabian oil output pushed OPEC production further below its quota in July, we doubt that the Kingdom is on the cusp of taking larger action in order to support oil prices . The OPEC …
16th August 2019
Norges Bank to raise rates in September, but this will be the end of the tightening cycle. It is now a question of when, not if, the SNB cuts rates further into negative territory. Expected dovish shift by the Riksbank will ensure that the krona stays the …
8th August 2019
We estimate that the new IMO rules will boost crude demand by 0.9m bpd in 2020 But overall growth in demand will remain subdued … constrained by weak global economic activity and sluggish growth in world trade The International Maritime Organization (IMO) …
The New Zealand economic outlook remains sour… …And the RBNZ have signalled they are ready to act Rates will be cut in August and again in November The Reserve Bank’s Monetary Policy Committee sounded almost ready to cut rates at its last meeting in June. …
1st August 2019
The RBA will pause in August following back to back rate cuts… …But given the weakness in the economy, the RBA will cut rates to 0.5% by early 2020 Lowe may be venturing into the world of forward guidance We expect the Reserve Bank of Australia to take a …
31st July 2019
Inflation remains below target, while most hawkish MPC member has stepped down As such, another rate cut is likely next week But aggressive policy easing risks stoking inflation over longer term The MPC – now even more firmly under the control of doves …
Beware of a misleading hawkish signal Key message is that the MPC has become less hawkish, but not as dovish as the markets Far more interesting than the probable decision by the Monetary Policy Committee (MPC) to leave interest rates at 0.75% on Thursday …
25th July 2019
Fed likely to cut rates by 25bp next week, rather than 50bp Economy not yet weak enough to justify additional easing But we expect slowing growth to prompt further cuts in December and March next year The Fed is likely to cut interest rates by 25bp next …
24th July 2019
Inflation remains well below target so Bank will pledge to keep rates low for longer Domestic demand set to slow after tax hike and external demand to soften But concerns about financial stability should forestall additional easing We expect the Bank of …
23rd July 2019
The ECB is likely to change its forward guidance to signal that a rate cut is coming... … and it might also add an explicit reference to the possibility of re-launching QE. All this would confirm investors’ expectations that looser policy is on the way. …
18th July 2019
A sharp drop in mortgage rates has boosted activity in the US housing market However, the outlook for lumber-intensive housing starts is not all that bright The latest rally in US lumber prices is therefore likely to unwind After falling sharply over the …
12th July 2019
OPEC is downbeat on prospects for 2020 OPEC sees demand for its oil falling in 2020 as non-OPEC producers take market share owing to its policy of output restraint. It forecasts that growth in global demand will be unchanged next year, whereas we expect …
11th July 2019
Lagarde selection strengthens our conviction of ECB rate cuts and QE to come. Trump’s nominations may be less influential, but lend policy a dovish tilt. Next year’s change of guard at the Bank of England could be meaningful. Recent news about a number of …
