The muted gains in the Bank of Canada’s preferred core price measures in July make another interest rate cut at the September meeting seem inevitable. The Bank will be encouraged by the second soft monthly gain in rents, which may be a sign that we have …
23rd August 2024
Still trying to fix the destocking scheme At a press conference today, the Ministry of Housing pledged to accelerate the purchase of unsold homes for conversion into affordable housing. Exactly how it intends to go about that is unclear. The national …
RBI Governor pushes back against change to target A longstanding debate in Indian policymaking circles over which measure of consumer price inflation the RBI should target has been reignited in recent weeks. In the Government’s Annual Economic Survey …
Underlying inflation falling below 2% According to a recent survey, 57% of analysts predict another rate hike by year-end, with one-third thinking it will happen in October and the remainder favouring the December meeting. In his parliamentary hearing …
Restrictive policy will do its job Earlier this week the Reserve Bank of Australia published the minutes of its August meeting, which showed that the Board remains concerned about upside inflation risks. In particular, the Bank noted that there was likely …
Currency concerns abating Three central banks announced policy decisions this week and all three kept rates on hold. At first glance then, an uneventful week. But there were dovish signs across the board that suggest all three will ease policy soon. We …
Ceasefire seems a long way off Despite the US government’s efforts to push for a ceasefire agreement between Israel and Hamas this week, a deal seems some way off. The economic spillovers from the war in Gaza have been largest for the economies of Egypt, …
22nd August 2024
The dollar remains on the backfoot as calm has been restored quickly in financial markets, with this week’s key economic data providing renewed support for the “soft landing” scenario. Next week is lighter on the data front but features the minutes from …
16th August 2024
The data this week cast doubt on the Bank of Canada’s view that the worst is already behind us for the economy, with manufacturing sales slumping to a two-and-a-half year low in June and non-residential building permit volumes plunging to their lowest …
More good data all round More good price data The July price data should have provided more relief for any Fed officials still worried about inflation. The PPI, CPI and import price data imply that the Fed’s preferred core PCE measure increased by 0.16% …
Winds of change in Venezuela? Hopes for a regime change in Venezuela have risen after leftwing governments in Brazil and Colombia made several suggestions to overcome Venezuela’s impasse, including holding fresh elections or forming a transitional …
The good news just kept coming this week. The economy grew by an above-trend rate for the second quarter in a row in Q2 (see here ), the unemployment rate fell to 4.2%, well below most estimates of the natural rate of around 4.50%. (See here .) And at …
Poland the region’s star in Q2 Perhaps the standout feature of the data released in the region this week was the strength of Polish GDP in Q2. Output expanded by a bumper 1.5% q/q, its fastest pace since Q1 2022. (See our initial take here .) The data …
Corporate borrowing still growing at a decent clip China’s July credit data came in weaker than expected on Wednesday. In particular, despite the PBOC cutting the loan prime rate last month, net new bank loans to the real economy turned negative for the …
We think concerns about a wage-price spiral in Germany look overdone. The German Institute of Economic and Social Research (IW) suggested that wages in Germany would “shoot up” by 5.6% this year, based on agreements reached in the first six months. This …
The strike at the world’s largest copper mine, Chinese export curbs on another critical mineral and the iron ore price tumbling to a yearly low rocked metals and minerals markets this week. While we suspect that global copper prices won’t be too affected …
Mpox fears rising on the continent This week, the WHO declared mpox a global public health emergency amidst a surge in cases in parts of Africa. Beyond the human tragedy, there may be disruption of economic activity in the region, with tourism impacted …
Further political uncertainty in Thailand Today’s election by Thailand’s parliament of Paetongtarn Shinawatra as prime minister is unlikely to draw a line under the country’s mounting political instability. Paetongtarn’s father Thaksin and aunt Yingluck …
Regulator comes under fire in Adani Group saga The Adani Group/Hindenburg Research saga took a new twist this week, 18 months after the publication by the US short-seller alleging “brazen stock manipulation and account fraud over the course of decades” …
Real labour incomes rising again The 0.8% q/q rise in Q2 GDP was stronger than most had anticipated though close to our Nowcast estimate. The main driver was a 1% q/q jump in consumption, the first increase following four consecutive quarterly falls. That …
Downside risks abound in New Zealand Our non-consensus call that the RBNZ would start normalising policy this week came to fruition, with the Bank handing down its first rate cut in over four years. But while the Committee reached a full consensus that it …
Kuwait’s tax overhaul falls a little short… Governments in Kuwait and Saudi Arabia have both stepped up reform efforts over the past week. Kuwait’s reforms are focused on the public finances, and diversifying revenues away from oil. Reports suggest that …
15th August 2024
After a turbulent start to the week, financial markets have stabilised over recent days, with asset prices and risky currencies recovering some of their sharp falls in the wake of the run of poor US economic data that prompted a massive sell-off across …
9th August 2024
With the Summary of Deliberations this week confirming that the Bank of Canada is putting more weight on the downside risks, we feel confident that the Bank will continue to cut interest rates at each remaining meeting this year. Still, with wage growth …
Economy still nowhere near recession In purely mechanical terms, the limited data released this week did trigger a downward revision to our third-quarter GDP growth forecast to 1.7%, from 2.0%. But only because the June trade data sets up for a slightly …
