Note: We discussed Turkey’s election in an online briefing on 10th May. Watch it here . There’s a lot of optimism that the opposition will emerge victorious in Turkey’s elections, which would pave the way for a return to orthodox economic policy. Were …
10th May 2023
The 2023/24 Budget unveiled yesterday by Treasurer Jim Chalmers was something of a mixed bag. On the one hand, the modest spending measures proposed by the government will not break the bank, thanks in large part to the government’s commodity-driven tax …
Flash GDP figures showed that Saudi Arabia’s economy contracted in Q1 on the back of OPEC+-agreed oil output cuts, but growth in the non-oil economy remained strong. The “voluntary” oil production reductions announced last month will continue to weigh on …
9th May 2023
While the hiking cycles of all major central banks will soon be in the rear-view mirror, most of their impact on activity lies on the road ahead. Based on the latest national accounts data, we estimate that there is still plenty of scope for higher …
We think migration patterns of footloose workers will continue to play the largest role in driving the rental outlook across metros. But rent as a share of income will also have a bearing, weighing on prospects in major markets such as NYC, LA and Boston, …
China’s commodity imports were generally weak in April. We suspect that import volumes generally could soften a bit further as any reopening effect on commodity demand fades and export demand deteriorates owing to sluggish growth in the rest of the world. …
While world trade fell further in February, the available data point to a rise in March, especially due to a strong rebound in China. But that rebound looks to have already reversed in April. And with high interest rates set to weigh on demand for goods …
The recent turmoil in the banking sector doesn’t appear to have triggered a severe further tightening in credit conditions, but since lending standards were already being tightened to a degree only previously seen during recessions, the lack of any …
8th May 2023
Concern about banks and the US debt ceiling will keep the gold price historically high in the next few months. However, once these worries fade, we think that longer-term headwinds will come into play. At around $2,010 per ounce today, the gold price …
5th May 2023
Our central scenario is that Italy’s public debt-to-GDP ratio will decline gradually in the long-run. However, the government will need to maintain sizeable primary budget surpluses to make that happen. The European Commission has recently made a series …
While home sales have plummeted, house prices have fallen just 3% so far and eked out a small gain in February. We think this reflects the role that tight supply is playing in this downturn, with the number of homes for sale at record lows. Given supply …
Although rent growth has been resilient, as the Swedish economy enters recession and employment contracts, we think the recent slowdown in Stockholm office occupier demand will persist. And with new office supply set to reach record highs in the next few …
We think that the tailwinds supporting the rebound in the euro against the US dollar have largely run their course, and still forecast the EUR/USD rate to return to parity as advanced economies fall into recessions later this year. Even after falling …
The manufacturing PMIs for April suggest that industrial activity softened in most EMs last month and that external demand generally remained weak. The one crumb of comfort is that price pressures eased further last month. The aggregate Emerging Market …
4th May 2023
In theory, there is plenty of scope for those countries set to age most rapidly over the coming few decades to cushion the impact on their workforces via migration and a rise in both female and older participation rates. However, in many cases, this will …
We forecast small further falls in the yields of long-dated US Treasuries and euro-zone sovereign bonds between now and the end of next year, as disinflation picks up steam and central banks turn more dovish. Investors largely shrugged off this week’s …
Today’s 25bp decision was in line with market expectations and the views of most forecasters polled by Reuters – though we had been in the minority forecasting 50bp. The move marks a slowing in the pace of policy tightening and suggests at face value that …
While food CPI inflation remains very high in all major advanced economies – and especially so in Europe – we expect it to fall sharply in the coming year. Energy and labour costs have been key in keeping consumer food inflation so high, but these props …
The underperformance of the US stock market seen last year has generally paused so far in 2023, as returns have been propped up by mega-cap “growth” stocks. That may continue over the rest of the year, especially if advanced economies enter recessions. …
The idea of a new BRICS currency to settle trade or hold in reserves instead of the dollar has been doing the rounds recently. This could be modelled on the IMF’s Special Drawing Rights. But getting India on board with China would be difficult. And if the …
The key message from the latest China PMIs is that whilst China’s economy is likely to grow strongly this quarter, momentum is fading. This will be one factor weighing on commodity prices in the near term. China’s Caixin manufacturing PMI fell from 50.0 …
The Norges Bank raised its policy rate by 25bp today, to 3.25%, but unlike the Fed we think the tightening cycle in Norway has further to run. That said, we think that inflation will fall more quickly than the central bank anticipates next year, allowing …
Over the past year, Spanish households have seen a bigger increase in their cost of borrowing than those of any other large euro-zone economy, but the increase in the interest paid on deposits has been tiny. This is squeezing households’ disposable …
Brazilian policymakers gave a firm push back against any expectations for imminent monetary easing at yesterday’s central bank meeting, supporting our view that interest rates will be lowered a bit more slowly over the next 6-12 months than most expect. …
The slowdown in regular earnings at the start of the year largely reflects sampling changes, with an unchanged sample of firms reporting continued strong wage growth. However, with inflation set to come off the boil before long and the labour market …
