Third quarter data make it look increasingly likely that our year-end price forecasts will prove to be too negative. However, with the UK still on course for a capital value fall of close to 10% this year, this doesn’t necessarily mean that the US or …
12th November 2020
President Erdogan’s latest comments suggest that the recent changes in Turkey’s economic management team may herald a shift back to orthodox policymaking. If these developments are backed up by a sharp interest rate hike at next week’s MPC meeting – we …
The easing of containment measures in South Africa in September supported industrial activity, but the recovery remains sluggish. Leading indicators suggest that the pace of recovery waned further in Q4. Activity data published by Stats SA today showed …
While the positive developments in finding an effective vaccine against COVID-19 have boosted investor risk appetite, we still think that gold prices will remain high in the year ahead . The price of gold surged between March and August in large part due …
11th November 2020
The relatively low valuations of US equity REITs influence our view that they will outperform ordinary US equities over the next two years or so, provided that COVID-19 is contained. While a few sectors of the commercial property market, such as …
In her opening remarks to today’s ECB Forum on Central Banking, President Christine Lagarde gave a clear message that encouraging news about a vaccine would not stop the Bank from loosening policy in December. An expansion of the PEPP, and additional …
The Bank of England won’t be worried by the recent jump in gilt yields given that it has been triggered by the growing possibility of a COVID-19 vaccine improving the economic outlook. As such, we have revised up our gilt yield forecasts. However, as the …
Reports of an imminent, and highly effective, vaccine against COVID-19 point to generally stronger commodities demand. Once there is more certainty on the vaccine, we will review our price forecasts . Risk appetite returned with a bang on Monday as news …
The news that mutated versions of SARS-CoV-2 have been transmitted from minks to humans in Denmark has raised fears that the goalposts for a vaccine may have already shifted. This Update answers six key questions about the new strain of the virus and its …
News of a vaccine sent oil prices surging on Monday on the back of expectations that this will enable demand to recover more quickly than previously thought. But higher prices also increase the chances of a faster return of supply, particularly from …
The impeachment of Peru’s president, Martín Vizcarra, has rattled the country’s financial markets and may pave the way for looser (and more populist) fiscal measures in the coming months. Given the country’s strong balance sheet, such policies should have …
There have been some concerns that as well as there being little scope to generate stimulus through interest rate cuts, the Bank of England is now reaching its limits on Quantitative Easing (QE). But the Bank seems open to loosening its own QE rules. And …
The Reserve Bank of New Zealand’s (RBNZ) decision to implement a funding for lending programme in December should provide some further stimulus on its own and is another step towards implementing negative rates in 2021. The Bank did not adjust the OCR or …
The BJP’s relatively strong performance in the state election in Bihar suggests that goodwill for the ruling national party remains intact amid India’s largest recession in modern history. Bihar has also been one of the states to recently implement labour …
The rollout of an effective vaccine in early 2021 would cause us to pull up our growth forecasts for next year, but the boost to GDP in 2022 could be much smaller if the improved near-term outlook causes the government to carry out less investment …
10th November 2020
The distribution of an effective COVID-19 vaccine across the emerging world would clearly improve the near-term economic outlook significantly. Even so, some EMs, including India and parts of Latin America and Africa, would still suffer economic …
While an effective vaccine would greatly improve the outlook for next year, the latest data show that the virus is still spreading rapidly. Unless this is reversed soon, the one-month lockdowns in place in many euro-zone countries may be extended, keeping …
Cities with a large tourism sector, such as Las Vegas and Orlando, still employ 10% fewer people than they did in February, which will hurt retail spending and apartment demand. And, while office-using jobs are holding up in tech-led cities, these have …
The introduction of one or more highly effective vaccines early next year would prompt us to revise up our 2021 GDP forecast, possibly quite significantly. The prospects of a vaccine might convince Congress to scale back the size of any fiscal stimulus …
The escalation of political tensions in Ethiopia into outright military conflict threatens to morph into civil war that would push the economy into a deep recession and raise the risk of a sovereign default. Even if this is avoided, Ethiopia’s reputation …
Asia may have less to gain than other parts of the world from a coronavirus vaccine, given successes in containing the new coronavirus. A widely-distributed and effective vaccine would nonetheless give a huge boost to tourist industries and it would …
The high-frequency data suggest there is a growing risk that the recovery stalls over the next month or two, even as the growing potential for effective vaccines together with a bipartisan fiscal stimulus mean the balance of risks to our forecasts further …
