The US dollar has fallen for a third week in a row, with the DXY closing in on its weakest level so far this year. But, although it is increasingly challenged by the current “risk-on” environment, we are sticking to the view that the greenback will …
16th June 2023
This week’s plunge in the Nigerian naira marked the latest positive step by President Bola Tinubu as he seeks to overhaul the economy, but there are still plenty of reasons to be cautious that this policy shift marks a clean break from the Buhari-era. A …
Brazil: shifting towards rate cuts? Expectations for interest rate cuts in Brazil have grown in light of recent developments, but, for now, we’re sticking with our view that Copom will hold off on lowering interest rates until November. The arguments in …
PiS adding further fuel to the inflation fire The Polish government set out plans this week to increase the national minimum wage by around 20% again next year. With the labour market still very tight and further pre-election fiscal stimulus likely to be …
Households feeling the pinch from higher rates Heavily indebted households are still being sheltered from the full impact of the surge in interest rates over the past 18 months, but their finances look ever-more perilous. The household debt to …
The Fed put its rate hiking cycle on pause this week but, in a hawkish shift, its new projections showed the median fed funds rate rising to 5.6% by year-end, which is consistent with 50bp of additional tightening. We agree that the Fed will push ahead …
Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision in an online briefing on 22nd June at 10:00 EDT/15:00 BST . Register now . The title of last week’s UK Economics Weekly was “Why …
More ground to cover The message from the ECB yesterday was decidedly hawkish. The Bank raised rates and more or less promised another hike in July, while the substantial upward revision to its inflation forecasts implied that further tightening could …
Monetary easing alone won’t suffice Data published this week made it clear that the reopening recovery has stalled. Momentum weakened almost across the board in May, and the labour market began to soften again. Broad credit growth also slowed sharply . …
Encouraging news for the BoK The minutes of the Bank of Korea’s May monetary policy meeting, published this week, confirm that the central bank is becoming increasingly concerned about the growth outlook. One MPC member called the economy “sluggish” and …
Note: We’re talking inflation and the BOJ, slowing Indian growth, and regional monetary easing in our Asia Drop-In on Thursday, 22nd June. Register now . Latest inflation data support our rates cuts view The overarching message from our Q3 India Economic …
Note: We’re talking inflation and the BOJ, slowing Indian growth, and regional monetary easing in our Asia Drop-In on Thursday, 22 nd June. Register now . Car exports catch up with other exports The external trade figures released this week suggest that …
Mortgage defaults will rise in Australia On Wednesday, the Council of Financial Regulators announced its support for the serviceability buffer set by the Australian Prudential Regulation Authority, reigniting an ongoing debate over the stringency of the …
Could SAMA step in again to support credit growth? Interbank rates in Saudi Arabia are running at their highest since 2001 following the monetary policy tightening over the past year or so and, with lingering concerns over the banking sectors liquidity, …
15th June 2023
The fall in employment in May suggests the Bank might not need to follow its 25bp hike this week with another in July. But with employment among prime-age people continuing to rise strongly and house prices surging last month, we still suspect the Bank is …
9th June 2023
Petro crisis sparks rally in Colombian assets Colombia stumbles from political crisis to political crisis. After a major cabinet reshuffle in April, this week’s scandal included allegations of phone tapping and violation of campaign financing rules and …
The US dollar looks poised to end another week down a touch – the DXY index’s first consecutive weekly fall since April. That probably reflects yield gaps vis-à-vis most other developed markets (DMs) shifting against the greenback as surprise central bank …
Agriculture dampened SA growth in Q1 South Africa’s Q1 GDP figures released this week revealed a big drag from the agricultural sector. Some of the factors that weighed on output (namely the weather) are likely to prove temporary but, even so, confidence …
Note: We’ll be discussing whether China’s post-zero-COVID recovery is already over in an online briefing at 09:00 BST/16:00 SGT on 15th June . Register now . Property support of limited use in isolation Stocks of Chinese property developers surged …
We expect the Fed to leave interest rates unchanged at next week’s FOMC meeting but, in what could be characterised as a “hawkish skip”, to signal via forward guidance (updated SEP forecasts and language in the statement) that officials are minded to hike …
Turkey embraces orthodoxy, but for how long? Optimism about a shift towards orthodox economic policymaking was at the heart of developments in Turkey this week amid the appointments of a new cabinet and central bank governor and a sharp fall in the lira. …
Central Bank Drop-In (15th June): We’ll be discussing the Fed and ECB June decisions and previewing the Bank of England’s upcoming meeting in a 20-minute online briefing at 10:00 EDT/15:00 BST on Thursday . Register Now. We learnt this week that the …
Central Bank Drop-In (15 th June): We’ll be discussing the Fed and ECB June decisions and previewing the Bank of England’s upcoming meeting in a 20-minute online briefing at 10:00 EDT/15:00 BST on Thursday . Register Now. The OECD joined the ranks of the …
No more hikes in Thailand Inflation figures published this week for Thailand showed the headline rate fell from 2.7% y/y in April to just 0.5% in May, which puts it well below the central bank’s 1-3% target. A key factor behind the decline was a 11% m/m …
RBI hawkish, but inflation outlook improving The Reserve Bank of India (RBI) didn’t throw up any surprises when it kept the repo rate on hold at 6.50% this week. The move was widely expected and the muted reaction in local financial markets suggests that …
