The Nigerian naira has fallen by more than 70% against the dollar since President Tinubu came to office, which has contributed to a surge in inflation that has weighed on economic growth. There are signs that some of the benefits from a weaker …
3rd October 2024
While we have been talking up the prospects for retail, malls remain the underperforming subsector in our forecasts. But that covers a wide range of likely performance. Indeed, as luxury retailers expand to class A malls while anchors shutter stores in …
Since mid-2022, the average stock in the industrials sector has returned more than the average stock in all other sectors of the S&P 500. This raises the question of whether investors have a rose-tinted view of the economy’s future, since industrials has …
Drought conditions across parts of Brazil are not yet at the stage where there is a threat of major disruptions to electricity supply, but it has already prompted electricity prices to be hiked and there may be upward pressure on food inflation if …
While some drivers of the US stock market’s recent underperformance are likely in our view to persist, we think that they will soon be outweighed by renewed enthusiasm about AI. And only when the associated bubble bursts do we expect US equities to lag …
Non-high street retail subsectors have seen a stronger rental recovery from post-pandemic lows than high street shops. And we think this outperformance will continue given tighter availability and slightly more favourable demand drivers. That said, there …
China’s recent stimulus announcements are still at the top of many investors’ minds, at least judging by the high level of client interest in the online briefing we ran on the topic yesterday. We’ve wrapped up our answers to the most common questions we …
The federal budget foresees an unusually large jump in cash outflows that don’t feed into the underlying cash balance in 2024/25. However, the actual boost to activity will be much smaller than the budget suggests and it will have run its course in …
Until the geopolitical situation in the Middle East deescalates, oil prices will clearly remain at risk of spiking higher. But against a backdrop of faltering demand and greater supply in the wider oil market, the risks to oil prices over the next year …
2nd October 2024
One way the US election could influence the UK economy would be if Donald Trump won and delivered on his pledge to put a 10% tariff on UK exports being sent to the US. We suspect the impact on UK activity from such a policy would be small (and perhaps …
We held a Drop-In yesterday to discuss what investors should expect as Claudia Sheinbaum takes over the presidency in Mexico. A recording of the event can be found here . This Update answers some of the questions that we received, including several that …
Despite driving a surge in developer stock prices, the property support measures announced so far aren’t that different from previous efforts and are unlikely, on their own, to deliver much better results. Achieving the Politburo’s recently upgraded goal …
We expect the RBNZ to move its easing cycle up a gear and cut the Official Cash Rate by 50bp at its meeting next week. What’s more, given the Bank’s tendency to loosen policy aggressively, we think the policy rate will eventually be slashed to 2.25%, …
The fall in the EM manufacturing PMI in September suggests that growth slowed last quarter and we think this will continue over the coming months. The PMIs did at least provide encouraging signs that price pressures continued to ease. The EM manufacturing …
1st October 2024
In addition to indicating that goods price pressures eased in September, the latest batch of manufacturing PMIs suggest that global industry slowed sharply towards the end of Q3. But with interest rates falling in DMs and more stimulus on the way in …
The August JOLTS data provides some reassurance against fears that labour market conditions will deteriorate further, while the sharp fall in the private quits rate suggests that core services inflation will moderate. The rebound in the job openings rate …
Inflation in Thailand is the lowest not just of any country in Asia, but across the emerging world. (See Chart 1.) The headline rate in August fell to just 0.4% y/y, while the core rate was 0.6%. (See Chart 2.) We expect inflation to rise a little over …
We now expect the ECB to cut interest rates by 25bp at each of its next four meetings, taking the deposit rate down from 3.5% currently to 2.5% in March. Following Christine Lagarde’s comments to the Committee on Economic and Monetary Affairs yesterday, …
The September PMIs from Asia generally declined from the previous month. And while the PMI surveys aren’t always a good guide to the hard activity data, their recent signals are consistent with our expectation for manufacturing activity in Asia to …
We recently held a series of Asia-focussed roundtable discussions with clients in London, covering an array of topics including the impact of Fed easing, the US election, global fracturing and China’s stimulus blizzard. This Update answers several of …
Slowdown in house-price growth has further to run With new listings rising rapidly, the housing market is shifting in favour of buyers. Accordingly, we think house price growth will ease further in the months ahead. Allowing for seasonal swings, house …
The strike by Israel in Lebanon that killed Hezbollah’s leader represents a major escalation of hostilities in the Middle East and all eyes are now on the next actions by Israel and Iran. On its own, this escalation would point to higher oil prices and …
30th September 2024
While banks have issued more housing loans that don’t meet APRA’s serviceability guidelines over the last couple of years, we aren’t convinced that this poses significant risks to financial stability. The Australian Prudential Regulation Authority’s …
China’s finance ministry appears to be lining up a fiscal support package to deliver on the Politburo’s pledge of additional support for the economy. If a report by Reuters is correct, the package could lift GDP by around 0.4% over the course of the next …
26th September 2024
Capital inflows into EMs have rebounded over recent weeks amid the start of the Fed’s easing cycle. Looking ahead, we expect EM inflows to hold up well as global monetary conditions ease further. In general, EMs are not especially dependant on foreign …
