The focus in oil markets this week was on the long term with the IEA predicting that oil demand will peak in 2029 while OPEC argued there is no peak in sight. In any case, when the peak occurs is only part of the picture. In its annual oil report, …
14th June 2024
EU announces new tariffs on China The immediate macroeconomic impact of the EU’s new tariffs on EV imports from China announced this week are likely to be fairly small. As we noted here , the EU imported 440,000 EVs (€9bn) from China over the past year. …
Higher levels of housebuilding is a prize that both Labour and the Conservatives seek, evidenced by the identical target of building 300,000 new homes a year published in their manifestos this week. (You can see all of our election analysis here , and …
The focus this week has been on the fallout of the European elections in France because there is a real chance that the parliamentary elections, to be held on 30 th June and 7 th July, will lead to a government led by the far-right Rassemblement National …
Malaysia subsidy cuts to push up inflation Headline inflation in Malaysia has been among the lowest in Asia but that is soon set to change. Long-planned subsidy cuts aimed at improving the public finances started this week when the government lowered …
Still a bright future in Europe China protested the European Commission’s (EC) imposition of additional tariffs on Chinese-made EVs this week but, if the EU goes no further, China’s government is likely to see this as a good outcome. The European tariffs, …
Prime Minister Modi’s third term got underway this week with the selection of the new cabinet. 25 of 30 cabinet ministers are unchanged from the previous government, including all of those in key roles. (The remaining five spots have been freed up for the …
BoJ pledges to unveil taper plans next month With the Bank of Japan today disappointing financial markets by delaying any announcement on the reduction of its bond purchases to its July meeting, 10-year JGB yields initially dropped by around 5bp and …
Underlying price pressures will abate only slowly When Queensland Treasurer Cameron Dick unveiled the state government’s 2024/25 Budget, he made no pretence about his desire to prime the pump in the run the up to local elections in October. The Budget …
Morocco: riding the EV wave Morocco’s domestic auto industry has boomed over the past decade and is drawing investment from major firms in Europe and China. With plans to more than double output in the coming years, the sector is likely to provide a …
13th June 2024
The strong nonfarm payrolls report released earlier today broke the recent streak of downward data surprises out of the US and has renewed strength in the dollar. Even so, the greenback looks set to end the week only somewhat stronger against most …
7th June 2024
The Bank of Canada kicked off its loosened cycle this week and the accompanying communications left the door open for another cut in July, although still-strong wage pressures are one reason why the Bank may opt to take a more gradual approach. “Let’s …
ANC’s unity government talks likely to be fraught South Africa’s post-election uncertainty continued this week, with the ANC outlining its desire for a government of national unity with a broad range of opposition parties. This looks like a non-starter, …
We don’t think that the below-potential GDP growth implied by the recent activity data is a cause for concern yet, particularly while the labour market appears healthy. That will keep the Fed squarely focused on the inflation side of its mandate at its …
Mexico: Morena supermajority spooks investors Investors have reacted negatively to Mexico’s election outcome, with the peso selling off sharply after the announcement of the election results. And while the currency has pared some of its losses, it’s still …
This week both the Conservative and Labour Party have been quick to tell us about ‘financial black holes’ in their opponent’s tax and spending plans. But there are two big things neither party is telling us. First, sticking to their fiscal rules means …
CBRT reserves on the rise The rebound in Turkey’s FX reserves in the past two months, alongside the sharp reduction in the central bank’s FX swap programme, has taken the CBRT’s net FX position into positive territory for the first time in four years. …
Data released this week confirmed that the euro-zone economy is out of recession, but that domestic demand is still quite weak. The second estimate of Q1 GDP showed that the economy expanded by 0.3% q/q. But the breakdown revealed that was fully explained …
Trade barriers doing little to slow influx of goods Trade data published today showed that Chinese exports remained on a tear in May, rising 14.5% y/y in volume terms. This will add to concerns in Western countries about the influx of Chinese goods, which …
Equities up at the end of an extraordinary week The dust is settling on an extraordinary week for domestic politics and financial markets. Equities rallied on Monday (See Chart 1) following the release of election exit polls at the weekend pointing to a …
Weak growth to prompt Thailand rate cut We expect the Bank of Thailand to start its easing cycle on Wednesday. The economy is certainly in need of support. Although GDP returned to growth in the first quarter of the year, output was still only 1.7% above …
Regular earnings growth hits 30-year high At first glance, the jump in regular earnings growth to a 30-year high of 2.3% in April is a clear sign that the strong pay hikes agreed in this year’s spring wage negotiations (Shunto) are filtering through. …
GDP growth set to undershoot RBA’s forecasts Australia last quarter recorded the weakest annual GDP growth since the early-1990s recession, leaving aside the pandemic. If the measly 0.1% q/q rise in output last quarter was repeated this quarter, annual …
UAE emerges as clear winner from OPEC+ decision The decision by OPEC+ to keep oil production lower this year means that GDP growth across the Gulf will be a little weaker than we had previously expected. However, the UAE came away from the meeting the …
6th June 2024
The US dollar has eased back a bit further against other G10 currencies this week as another round of slightly softer US inflation data dampened the recent rebound in US interest rate expectations. By contrast, today’s upside surprise in euro-zone …
