Despite the re-introduction of lockdown measures in some US states, industrial commodities prices continued to rise this week on the back of ongoing hopes of a vaccine-induced economic boom next year . Nevertheless, we think that the risks to most of our …
11th December 2020
It’s been over four years since the EU referendum and the world is a clearly a very different place. However, when it comes to Brexit, it feels like Groundhog Day. The EU Summit on 10 th /11 th December, billed as the moment when a Brexit deal could be …
This week brought more evidence that the economic rebound has faded in the closing weeks of the year. The near-term risks are still skewed firmly to the downside, even as the vaccine rollout gets underway. Economy goes into reverse in December… Infection …
Sanctions threat a reminder of Turkey’s fragility Both the US and the EU look set to impose sanctions on Turkey, which could undermine the gains from the recent shift to orthodox economic policymaking. Any sanctions are likely to be towards the milder end …
Riksbank keeps all options on the table The minutes from the Riksbank’s policy meetings are never what one would call page-turners. However, the account from the November meeting (released on Monday) was a bit more interesting than usual given that two of …
This week has brought little festive cheer on the virus front, with France announcing that with daily new infections no longer falling rapidly, many of the restrictions will stay in place for three more weeks, with an 8pm curfew only lifted for Christmas …
On hold on Thursday, and beyond Taiwan’s central bank (CBC) looks all but certain to leave its main policy rate unchanged at its current all-time low of 1.125% at its meeting on Thursday. With the economy performing well, there is a plausible argument …
Credit rating downgrade unlikely to lift bond yields S&P Global Ratings downgraded the credit ratings of New South Wales and Victoria this week from AAA to AA+ and AA respectively. Both states have held the prestigious AAA rating since 2003 and entered …
CEWC to discuss withdrawal of COVID stimulus China’s leadership will gather in the coming days for the Central Economic Work Conference (CEWC), an annual meeting that sets the economic targets and policy priorities for the coming year. The discussions are …
Emergency approvals will fast-track the recovery… Further developments this week on COVID-19 vaccine availability in India reaffirm the recent upward revisions that we made to our GDP forecasts . Three manufacturers have submitted applications to …
The Nikkei 225 this week reached levels last seen in 1991, buoyed by a flurry of upbeat data releases. Revised figures show that GDP expanded by 5.3% q/q in Q3, a touch stronger than the preliminary estimate. The 17.1% m/m jump in machinery orders in …
Egypt: government keeps the belt tight Egypt’s budget deficit has narrowed this year despite the COVID-19 pandemic as the authorities maintained a tight grip on public spending. While this highlights the commitment to lowering the public debt ratio, it …
10th December 2020
Finance Minister Chrystia Freeland hinted this week that the government will continue to provide fiscal stimulus until the economy reaches full employment. This is a far cry from concerns elsewhere about public finances and reinforces our view that the …
4th December 2020
After much wrangling, this week OPEC+ agreed to a partial roll over of its current collective output cut into next year. But the obvious divisions between members of the group mean the question marks over the future direction of oil supply are as large as …
SA: tighter restrictions but one eye on the economy South African President Cyril Ramaphosa’s speech to the nation last night suggests that, for now at least, the government is continuing to prioritise the economy over battling a second wave of COVID-19. …
Brazil: benefitting from fiscal largesse… The activity data out of Brazil this week confirmed that its economy has suffered much less than others in Latin America. Q3 GDP figures showed that output was down 3.9% y/y (compared with 8-10% y/y elsewhere) and …
Markets received a boost this week from the more positive news on the possibility of a (smaller) fiscal relief package, but it still seems unlikely that a deal will be made that satisfies all sides. At the same time there’s a risk of a government shutdown …
Swedish services PMI defying gravity, for now The strong set of manufacturing PMIs from Switzerland and Sweden in November mirrored the survey from Germany and did not come as a huge shock. The pick-up in Sweden’s services PMI, released yesterday, was …
Brighter times ahead The week’s data releases have been a mixed bag. The good news is that retail sales rose by 1.5% m/m in October which lifted them to 3.1% above their February level. But things have taken a turn for the worse since then. The services …
Will Poland and Hungary blink? Comments by the leaders of both Hungary and Poland today suggest that their governments are unwilling to back down over their EU budget vetoes. But threats by EU officials to circumvent Poland and Hungary could make them …
Depending on which paper you have read this week a Brexit deal is either all-but done, with just some technical details to iron out, or the negotiations are about to collapse due to demands from the EU and intransigence by the UK. We admit that we don’t …
US to curtail China’s access to its capital markets On Wednesday, the US House of Representatives passed the “Holding Foreign Companies Accountable Act”, which has already cleared the Senate. If it is signed into law by President Trump, as seems likely, …
Faster recovery now likely The recent good news on vaccine development means that countries in Emerging Asia are likely to start inoculating their populations sooner than we had previously envisaged. As we outlined in a recent Update , an effective …
Containment measures may need more teeth Daily cases have started creeping higher again at the national level driven by a renewed rise in infections in Tokyo and Osaka. (See Chart 1.) However, across most of the country the virus is a long way off …