An effective COVID-19 vaccine would dramatically improve the economic outlook. It may allow GDP to rise to its pre-virus level a year earlier than otherwise and mean that the unemployment rate peaks at 7% next year instead of 9%. But while this would …
If an effective vaccine is rolled out in the euro-zone in the coming months, it would lead to stronger growth next year but slower growth in 2022. With light at the end of the tunnel, policy support may be just as generous in the short term and be more …
9th November 2020
A vaccine with a 90% efficacy rate would clearly represent a major boost for both public health and the economy. While there remain issues around the likely speed of production and distribution of the Pfizer vaccine, today’s news raises the chances that …
Italy’s new tiered COVID-19 restrictions are likely to cause GDP to fall by about 2.5% q/q in Q4, and there is a risk that government is forced into a more severe national lockdown. That said, the news today on a potential vaccine is an upside risk to our …
A survey of firms from France’s central bank and high frequency mobility for last week suggest that the new national lockdown will have a smaller impact on France’s GDP than the first, perhaps of “only” 8%-points. This is broadly in line with our own …
High-frequency mobility data have their flaws but have offered some guide to how economies have responded to government restrictions. As Europe enters a fresh set of lockdowns, careful interpretation of these data will again allow us to shine some light …
Saudi Arabia’s economic recovery has lost momentum in recent months and persistent low oil prices reinforce our view that policymakers are unlikely to row back on fiscal austerity and there is rising probability that current oil production cuts are …
Joe Biden is likely to take a different approach to trade relations than Donald Trump, but his election will not reinvigorate globalisation, which has stalled over recent years. This will act as a headwind for the region’s poorer economies. Joe Biden …
China’s commodity import volumes remained high in October, although they eased back from September levels. We expect import volumes to remain solid in the coming months given the strength in economic activity, but higher prices should prevent a repeat of …
The sacking of Turkey’s central bank governor, as well as the (possible) departure of Finance Minister and President Erdogan’s son-in-law Berat Albayrak, has prompted a rally in local financial markets on expectations that breaks within the ruling AK …
Cladding issues are a downside risk to our already weak housing transactions forecasts for next year. If there continues to be severe testing delays and no change in policy, transactions could end up significantly weaker than our expectations in 2021. …
While card transaction data have overstated the health of consumer spending in recent years, we suspect they didn’t do so recently. As such, we’re willing to take the jump in transaction amounts in Q3 at face value and have pencilled in a strong rise in …
Much of President-elect Joe Biden’s agenda will be dead on arrival with the Republicans maintaining control of the Senate, but there is still a chance of more fiscal stimulus being passed, albeit probably not until after Biden takes office on 20 th …
7th November 2020
While the US election has dominated the news cycle across the world, the outcome is unlikely to have a significant impact on the world economy. Short-term global prospects will continue to be overwhelmingly driven by the evolution of the virus and the …
6th November 2020
New national lockdowns in Europe have led us to revise down our oil demand forecasts for Q4. But the decline is likely to be much smaller than in Q2, not least because the economic hit will be less severe . European oil demand slumped in early 2020, as …
A Biden presidency won’t reverse the tide of US-China decoupling and could lead to economic strains on new fronts if climate change and human rights become greater US priorities. While some ballots are still being counted and the composition of the US …
The apparent failure of the Democratic Party to win a ‘clean sweep’ in this week’s US election means that many of the policy initiatives and spending proposals made by presidential hopeful, Joe Biden, during his campaign are likely to be – at best – …
Poland’s central bank left its policy rate on hold at 0.10% at today’s MPC meeting and opted to reinforce its commitment to its asset purchase programme rather than announce new unconventional measures. These asset purchases are likely to work in tandem …
German occupier demand has slumped in the pandemic, though rents have generally held steady so far this year. But with demand likely to remain weak and an overhang of supply in some markets, declines are still likely over the next 12 months or so. Our …
While there could still be more twists and turns to come after this week’s elections in the US, in general we expect equities there to outperform Treasuries between voting day and the end of 2022. The S&P 500 has risen significantly since voting day, even …
With the markets still relatively calm amid the ongoing election uncertainty, the Fed took the predictable decision to stand pat today. However, if the election results in a divided government – as now looks likely – that will reduce the odds of any …
5th November 2020
The Czech National Bank (CNB) kept interest rates on hold at today’s MPC meeting and, despite its downbeat view on the economic outlook, gave no hint that monetary policy would be loosened further. We expect interest rates to remain on hold for some time …
