Note: We’ll be discussing the Fed, ECB and Bank of England December decisions and the policy outlook for 2024 in an online briefing on Thursday, 14 th December . Click here to register for the 20-minute session. Last week we brought forward the timing of …
8th December 2023
Faith in the state backstop as strong as ever Earlier this week, Moody’s downgraded the outlook on China’s sovereign credit rating from “stable” to “negative” and made similar changes to its ratings outlook for Chinese banks, local governments and …
Falling fertility in Korea Recently released figures show the fertility rate (the number of babies expected to be born per woman during her lifetime) in Korea fell to a new all-time low of just 0.7 in the third quarter of the year. This is the lowest …
Sensex surges as BJP wins big in state elections The financial market reaction to the announcement of the BJP’s victory in three state elections is perhaps an indication that investors are confident that next year’s general election will deliver another …
Services inflation continues to accelerate The economic data released this week seem to vindicate the Bank of Japan’s caution when it comes to abandoning ultra-loose monetary policy. For a start, the timely Tokyo CPI showed that inflation slowed from …
Not higher, not longer Earlier today, the Treasury and the RBA published an updated Statement on the Conduct of Monetary Policy. The revised statement clarified that the RBA’s objective is to return inflation to the mid-point of its 2-3% target. That led …
Egypt: aftermath of election to prove pivotal Next week Egyptians will head to the polls to vote in the presidential election and, while it is widely expected President al-Sisi will be re-elected, the vote could act as a trigger for policy moves that are …
7th December 2023
The greenback’s grind lower has continued this week amid falling US Treasury yields and strong appetite for risk. While comments from numerous Fed speakers (including Chair Powell today) continued to point to an extended pause, PCE data and November’s …
1st December 2023
Despite strong growth, core inflation normalising Q3 growth up, Q4 down This week’s modest upward revision to third-quarter GDP growth, which is now estimated to have been as strong as 5.2% annualised, rather than 4.9%, was certainly eye-catching. It …
The revisions to the national accounts leave the post-pandemic recovery looking stronger than we thought. But that is partly due to intense inventory building, which leaves the economy vulnerable to a period of destocking now that demand is weakening. …
Argentina: signs of more orthodox shock therapy There have been two key developments in Argentina this week that give a sense of what President-elect Javier Milei’s policy agenda will look like. First, the confirmation that Luis Caputo will become economy …
Investors increased their expectations for interest rate cuts by the ECB after November’s soft euro-zone inflation print this week, but in parts of Central and Eastern Europe (CEE) the latest developments suggest inflation will take a lot longer to fall …
In light of the inflation and activity data released this week we are bringing forward our forecast for the start of the ECB’s rate cuts from September to June next year. And we now think the deposit rate will come down from 4.0% currently to 3.0% by the …
The prospect of earlier interest rate cuts in the US and the euro-zone has led to a sharp fall in US and euro-zone government bond yields this week. 10-year US Treasury and German Bund yields have fallen by 15 and 22 basis points (bps), to 4.32% and 2.43% …
SA's public debt risks a problem for banks? The key takeaway from the South African Reserve Bank’s latest Financial Stability Review released this week is growing concern about local financial institutions’ holdings of government bonds – what the report …
Ramp up in fiscal support yet to be fully felt Government borrowing has been strong ever since the Politburo called for an acceleration in bond issuance at its July meeting. Momentum has been sustained by a rare mid-year increase in the deficit target …
Korea makes a weak start to Q4 This week’s data dump from Korea suggests the economy weakened at the start of Q4, supporting our view that the tightening cycle is over and that interest rate cuts could come onto the agenda soon. Figures published …
Revising up our GDP forecasts The activity data this week confirm that India’s economy is rude health. The GDP data for Q3 (Q2 of FY23/24) showed a slowdown in both y/y and q/q, but this was very mild and the bigger picture is that the pace of growth …
Consumption falling but labour market tightening The October activity data were a mixed bag. While industrial production rose by 1% m/m, firms’ forecasts for the next couple of months were weak and point to a stagnation in output across Q4 following …
House prices falling again in Sydney and Melbourne Data released by CoreLogic today showed that house prices rose by 0.6% m/m in seasonally-adjusted terms in November, the smallest rise since April. And CoreLogic’s daily data show that house price …
COP attendance t = COP attendance t-1 ^ 2 Whatever does or does not get agreed at COP28 in Dubai over the coming weeks, one way in which the event will set records is the staggering number of people in attendance. As shown in Chart 1, the 70,000 delegates …
30th November 2023
All eyes on Vienna and Dubai The UN’s annual climate conference, COP28, gets underway in Dubai today with thousands of delegates set to attend. But events in Vienna could take the spotlight. OPEC+’s delayed meeting is taking place as we speak and could …
Zambia and Angola hikes, Nigeria resists High inflation is pushing some African economies to return to monetary tightening but Nigeria has resisted so far. We doubt this will last. Inflation rose again in Nigeria, Angola and Zambia last month as currency …
24th November 2023
Currencies were no exception to the calm across markets, and the US dollar seems set the end the week a bit lower against most currencies. While “more of the same” downbeat data out of the euro-zone weighed on the euro, most other G10 currencies …
It would be a stretch to say the government showed fiscal restraint in the Fall Economic Statement , but the announcement of only a few billion dollars in extra spending measures means that Finance Minister Chrystia Freeland did not pour much more fuel on …