Tight supply conditions have boosted German prime logistics rents despite weak occupier demand. This looks set to continue over the next year or two given completions pipelines for the German markets are among the tightest in Europe. However, weak …
Ahead of COP29 in November, discussions have been taking place at events in London and New York this week on all things climate. We attended the LSE’s Environment Week to hear the thoughts of academics and policymakers on carbon offsets, CBAM, and US …
France’s new government suggested yesterday that the budget deficit will be over 6% of GDP this year, rather than the 5.6% as indicated only a couple of weeks ago. We expect the government to struggle to pass a budget which substantially reduces the …
Today’s news that Saudi Arabia will proceed with unwinding its voluntary oil output cuts from December does not change our thinking on the oil market balance; we still expect the market to be in a small surplus by Q4 2025 and prices to edge a little …
This summer’s falls in the share prices of companies involved in producing AI chips have prompted some to question whether the AI revolution will be quite the game-changer it has been built up to be. But it is important to separate the impact of AI on …
The leisure sector is yet to show signs of recovery from the cost-of-living crisis, in part because still-cautious households are prioritising buying goods rather than expensive leisure services. But a relatively large squeeze on higher-earning …
While the SNB only cut the policy rate by 25bp today to 1.0%, the accompanying statement was very dovish and indicated that there are at least two more rate cuts on the way, probably in 25bp increments in December and March. Despite the emphasis on the …
The flex industrial subsector outperformed most other property types over the last cycle. Its underlying characteristics mean demand and returns will continue to be healthy ahead, though the winning metros are likely to remain those closest to clusters of …
25th September 2024
While the announcement of new stimulus measures by Chinese officials coincided with increases in many commodity prices, the package does not materially alter the outlook for China’s commodity demand. This could change if fiscal stimulus was announced – …
CNB cuts by 25bp again, easing cycle has further to run The decision by the Czech National Bank (CNB) to cut its policy rate by a further 25bp today, to 4.25%, was followed by communications which, on balance, felt a bit more dovish than at the last …
We held an online Drop-In session this week to discuss the outlook for the euro-zone. (See a recording here .) This Update addresses some of the questions that we received, including some that we didn’t have time for during the event, starting with …
The Riksbank’s decision to cut by 25bp today to 3.25% was all but guaranteed, but the accompanying statement was surprisingly dovish. Policymakers said the policy rate could be cut faster and further than previously indicated, while also raising the …
The strike at East and Gulf Coast ports is unlikely to trigger major economic disruption. Many retailers have made plans in anticipation of the strike and our sense is that, this close to the election and despite recent denials, President Biden would have …
Increased supply and weak demand are both contributing to the slowdown in house price growth. The recent sharp drop in mortgage rates should cause the market to retighten, but it will take time for that to show up in house prices, which work with a …
24th September 2024
Easing cycle resumes ... for now The communications accompanying the decision by the Hungarian central bank (MNB) to resume its easing cycle today suggests that the central bank could pause interest rate cuts again very soon. We expect just one further …
The RBA didn’t discuss a rate hike at today’s meeting for the first time since March but reiterated its pledge that it won’t cut interest rates “in the near-term”. While the risks are starting to tilt towards an earlier rate cut, we’re sticking to our …
The government tried to prevent the Bank of Japan from hiking interest rates in 2000 but that attempt was unsuccessful and the government has respected the Bank’s independence ever since. Renewed efforts to bring the BoJ to heel look unlikely now given …
The latest flash PMIs suggest that GDP growth slowed in advanced economies at the end of Q3, particularly in the euro-zone. Meanwhile, weaker activity seems to be weighing on services price pressures, which should give central banks confidence to continue …
23rd September 2024
We held an online Drop-In session last week to discuss the likely pace and extent of interest rate cuts and their implications now that the US Fed has joined the party. (See a recording here .) This Update answers some of the questions that we received, …
The imminent closure of the UK’s last coal power plant is a further reminder that thermal coal’s days in Europe are numbered. In Asia, coal will remain a major source of power for many years to come but global demand will still slow as growth in India …
After the Fed recently delivered its first rate cut, we look at previous US loosening cycles to analyse how emerging markets assets have performed. This time around we expect the US to skirt a recession, and our view is that most of the easing cycle is …
20th September 2024
Our proprietary measure of China’s green export volumes continued to rise in August to a new record high. Given that the EU tariffs have so far barely made a dent into China’s electric vehicle exports, and the fact that US and Canada tariffs will only …
The Bank of Japan today signalled that it’s in no rush to tighten monetary policy any further and we’re pushing back our forecast for a final rate hike to 0.5% from October to December. As widely anticipated, the Bank kept its policy rate unchanged at …
We think SNB Chairman Thomas Jordan will probably use his last meeting to once again surprise markets by cutting the policy rate by 50bp to 0.75%. Policymakers will be unhappy with the franc’s recent appreciation and will use rate cuts to try and stifle …
19th September 2024
In the months ahead, there are five themes to watch for in the world of trade and shipping, the most immediate of which is the risk of strikes at US East and Gulf coast ports in October. The upshot is that, after a nascent recovery in the first half of …