Our Asia team will be holding a Drop-In on Wednesday 14th August at 0830 ET/1330 BST to discuss the timing of Asian interest rate cuts and the impact of global markets volatility. Register here for the 20-minute online briefing. Weakening against a weak …
After stagnating in the first half of this year, the Halifax house price index jumped by 0.8% m/m in July in response to the fall in mortgage rates from 4.9% to 4.7% in July. (See here .) What’s more, July’s RICS survey suggests that increasing demand …
Banxico looks through peso volatility and cuts The Mexican peso was on a rollercoaster ride this week. It was one of the hardest hit EM currencies in the market rout, briefly breaching 20/$ (the weakest level in over a year) in early hour trading on …
It was no surprise to see the global commodity price index fall and rise alongside the contortions in equity markets this week. But commodity prices have not all been in the same boat ; whereas some have remained buoyant throughout, others were already …
Domestic factors outweigh global turmoil Idiosyncratic factors seemed to play a bigger role than the recent global financial market turmoil in driving African markets this week. But while the fall in oil prices may be overdone, African producers should …
The brief turmoil in global financial markets following the release of weaker-than-expected US payrolls data and a resurgence of concerns about a hard landing there has been the main event of the past week. We think three points are worth making about the …
US recession fears grip global markets ... The turmoil in global financial markets late last week and early this week has been followed by some stabilisation over the past few days, but the situation remains fluid and you can find all our analysis on the …
Our Asia team will be holding a Drop-In on Wednesday 14th August at 0830 ET/1330 BST to discuss the timing of Asian interest rate cuts and the impact of global markets volatility. Register here for the 20-minute online briefing. US growth …
US recession risks yet to derail export outlook The recent batch of weaker-than-expected US data rattled global markets this week. But it hasn’t significantly altered China’s economic outlook. Admittedly, the risk of a US recession, which would hurt …
8th August 2024
Sell-off’s hit to oil likely to be reversed Fears of a US recession have rattled global financial markets earlier in the week, and those in the Middle East weren’t spared. We think the spillover into the oil market has gone too far, though, and it raises …
No rush to loosen policy Although the Reserve Bank of Australia left rates on hold at its meeting this Tuesday, its messaging was unequivocally hawkish. In her post-meeting press conference Governor Michele Bullock stated that the Board had seriously …
Financial stress should be short-lived The Topix and the yen have reversed some of the large moves seen earlier this week, but BoJ Deputy Governor Uchida still signalled that those developments have reduced the chances of further policy tightening in a …
Between a dovish message from the FOMC on Wednesday and a shockingly weak non-farm payrolls report today, the dollar is ending a turbulent week on the back foot. US interest rate expectations have seen a massive drop as recession fears now appear to have …
2nd August 2024
The data this week suggested that second-quarter GDP growth was a touch stronger than expected at 2.1% annualised. We expect higher oil export capacity and strong immigration to prevent a sharp slowdown this year, but with neither tailwind preventing …
Labour market cracks raise risk of hard landing Things went from bad to worse after the Fed’s policy announcement mid-week, with the data on Thursday revealing a further fall in the ISM manufacturing index and a rise in initial jobless claims to a near …
We will be holding a Drop-In next Thursday at 15.00 BST discussing financial risk across the EM world. Register for the 20-minute online briefing here . Nigeria turns back to Ways and Means facility Nigeria’s government raised the limit of its Ways and …
This week was a good example of a “hawkish cut” from the Bank of England. The cut bit; the first 25 basis point (bp) fall in interest rates since March 2020. The hawkish bit; the Bank stated very clearly that it doesn’t expect to cut rates too much or too …
We will discuss our latest EM Financial Risk Monitor in a Drop-In next Thursday. Register here for the 20-minute online briefing. By hook or by crook The declaration that incumbent Nicolás Maduro won Venezuela’s presidential election was met with …
We will be holding a Drop-In next Thursday at 15.00 BST discussing financial risk across the EM world. Register for the 20-minute online briefing here . Tensions in the Middle East rising after Israeli strikes The rocket strike on the Israeli-occupied …
The oil market's fairly muted reaction to events in the Middle East this week only temporarily reversed the recent downward trend in oil prices. On the face of it, however, the risk of a spike in oil prices which would likely arise from a more direct …
We've been here before We wouldn’t take Tuesday’s pledge from the Politburo to tilt stimulus towards consumption at face value. The leadership called for policies to lift incomes and enhance the capacity and willingness of low- and middle-income groups to …
This week saw the publication of a raft of activity and inflation data for the euro-zone. There are two key takeaways in our view. First, the economic recovery remains fragile. Admittedly, GDP expanded by a solid 0.3% q/q in Q2, the same pace as in Q1. …
Bank of Korea to wait until October to cut rates Korean GDP figures published last week showed that the economy contracted in the second quarter, and monthly data for June and July published this week confirm that the economy is struggling. Although …
Bond restrictions highlight investor wariness The Reserve Bank of India (RBI) this week announced restrictions on foreign investment on all newly-issued 14-year and 30-year local-currency sovereign bonds. Effective immediately, foreigners will now only be …
Near-term outlook for consumption brightening As we had anticipated , the Bank of Japan’s decision to halve its JGB purchases over the next couple of years didn’t deter it from also raising interest rates further at this week’s meeting . Press reports …
