Filtered by Region: G10 Use setting G10
We estimate that in the near-term, the drag on Japan’s exports resulting from of a universal 10% US import tariff could be nearly offset by Japan gaining market share at the expense of China in response to a much higher US tariff on Chinese imports. …
26th February 2024
Februarys’ flash PMI surveys suggest that economic activity improved in Europe at the start of this year. But services prices pressures remained elevated, especially in the UK and euro-zone, meaning that the ECB and Bank of England won’t be in a rush to …
22nd February 2024
The Bank of Japan has succeeded in creating tight labour market conditions through ultra-loose monetary policy and is now reaping the benefits in the form of stronger wage growth. The upshot is that we expect the Bank to end negative interest rates at its …
The S&P Global PMI surveys have not been fully reliable guides to activity in major advanced economies over the past few years. But their relationship with GDP outside the US is still fairly strong and the detail in the surveys offers useful information …
21st February 2024
Unlike most bubbles, this one hasn’t been accompanied, at least so far, by obvious signs of high and rising leverage. On the other hand, the share of funds invested in ‘passive’ products is now much higher than in prior bubbles. This Update considers how …
20th February 2024
Euro-zone construction output picked up in December, but remained well below last year’s peak. We expect it to drop again in 2024, in part due to a continued dismal performance by the sector in Germany. Data released today showed that euro-zone …
Following the huge fall in multi-family starts in January, we suspect the apartment sector will continue to be a drag on new development this year. But construction of single-family dwellings will remain strong. In January, housing starts suffered their …
19th February 2024
Japan’s industrial production data don’t fully take into account the influence of falling prices and have systematically underestimated the strength of manufacturing output. The upshot is that rather than losing importance, Japan’s industrial sector is …
While we expect the office and multifamily sectors to account for the lion’s share of distressed assets over the next couple of years, there is an important distinction between the two. Unlike multifamily, we expect impacts on offices to be widespread, …
15th February 2024
Although house prices continued to fall in January, lower mortgage rates are beginning to support affordability and stimulate home sales. With the sales-to-new listing ratio now pointing to positive house price inflation, we expect house prices to be …
Non-labour input costs are now moderating which should soon result in a more rapid slowdown in consumer price inflation than most are anticipating. In a recent Bulletin article, the RBA argued that “large cost increases over recent years are still flowing …
The strong reaction to the January CPI data demonstrates that markets still don’t fully comprehend that the Fed is focused on the alternative PCE measure of inflation. While core CPI inflation was unchanged at 3.9% last month, we estimate that core PCE …
14th February 2024
With activity and inflation both softer than it had expected a few months ago, the RBNZ will likely stay put at its meeting at the end of the month. However, with a still-tight labour market fuelling uncertainty about domestically-sourced price pressures, …
Speculation will inevitably build that a Donald Trump victory in this year’s presidential election would be followed, once again, by large-scale tax cuts. With the Federal budget outlook in a far worse position than back in 2017, however, it’s notable …
12th February 2024
The recent fall in the homeownership rate revealed by the Housing Vacancy Survey (HVS) is unlikely to reverse given still-high mortgage costs. The survey also provided more evidence in support of our view that the homeowner market will remain tight this …
8th February 2024
The strength of payroll employment growth over the past two months is likely to be a blip rather than the start of a renewed acceleration and the wider evidence still points to a further slowdown in wage growth. Following the unexpected strength of …
With the Reserve Bank of Australia still striking a hawkish tone at its meeting today, we’re pushing back our forecast for the Bank’s first rate cut from May. But we still think that incoming data will show enough of a drop in inflation alongside …
6th February 2024
Credit conditions normalising The Fed’s latest Senior Loan Officer Opinion Survey suggests that banks have put last year’s SVB regional bank crisis firmly behind them and, with long-term interest rates markedly lower than the peaks reached last October, …
5th February 2024
Recent headlines have drawn attention to the immediate risks facing multifamily investors and lenders. While we think this concern is appropriate, we think the biggest risks face assets financed at historically low fixed rates in 2020-21. Problems are …
The news this morning that the unemployment rate is lower than previously thought increases the chances that interest rate cuts start a little later and are slower. After publishing experimental labour market data for the five months to November due to a …
Given the rise in rents and the recent decline in mortgage rates, the financial benefit of buying over renting is increasing. This will boost buyer demand and cause tenant demand to soften this year. As housing is a necessity, households must either rent …
We expect big tech to drive the S&P 500 higher still in 2024, despite a mixed performance from the shares of most of the so-called ‘Magnificent 7’ over the last ten days in the wake of a flurry of earnings reports. To re-cap, six of the Magnificent 7 have …
2nd February 2024
The big picture from January’s manufacturing PMIs was the growing outperformance of industry in major EMs compared to their advanced economy peers. The surveys also highlighted that Red Sea disruptions are causing delivery times to lengthen. For now, …
1st February 2024
While leaving interest rates at 5.25% for the fourth meeting in a row today, the Bank of England sent a signal that the next move will be a cut, but it pushed back strongly against the idea that rates will be cut soon or far. Our forecast that inflation …
World goods trade looks to have had one of its weakest years in over 40 years in 2023. While shipping diversions may weigh on trade in the very near term, we think that they are unlikely to dent trade activity over a longer period. The bigger headwind is …
