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Canada has escaped much more lightly than we feared from President Trump’s big announcement, with the import-weighted US tariff likely to be 8% based on current plans and potentially below 5% in the near future. Nonetheless, the much larger tariff rate on …
3rd April 2025
We are significantly downgrading our end-2025 forecast for the S&P 500 for two key reasons. The first is yesterday’s announcement of greater tariffs on US imports than we had assumed . In such circumstances, we no longer think the economic backdrop will …
Asian economies will be hit harder than most by US reciprocal tariffs. We were already expecting more rate cuts than the consensus in most countries in the region, but there’s now a risk that central banks in Malaysia and Taiwan may have to start easing …
Our scenarios of how different rates of US tariffs on UK exports could influence the UK are designed to provide clients with some real-time context when President Trump announces tariffs tonight. These are rough rules of thumb for blanket tariffs on all …
2nd April 2025
We expect the Reserve Bank of New Zealand to cut its Official Cash Rate by 25bp, to 3.5%, at its next meeting on 9 th April. Although activity is now on the mend, spare capacity will ease only gradually, consistent with a sustained decline in …
The latest PMIs suggest that global industry is heading into Q2 on a weaker footing. Meanwhile, price pressures accelerated sharply in the US but generally eased elsewhere. The output component of the global manufacturing PMI fell to 50.5 in March from …
1st April 2025
February’s JOLTS data show a labour market settling back into its pre-pandemic norms. With limited signs of DOGE’s trimming of the federal workforce in the survey, all eyes will now turn to March’s employment report, due on Friday. Job openings fell to …
While the RBA is becoming increasingly confident that inflation will sustainably return to target, we still expect its easing cycle to be shallower than most anticipate. The RBA’s decision to leave its policy rate unchanged at 4.10% was correctly …
While US tariffs are a headwind, the continued acceleration in consumer prices will only heighten concerns among Bank of Japan’s Board members about inflation overshooting its 2% target. As the Bank should have a rough sense of the severity of US trade …
28th March 2025
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
27th March 2025
As expected, Australian Treasurer Jim Chalmers unveiled a slew of new spending measures in today’s pre-election Budget. However, we don’t believe the scope of fiscal expansion is large enough to keep the RBA from cutting rates a bit further this year. In …
25th March 2025
Because the concept of ‘reciprocal tariffs’ is merely a cover for the White House to impose whatever tariffs it likes, they pose a potentially considerable threat to world trade. This Update provides answers to ten questions regarding what we know, as …
The latest flash PMIs suggest that while economic activity may have picked up a bit in advanced economies towards the end of Q1, the outlook remains fairly bleak. And while inflation seems to finally be receding in the euro-zone, price pressures remain …
24th March 2025
While leaving interest rates at 4.50% today, the Bank of England seemed less committed to continuing to cut rates by 25bps every quarter. We had already been pondering this possibility and today’s news has tipped us towards putting a pause in the rate …
20th March 2025
Although the FOMC stuck to its projection for two rate cuts this year, a growing number of officials share our view that further loosening is unlikely amid the increased upside risks to inflation. Otherwise, the Fed confirmed that it will slow the pace of …
19th March 2025
Our new CE UK Employment Indicator , which extracts the overall signal from a range of measures of employment, suggests that while employment growth has continued to slow in Q1 this year, it is cooling rather than collapsing. This lends support to our …
With the Bank of Japan sounding a bit more worried about downside risks to activity from US tariffs than about upside risks to inflation, we’re pushing back our forecast for the next rate hike from May to July. However, we still expect the Bank to lift …
The latest PREA consensus forecasts reveal a downward revision in total returns and capital value changes across most sectors, especially for offices and industrial. However, the consensus remains more optimistic than our projections. That said, the …
18th March 2025
While a notable shift in Canadian fiscal policy is likely regardless of who wins the upcoming election, we doubt this will move the needle for the loonie or Canadian government bonds, given that the outlook for Canadian financial markets depends more on …
Canada’s housing market falls victim to trade war While unseasonably severe winter weather has undoubtedly played some role in the recent weakness of home sales, we suspect the sharp drop in house prices in February can also be blamed on the growing …
17th March 2025
There are good reasons for the BoJ to strip out only fresh food rather than all food from its preferred measure of core inflation. To be sure, the fact that inflation excluding all food and energy has fallen to just 1.6% underlines that price pressures …
14th March 2025
The surge in rental demand is over, but rental demand will probably remain stronger than pre-pandemic levels. That suggests the prop to rents growth in 2025 and 2026 from solid demand will fade only slowly. Fundamentally, changes in rental demand are …
13th March 2025
Weak economy finally taking its toll on housing demand February’s RICS survey suggests the downside risks to our 2025 forecasts for housing demand and prices from the weak economy continue to grow. But bigger falls in mortgage rates than most expect over …
Although the Bank of Canada cut interest rates by 25bp again today, it also warned that “monetary policy cannot offset the impacts of a trade war” and that it must guard against tariff-related rises in price inflation. This suggests that the Bank is …
12th March 2025
While January’s JOLTS report was not much to shout about, timelier labour market data suggest conditions look set to worsen amid DOGE’s gutting of the federal workforce. We remain optimistic for now, though, given the health of private sector hiring in …
11th March 2025