Q1 GDP saw large upward revision The government in its May monthly economic report upgraded its view of the economy, changing its assessment to say that “the economy is recovering moderately”, dropping the previous qualifier that “there was some …
Rate hikes will drive double-dip housing downturn The big news this week was RBA Governor Lowe indicating that the Board’s patience to tolerate high inflation was waning. The Bank’s hawkish turn, coming at a time when unit labour costs are growing at …
Is Saudi Arabia taking its eye off the ball? Outside of the usual economics newsflow this week, Saudi Arabia has been the hot topic in the footballing and golfing world. It was announced control of four Saudi Pro League clubs is being transferred to the …
8th June 2023
The upside surprise to first-quarter GDP growth means there is a rising probability that the Bank of Canada will raise interest rates again. While the commonly held view seems to be that the Bank will wait until July, the passing of the US debt ceiling …
2nd June 2023
Colombia: baby steps towards sustainable growth Data out this week suggest that Colombia’s economy has started to undergo an adjustment process, albeit a gradual one. In an Update last week, we explained how Colombia’s unsustainably strong recovery had …
Debt ceiling ends not with a bang but a whimper The debt ceiling standoff ended not with a bang but a whimper – as the bill easily passed the House and Senate with comfortable majorities. In the end, the debt ceiling negotiations played out largely as …
Nigeria: subsidies slashed, naira nerves? In a positive early move, Nigeria’s President Bola Tinubu removed fuel subsidies in his first week in power. But it looks like the fiscal savings will be spent, leaving public debt on an upwards trajectory. And …
Core inflation on its way down? Data published this week showed that euro-zone core inflation fell for the second consecutive month in May. (You can read our response to the data here or watch our Drop-in on the outlook for inflation, ECB policy and …
Optimism building about policy shift in Turkey All the attention in Turkey this week has been on whether President Erdogan will moderate his economic policies now that he has secured another five-year term. The latest signs of an improvement in …
After last week’s surprise rebound in core CPI inflation, this week’s data showed that higher interest rates are starting to percolate more meaningfully throughout the economy. That will have given the Bank of England more encouragement on its mission to …
Revising up our GDP forecast for 2023 The activity data released this week suggest that the economy is holding up better than we had been anticipating. GDP growth accelerated from 4.5% y/y in Q4 2022 to 6.1% y/y in Q1 (Q4 of FY22/23). Based on our …
All eyes on OPEC+ Sunday’s OPEC+ meeting is going to be a closely watched affair amid speculation that Saudi Arabia will push for another oil output cut. Our expectation is that OPEC+ will stick with current output quotas. (Listen to an on-demand …
1st June 2023
Second-round effects from reopening still in play Investors have become increasingly bearish on the outlook for household spending in China. Onshore-listed consumer discretionary stocks have now reversed almost all of their reopening gains and those …
Korea set for a weak Q2, BoK still too optimistic While the economy avoided a technical recession in Q1 on the back of a sharp rise in automotive exports , activity data for April released this week showed that Korea’s economic woes are far from over. …
CoreLogic data published earlier today showed that house prices continue to make gains in May, heightening risks to our long-held view that the housing downturn has further to run. If house prices do stabilise or rise higher, that in turn raises the …
Policymakers warn against selling the yen The yen made headlines this week after breaching 140 against the greenback, hitting 140.93 at one point on Tuesday. That’s the weakest it had been since November last year and prompted Japanese policymakers to …
Ajay Banga appears to be well qualified to lead the World Bank Group and is as well-placed as anyone to “mobilise” Wall Street cash to fund climate-related projects. However, progress on reducing global emissions will require more than a stream of climate …
31st May 2023
The big news this week was the downward revision to Germany’s estimate of Q1 GDP, which is now thought to have contracted by 0.3% q/q rather than stagnating. That pushed the economy into a technical recession as it had contracted by 0.5% in Q4 last year, …
26th May 2023
Note: We’re discussing potential EM equity outperformance, monetary easing and “friend-shoring” in our next EM monthly online briefing on Thursday, 1 st June. Register here to join. Brazil’s fiscal framework gets strong support The approval of Brazil’s …
Attention focusing on financial stability in Turkey With the second round vote of Turkey’s presidential election taking centre stage on Sunday, the day of reckoning for Turkey’s economy and financial markets may now just be around the corner. The …
The decline in the job vacancy rate to a 22-month low in March eases some of the pressure on the Bank of Canada but, with the CFIB Business Barometer showing a renewed rise in firms’ selling price expectations this month, we continue to judge that …
GDI suggests economy already in recession This week’s upward revision to first-quarter GDP growth, to 1.3% annualised from 1.1%, suggests the economy had marginally more momentum than previously thought. But, in stark contrast, the first release of real …
Slow progress tackling construction backlog New home sales have ticked up since the end of last year, helped by a post-zero-COVID recovery in consumer confidence and large reductions in mortgage rates and down-payment requirements. But the improvement has …
The title of the UK Economic Outlook we published in March was “Recession needed to solve the inflation problem”. (See here .) The argument was that the drags from high inflation and a rise in interest rates to 4.50% would weaken activity and domestic …
SA: rising risk premia threaten high for longer rates One new threat to the inflation outlook that the South African Reserve Bank highlighted at its policy meeting on Thursday was a higher country risk premium which is fuelling downward pressure on the …