Leading indicators still point to weaker house price growth Although house price gains remained firm in January, we still expect them to soften in the months ahead. While rate cuts are on the horizon, they will do little to improve homebuying capacity. In …
Powell suggests first rate cut more likely to be May Based on the surprisingly explicit steer provided by Fed Chair Jerome Powell halfway through today’s press conference, we now expect the first Fed rate cut to come at the early-May FOMC meeting rather …
31st January 2024
We think the recent divergence between the BLS measure of apartment rents and other sources is due to reliability issues with the former, which we expect will be revised higher in future releases. Therefore, while it currently points to a downside risk to …
Typically, US REIT price indices have been a good indicator of the growth path for capital values in the direct market. That said, even though REIT prices rebounded in Q4 2023, we don’t expect the direct market to follow any time soon as the property …
30th January 2024
The December JOLTS data show a continued painless normalisation in the labour market – with job openings on a downward trend, layoffs unusually low and wage growth set for a sharp slowdown. Job openings have rebounded over the past couple of months …
The Reserve Bank of New Zealand launched a consultation on changes to its macroprudential framework last week. In our view, the proposed tweaks are unlikely to have a meaningful impact on the housing market one way or the other. The big picture continues …
The worsening in total returns to -3.0% q/q in Q4 was consistent with our expectations of bigger-than-average year-end markdowns. But the major takeaway was that the data and NCREIF’s release notes support our view that there will be growing distress and …
29th January 2024
The Q4 RICS survey suggested that occupier and investment sentiment remained pessimistic in Q4. We expect sentiment will be subdued in at least the first half of 2024, with credit conditions staying tight and growing signs of distress, particularly in the …
25th January 2024
Minor improvements in all sectors, but very gradual recovery ahead Having deteriorated for the best part of 2023, sentiment over all-property occupier demand and rents improved in Q4. However, the balances remain negative, pointing to subdued demand and …
Our new Fiscal Headroom Monitor uses a simplified version of the Office for Budget Responsibility’s (OBR’s) model to estimate how changes in market interest rate expectations and gilt yields are influencing the scope for the government to announce new …
We held a 20-minute online briefing this week to discuss our new forecast for the US housing market in 2024. You can watch the recording of the “drop-in” here . This Update recaps our answers to the most asked questions from clients and provides answers …
Norges Bank today reiterated that it will leave its policy rate at 4.5% “for some time”. But we think that inflation will fall rapidly this year, so when the Bank does start to cut rates, it will do so more quickly than its forecasts suggest. The decision …
January’s flash PMI surveys suggest that GDP growth in advanced economies ticked up from a very weak pace at the start of 2024. And with price pressures still strong, central banks will probably continue to push back against expectations for rate cuts in …
24th January 2024
The Bank of Canada’s decision to drop its tightening bias today is the first step toward interest rate cuts, particularly as the Bank also hinted that it may be willing to look through elevated mortgage interest costs and rent inflation. We continue to …
The new cap on international student visas is another reason to expect population growth to slow sharply. That will give the Bank of Canada confidence that CPI rent inflation will ease later this year, providing a clearer path for headline inflation to …
23rd January 2024
Central banks will probably continue to push back on expectations of rate cuts at their scheduled policy announcements in the coming weeks. But with inflation and wage pressures clearly moderating, we still think the Fed, ECB and Bank of England will cut …
History suggests that when one Monetary Policy Committee (MPC) member votes to cut interest rates, a majority of the nine members will agree about two meetings later. There have been 14 turning points in Bank Rate since the MPC’s inception in 1997, by …
The Bank of Japan sounds increasingly confident that it will be able to achieve its inflation target on a sustained basis. With Mr Ueda at the post-BOJ-meeting press conference again emphasising the importance of the spring wage negotiations, we think the …
While Australian households are as indebted as ever and mortgage payments have hit fresh record-highs, lending standards continue to be sound, loan defaults remain subdued and banks are well capitalised. Accordingly, there’s no compelling case to tighten …
We expect evidence of distress to ramp up this year as loan extensions end. Many borrowers will be forced to either inject new capital, return assets to lenders or sell into a soft market. Those assets returned to lenders will also ultimately end up on …
22nd January 2024
Lenders ready to meet increasing mortgage demand The latest Credit Conditions Survey showed a rise in the availability of mortgage credit in Q4 as financial market interest rates fell, but demand for mortgages slipped as mortgage rates took time to catch …
18th January 2024
The Bank of England’s Q4 Credit Conditions Survey suggests the worst of the drag on economic growth from higher interest rates is fading. That suggests an economic recovery will begin later this year. The net percentage balance of banks’ supply of …
Lower mortgage rates supporting demand The decline in mortgage rates appears to be supporting demand, with home sales rebounding last month. While prices continued to fall in December, the sales-to-new listing ratio is now pointing to positive house price …
16th January 2024
We are downbeat on industrial total returns over the next two years compared to the consensus because of our relatively pessimistic views on both rents and cap rates. And we think the risks to long-term returns are skewed towards the downside, which, if …
The Bank of Canada’s quarterly business and consumer surveys continue to flash warning signs about the outlook for the economy and labour market. The normalisation of inflation expectations remains painfully slow, however, presenting a risk to our view …
15th January 2024