The unravelling of US exceptionalism in stock markets since Donald Trump returned to the White House on 20 th January has been mainly driven by concerns about the US’ dominance of AI and the relative health of its economy (which has also dragged down …
6th March 2025
Although our forecast for first-quarter GDP growth is now down to -1.9% annualised, we still believe that, on balance, the US economy will escape recession and rebound in the second quarter, as the distortion caused by the unseasonably severe winter …
If the US tariffs remain in place, Canada will undoubtedly fall into recession. The limited decline in the loonie so far suggests markets are still pricing in a quick U-turn from the Trump administration. But even if the tariffs are soon lifted, their …
4th March 2025
Japanese firms will suffer some collateral damage from the 25% US tariff on imports from Canada and Mexico. And if Trump presses ahead with tariffs on imports from Japan, carmakers would be most affected. Nonetheless, we suspect that the sales of Japanese …
President Donald Trump’s has claimed that there is “no room left’ for Canada and Mexico to avoid the imposition of 25% across-the-board tariffs at midnight tonight and he has reportedly signed a separate Executive Order raising the tariff rate on Chinese …
3rd March 2025
Our updated analysis of the most attractive apartment markets for remote workers sees Austin nudge Nashville into second place after two years at the top of the table, with San Antonio climbing to third. On the other hand, Tampa fell from fourth to …
The latest PMIs suggest that global industrial activity gained some momentum in February. But with more US tariffs on manufactured goods likely to come into force in the coming months, any rebound in industrial activity could prove short-lived. Meanwhile, …
The modest uptick in Australian house prices last month is unlikely to mark the beginning of a meaningful rally. With the Reserve Bank of Australia set to deliver a shallow easing cycle, housing affordability will remain stretched, weighing on the …
Could uncertainty weigh on the global economy? Instead of clearing up the uncertainty about the direction of US economic policy, Donald Trump’s victory in last November’s presidential election has only magnified it, with threats of massive punitive …
27th February 2025
It is very unusual for the Bank of England to be cutting interest rates when inflation is above the 2% target and is expected to rise further. There’s a growing risk, then, that inflation fears will force the Bank to stop cutting rates. Equally, though, …
The Prime Minister’s announcement that defence spending will rise from 2.3% of GDP now to 2.5% by 2027 is likely to be only the start of a more substantial and longer-lasting increase in defence spending that could be funded by cuts to public spending …
25th February 2025
While our bullish year-end forecast of 7,000 for the S&P 500 assumes the index’s absolute valuation will approach its dotcom-era peak, that forecast is comparatively conservative based on relative valuation. If the equity risk premium reached its level in …
20th February 2025
The Bank of Canada has downplayed the recent stronger monthly increases in its preferred CPI-trim and CPI-median core measures, but we are not convinced by the Bank’s claim that these measures are overstating underlying inflation pressures. While the GST …
19th February 2025
Having handed down a third consecutive 50bp rate cut at its meeting today, the Reserve Bank of New Zealand is likely to slow the pace of easing going forward. That said, we still think there’s a compelling case for a lower terminal rate than most are …
Polar vortex freezes market The plunge in the sales-to-new listings ratio in January is a downside risk to our view that house prices will recover this year, particularly amid anecdotal evidence that US tariff threats are weighing on demand. Developers …
18th February 2025
When the Reserve Bank of Australia handed down its inaugural 25bp cut today, it indicated that any further withdrawal of monetary restriction would be limited, given residual inflationary pressures. Accordingly, we’re comfortable with our view that the …
A weaker economy than we previously thought could mean housing demand is a bit more subdued than we expect. But our forecast for mortgage rates to fall further than is widely anticipated suggests transactions will continue to recover and house prices can …
17th February 2025
While household incomes are rising the most since the early 1990s, households are saving rather than spending the bulk of those gains. And with real income growth set to slow this year, we expect consumption growth to remain solid rather than …
Higher mortgage rates and weak activity starting to weigh on housing demand January’s RICS survey suggests that the recent rises in mortgage rates and the downbeat economic outlook weighed on housing demand at the start of this year. But bigger falls in …
13th February 2025
Soaring food inflation has been the key driver behind the recent strength in headline inflation. Processed food inflation will remain high for a while yet but that won’t prevent overall food inflation from falling sharply as the surge in rice and fresh …
Due to the relatively small size of the federal workforce and the large number of exempt positions, the federal government hiring freeze should have only a modest impact on payroll employment. More pain would be felt if the President follows through on …
11th February 2025
The latest opinion polls suggest that a CDU-SPD coalition is the most likely outcome of the German election. Such a coalition would be less likely to pursue labour market reforms and activist industrial policies than a CDU-Green coalition. But we think it …
This analysis has been edited to reflect the influence of the Q4 2024 GDP data released two days after the initial analysis was published. Higher taxes for businesses, a lingering drag from the previous interest rate hikes and softer overseas demand …
While it is possible that a fall in mortgage rates will trigger a modest increase in the number of rental properties over the next two years, we doubt this will offset the weakness in rental supply over the past decade. Our forecast is for tight supply to …
The newly-announced 25% tariffs on all steel and aluminum imports entering the US will have a limited impact on the Canadian economy given that exports of these products account for just 1% of GDP. With President Trump also beginning to change his tune on …
10th February 2025