31st May 2024
The weaker-than-expected first-quarter GDP data and downward revision to fourth-quarter growth caused markets to price in a higher chance that the Bank of Canada will cut interest rates next week. With consumption growth strong, however, we still think …
What to watch after Mexico’s election Mexicans head to the polls on Sunday to elect thousands of local officials, a new congress and the country’s next president. We have covered the macroeconomic implications of the election in several pieces – all of …
South Africa’s looming coalition talks Two days have passed since South Africa’s polling day and, with over 70% of votes counted, the ANC’s vote share is set to be fall well short of a majority. A coalition with one of the larger opposition party now …
Trump conviction won’t sway the election Trump campaign won’t be decided by courts We doubt that Donald Trump’s New York felony conviction on charges of falsifying business documents will have any significant impact on the presidential election …
Russian tax hikes: important but not large enough The tax hikes announced by the Russian finance ministry this week will help to plug the hole created by the growing military budget, but won’t deliver the scale of fiscal tightening needed to stop the …
Government spending set to reaccelerate The official PMIs for May published today were disappointing. Taken at face value, they imply that the improvement in economic momentum earlier this year has stalled. One reason appears to be that government …
The key event next week will of course be Thursday’s ECB meeting which we have previewed separately in our ECB Watch . In brief, we think the Bank will go ahead and cut its deposit rate from 4.00% to 3.75% but now expect it to leave rates on hold in July …
With both Labour and the Conservatives this week ruling out increases in income tax, national insurance and VAT, it remains difficult to see how cuts to public services can be avoided after the election. (For all our election analyses, see here .) But …
The decision by OPEC+ to move its crunch meeting from in-person on Saturday in Vienna to online on Sunday, historically a sign of an uneventful meeting, suggests that members will rollover production cuts into the second half of this year. But a host of …
Vietnam rate hike risk The risk of monetary tightening in Vietnam has risen over the past few weeks due to concerns about the currency and inflation. We still think a rate hike is unlikely. But even if the central bank (SBV) did raise rates now, we think …
The US puts up trade barriers, will Europe follow? The US announced that it is ratcheting up tariffs on Chinese-made electric vehicles, lithium-ion batteries, and solar panels. We covered the announcement and its implications across our Climate, Global, …
Will PM Modi secure another majority? Voting in India’s seven-week election extravaganza ends tomorrow, and results are due to be announced on Tuesday 4 th June. Clients can see all of our election insights here . We will also be discussing the election …
Fertility rate may have fallen to fresh lows According to some estimates , Japan’s fertility rate fell from 1.26 in 2022 to 1.21 last year. Although higher than in some other Asian economies, for Japan this would still be a fresh record low. (See Chart …
Disinflation stalling The economic data released this week once again highlighted the dilemma the Reserve Bank of Australia finds itself in. On the one hand, the April Monthly CPI Indicator showed the second consecutive rise in both headline and trimmed …
Stick or twist for OPEC+ Oil markets are gearing up for Sunday’s OPEC+ meeting which looks set to be a close call on how the group decides to take forward oil policy. OPEC+ has reduced its oil output by 3.2mn bpd since October 2022, but oil prices have …
30th May 2024
The dollar looks set to end the week broadly unchanged against most currencies, halting its slide over the past couple of weeks. Bond yields in the US rebounded this week, partly due to the Fed minutes published on Wednesday but have also risen in other …
24th May 2024
The further fall in headline inflation in April, to a three-year low of 2.6%, means the 2% target could be achieved as soon as August. Whether the Bank of Canada cuts interest rates in a couple of weeks or waits until July, our key message is that the …
South Africa's pivotal election looms There’s less than a week to go until South Africa’s pivotal election and there remains significant uncertainty about the ANC’s vote share and, if it’s forced to go into coalition, who it will ally with. The ANC’s vote …
Fed in wait-and-see mode Fed to proceed with caution The minutes of the Fed’s early May policy meeting were, not surprisingly given the backdrop of data releases ahead of that meeting, somewhat hawkish. The resilience of economic growth and employment, …
Still too early for nominal TRY appreciation The Turkish lira has been surprisingly stable over the past two months and Finance Minister Simsek noted this week that the currency would have actually appreciated had the central bank not been buying dollars …
Mexico’s election race enters the final phase Next week marks the final week ahead of Mexico’s election, in which all seats in congress, thousands of local government positions and, most importantly, the presidency are up for grabs. The opinion polls …
Natural gas bucks the trend In a week dominated by sharp falls in oil and precious metals prices, the 12% jump in European natural gas prices has been a notable outlier. Although the front-month TTF benchmark price has slipped back in trading today, at …
It’s tempting to think that every bit of economic data released between now and the general election on 4 th July will make a difference to who will be Prime Minister on 5 th July. Inevitably, data releases will be written up as “good” or “bad” for Sunak …
Worrying or reassuring? The wage growth data published this week were not good for the inflation outlook, but they weren’t as bad as they first appeared. As a re-cap, data released by the ECB showed that negotiated wages rose by 4.7% y/y in Q1, slightly …
Pullback in deposit growth is not a bullish signal After picking up during the pandemic, growth in bank deposits has slowed sharply recently. (See Chart 1.) They even fell outright in April, by a record RMB3.9trn, though this may partly reflect …