The Fed’s new policy statement provides the clearest hint yet that the 25bp rate hike today is likely to be the last. We expect economic weakness and a sharper-than-expected drop back in core inflation to convince officials to start cutting rates again …
3rd May 2023
The surge in exports from Latin America's major economies in March suggests that the upside risks to our GDP growth and currency forecasts are building. But with advanced economies poised to fall into recession over the coming quarters, China's demand for …
The Czech central bank (CNB) left its main policy rate on hold at 7.00% as expected today, but it looks like policymakers set out to strengthen their hawkish rhetoric and downplay expectations of an imminent cut in interest rates. The message was loud and …
A bipartisan deal to raise the debt ceiling alongside modest cuts to government spending still appears to be the most likely way out of the current impasse. It's possible that moderate Republicans will step in to help the Democrats push through a …
Although the unemployment rate remains near a record low, the decline in vacancies suggests that labour market conditions have nevertheless eased, supporting our view that wage growth is close to a peak. While the unemployment rate has been unchanged at …
Concerns about Kenya's public finances have intensified with the government recently delaying the payment of public employees' salaries. Policymakers appear willing to honour public debt obligations, but with plenty of pitfalls along the way, officials …
Note: We'll be discussing Turkey's election in an online briefing at 09:00 EDT/14:00 BST on 10th May . Register here . Parliamentary and presidential elections on 14 th May will make or break macroeconomic stability in Turkey. As things stand it looks …
A combination of the falls in global agricultural commodity prices, energy prices and wage growth will soon drag down food CPI inflation from a 46-year high of 19.6% in March perhaps to around 4.5% by the end of the year. Food inflation will soon become a …
Policy tightening over the past year has pushed up euro-zone households’ interest costs substantially and is a key explanation for household consumption falling. With interest costs set to rise a lot further in the coming months, we expect consumption, …
Note: We’re holding a special 20-minute online briefing all about EM debt risks this Thursday at 10:00 EDT/15:00 BST . Register now . Malaysia’s central bank (BNM) unexpectedly raised its main policy rate (OPR) today by 25bps (to 3.0%), citing the …
Available data for Q1 suggest that the global economy had a better start to the year than previously feared. That seems to have reflected the post zero-COVID rebound in China and its effects, a boost to spending from a mild winter in the US and ongoing …
Berlin offices have been outperforming those in other German markets for some time. But Q1 data suggest that growth has begun to falter, and we think that the recent strength of the market won’t last. Berlin office rents have risen rapidly over …
The decline in job openings to a near two-year low of 9.6 million in March, from a peak of 12.1 million a year earlier, suggests that, even without a rise in the unemployment rate, labour market conditions are nevertheless easing and are consistent with a …
2nd May 2023
Note: We’re holding a special 20-minute online briefing all about EM debt risks this Thursday at 10:00 EDT/15:00 BST . Register now . Egypt’s balance of payments (BoP) position strengthened markedly late last year, but policymakers’ reluctance to live up …
March’s money and credit data, as well as the Bank Lending Survey carried out in March and April, show no clear signs that the recent troubles in the US and Swiss banking sectors have had an impact on credit conditions in the euro-zone. Nevertheless, …
The Reserve Bank of Australia retained its tightening bias when it lifted the cash rate by 25bp at today’s meeting, but we suspect that it won’t raise interest rates any further over the coming months . The Bank’s decision to lift the cash rate from 3.60% …
The collapse of First Republic Bank is no big surprise – it had been teetering on the edge since suffering $100bn in deposit withdrawals mostly in March – but it’s a timely reminder that banking turmoil will continue to flare up periodically. After …
1st May 2023
The slowdown in European investment intensified in Q1 as transactions more than halved year-on-year. This was perhaps unsurprising given the ongoing price correction amid one of the sharpest tightenings of financial conditions on record. But, with …
28th April 2023
In our view, the role of UK pension funds in deterring firms from listing on the London Stock Exchange has been overstated of late. To the extent that higher valuations are the reason firms find a US listing more attractive, we think there is good reason …
Alongside the publication of our Q2 UK Housing Outlook this week, we held a series of roundtable meetings for clients in London. Here we sum up our thoughts on three key questions which recurred throughout the day: What is the biggest risk to our …
The Bank of Japan predicted that inflation will fall well below its 2% target in FY2025 when it kept policy settings unchanged today. And while it pledged to conduct a review into its policy measures, the results will only be unveiled next year. The …
Resilience in much of the global economic data of late has raised questions over whether the recessions we expect in most developed markets (DMs) will materialise later than we had initially thought. As such, we now forecast most “risky” assets will reach …
27th April 2023
The housing market will face growing headwinds from tighter credit conditions, slowing income growth and rising unemployment as the economy enters a recession this year. That will offset some of the impact of lower mortgage rates, and means housing market …
Inflows into EM bond and equity markets have picked up sharply in the past month, with flows into Asian equity markets looking particularly strong. That said, if we right that the dollar will rebound, we suspect that these inflows will drop back. That’s …
The replacement of Colombia’s market-friendly finance minister José Antonio Ocampo with a close ally of President Petro is likely to lead to a sell-off in Colombia’s financial assets when markets open later today. This is especially worrying given the …