Consumption set to rebound further The 3.3% q/q rebound in Q3 GDP was stronger than most had expected. The 7.9% q/q rise in consumption reversed half of the drop in Q3, but some sectors are still on their knees. For example, spending on accommodation …
Activity data indicate further recovery in Q4 The recovery in GDP was a touch faster than expected in Q3 , and activity data for November released this week point to a continued rebound in Q4. The manufacturing and composite PMIs dropped last month, but …
Deal or no deal? The past week has been dominated by the OPEC+ meeting and, while it has brought to the fore divisions within the cartel, it seems that the group is moving towards some sort of agreement. The OPEC Conference started on Monday but, having …
3rd December 2020
All eyes in the oil market will be on the OPEC and OPEC+ meetings on Monday and Tuesday next week . Given the renewed imposition of virus-related restrictions in Western economies, the near-term prospects for oil demand have deteriorated. Accordingly, we …
27th November 2020
Solid current account to support MXN This week’s data dump from Mexico showed a sharp drop in inflation to 3.4% in early November , and a small upward revision to Q3 GDP from the provisional estimate (+12.0% q/q to +12.1% q/q). Perhaps the most …
CEE past the worst as virus outbreaks ease There are encouraging signs that virus outbreaks have passed the worst in Central & Eastern Europe. Poland, the Czech Republic, and Slovakia have all recorded a decline in new daily infections in recent weeks. …
There is now more pressure on Finance Minister Chrystia Freeland to use the fall fiscal update next week to announce short-term measures to support the economy, but we still expect her to outline how the government intends to raise longer-term investment. …
Nigerian reforms: blowing hot and cold Mixed signals from recent policy announcements in Nigeria raise doubts about the administration’s commitment to pro-business reforms, most notably in relation to the currency. The announcement by the Central Bank of …
Lockdown boost to exports will fade… The growing likelihood that effective vaccines will soon be available in major developed economies has brightened the global economic outlook. But an end to lockdowns and a revival of spending on services in major …
Sweden in the limelight It has been a Sweden-centric week, rounded off with a raft of economic data released this morning. The most noteworthy of which was the second reading of Q3 GDP, which was revised up from the initial estimate (+4.9% q/q versus …
Mounting evidence of Q4 contraction Data published this week for November added to the evidence that the euro-zone economy will experience a sharp contraction in Q4, at least by pre-pandemic standards. The Economic Sentiment Indicator declined, and the …
Following the news on 9 th November that the Pfizer and BioNTech COVID-19 vaccine is very effective, we highlighted how this could dramatically improve the economic outlook. (See here .) Since then, the positive news on other vaccines has convinced us to …
How will the BoK respond to rising property prices Rising property prices in Korea appear to be causing some concern at the central bank, with the BoK governor on Thursday again noting that “housing prices have continued to increase in all parts of the …
Olympics unlikely to boost recovery While daily cases have showed signs of levelling off in virus hotspots such as Tokyo and Hokkaido in recent days, the third wave is increasingly likely to weigh on economic activity over the near term. The number of …
House prices ready to skyrocket Daily data from CoreLogic suggest house prices in Australia’s five largest capital cities have risen 0.9% from their trough in October. And leading indicators suggest prices may soar before long. Indeed, our sales to new …
Foreign purchases of equities at record highs Net portfolio inflows into India have surged this month. (See Chart 1.) This mirrors the jump in portfolio inflows to other EMs, suggesting that global factors have been at play, such as the US election …
UAE: major oil discovery, OPEC quit rumours This week’s revelation by the UAE that it has discovered major new oil reserves boosts the economy’s long-term prospects but it may further raise questions over its commitment to OPEC. On Sunday, Abu Dhabi …
26th November 2020
This week the markets were buoyed by the news that President-elect Joe Biden intends to nominate Janet Yellen to be Treasury secretary but, while she is eminently qualified, her lack of political deal-making experience could be an Achilles heel. Yellen to …
25th November 2020
Pension withdrawals 2.0 in Peru and Chile The recent political storm in Peru has calmed after centrist Francisco Sagasti was sworn in as the third President in just over a week. Local financial markets and the sol have reversed their earlier losses. The …
20th November 2020
Crawling out of the pandemic era A string of good news from COVID-19 vaccine producers may be followed by further positive updates in the coming weeks, but it is likely to take longer for the “vaccine boost” to reach much of Sub-Saharan Africa compared to …
Most commodity prices rose this week, buoyed by news of further progress on COVID-19 vaccines. A rapid roll out of an effective vaccine suggests that economic activity, particularly in the US and EU, would be stronger than otherwise, which is positive …
While renewed lockdowns could soon dent home sales, we doubt they would lower prices. There was a modest 0.6% m/m fall in home sales in October, but this was likely due to very low inventory rather than fears about worsening outbreaks of COVID-19. The …
The good news on vaccines kept coming this week, but beyond those encouraging headlines, the inexorable rise in coronavirus infections is beginning to trouble us about the near-term economic outlook. Vaccine news mostly positive The news that the mRNA …