Markets welcome Milei’s win From a political angle, it’s hard to see Javier Milei’s victory in Argentina’s presidential election last Sunday as anything other than a rejection of the political establishment, in a similar vein to the surge in support seen …
CBRT bringing tightening cycle to a close Turkey’s central bank (CBRT) delivered another chunky 500bp rate hike to 40% this week but it also signalled that its tightening cycle was very close to an end. The local elections in March may be playing a part …
We continue to think the euro-zone economy will fall into recession in the second half of this year and roughly flatline in the first half of next year. This is mostly due to the impact of squeezed household incomes and the tightening of monetary policy, …
It’s true that the Chancellor’s pre-election splurge unveiled in this week’s Autumn Statement was the largest discretionary fiscal loosening (outside of the Covid period) since 2010. And at £20.3bn (0.6% of GDP) in 2028/29, it was the biggest tax-cutting …
Revising up our GDP forecasts India’s economy recorded solid growth in the first half of this year and continues to do so in the second half. Household consumption appears to have been robust in recent months. The RBI’s latest consumer confidence survey …
Strong Q3 growth Most countries in Emerging Asia have now published GDP figures for the third quarter. Growth slowed in China, was unchanged in Korea, but rebounded strongly everywhere else. (See Chart 1.) To view our various responses click here . …
More credit support for developers in the works Policymakers have been trying, and largely failing, to stabilise the property sector for some time. There was a major step-up in support in September, when downpayment requirements and purchase controls …
Disapproval rating highest since Suga resignation The Cabinet Office’s disapproval rating has surpassed 50% for the first time since Fumio Kishida became Prime Minister two years ago. Surely one reason is the 5% plunge in real household disposable …
Surveys point to renewed slowdown in inflation Following a rather hawkish speech by Reserve Bank of Australia Michele Bullock, the financial markets now price in a 60% chance of another 25bp rate hike at the Bank’s February’s meeting, up from 40% before …
Tensions within OPEC+ rise as threat of cut looms OPEC+ was meant to be in the spotlight this weekend but, in a surprise move, the meeting has been delayed until Thursday. The slide in oil prices and the Israel-Hamas conflict suggest that output quotas …
23rd November 2023
Post-SVB bank lending holding up well Credit where credit is due The SVB crisis back in mid-March sparked fears of a credit crunch, particularly among regional banks who are the principal source of funding for commercial real estate. Post-SVB, while the …
22nd November 2023
CBN poor communication harming credibility CBN Governor Cardoso’s press remarks this week highlighted his continued ambition to restore confidence in and the credibility of the Bank. But so far an action that would help – a clear strategy to stabilise the …
17th November 2023
The dollar is ending the week on the back foot, with the DXY index on track for its worst week since July, after this week’s US CPI print came in softer than expected. That has reinforced the growing consensus that US inflation is on track back to target …
Massa vs. Milei – the final round The final round of Argentina’s drawn-out presidential election process takes place on Sunday, pitching left-wing Peronist and current Economy Minister Sergio Massa against right-wing libertarian Javier Milei. The result …
Falling inflation prompts rate cut speculation Better inflation news prompts big market moves The release of the slightly-better-than-expected October CPI data earlier this week triggered a massive reaction in markets, with the two-year Treasury yield …
For the first time since the pandemic, the government will find itself with less fiscal room than expected when it provides an update of its plans next week. Accordingly, we doubt that the Fall Economic Statement will contain any major giveaways. Gloomy …
We’ll be discussing the UK macro and market consequences of the Chancellor’s Autumn statement at 10:00 EST/15:00 GMT on 22nd November. Register here for this 20-minute online briefing. The Chancellor, Jeremy Hunt, will want to use next Wednesday’s Autumn …
Easing inflation and stronger shekel Data out of Israel for October this week suggest that the initial impact of the conflict with Hamas on the export sector was fairly limited, that inflation pressures continued to ease and that the chances of an …
Recent export resilience unlikely to last While the Q3 GDP release disappointed this week, there was some (qualified) good news in the October trade data. Although headline export growth slowed to 1.6% y/y, from 4.3% in September, a deceleration had been …
A German constitutional court ruling this week threatens to force the government to cut its planned climate-related expenditure by €60bn or 1.2% of GDP. The decision states that it was not lawful for the government to reallocate this un-used borrowing …
Developers retreating, LGFVs taking their place In remarks published by state media last weekend, China’s housing minister, Ni Hong, discussed plans to alter the country’s real estate development model, shifting the focus from quantity to quality. There …
Back-to-back rate hikes unlikely Bank Indonesia surprised financial markets (and us) by hiking interest rates in October. But we don’t expect it to follow through with another hike at its scheduled meeting on Thursday. The main reason BI hiked last …
Commodity imports boosting trade deficit The men’s cricket team are soaring on the pitch, while the monthly goods trade deficit is doing so off it. Data released this week showed that it hit an all-time high of $31.5bn in October. That surpassed the …
Spare capacity is opening up The ABS published a flurry of data this week, which prima facie suggest the labour market is still running red hot. Nevertheless, we remain confident in our decision to call time on the RBA’s tightening cycle . That’s largely …
Saudi’s new Civil Code another step to attract FDI In a month’s time, Saudi Arabia’s new Civil Code will come into force in a bid to further entice foreign investors to the Kingdom, but more is required to hit Vision 2030 targets. The Civil Code contains …
16th November 2023
