The eviction ban has been extended to early October, but we doubt it will be renewed again. Given the strength of the labour market, significant government support and robust rental demand, the resumption of evictions will not boost the rental vacancy …
19th August 2021
The Central Bank of Sri Lanka (CBSL) hiked interest rates today to help support the currency. With the rupee likely to remain under downward pressure over the coming months, further rate hikes are likely. The decision to raise the deposit and lending …
Bank Indonesia left its main policy rate on hold at 3.50% today, and signalled that rates are likely to remain low for the foreseeable future. We think the policy rate will remain unchanged until at least the end of next year. The decision came as no …
China’s leadership has signalled a growing focus on reducing inequality. This could boost the productivity of low-income households and speed up the long-touted rebalancing toward consumption. But, if taken too far, it risks dampening the competitive …
The government in China has stepped up measures to tackle pollution and excess capacity in the domestic steel sector over the past few months. This adds weight to our view that steel production, and consequently the price of iron ore, will fall back over …
This morning’s decision by the Norges Bank to leave its policy rate on hold at a record low of zero was no surprise. Following the delay to the tightening cycle in New Zealand, the Norges Bank is back in pole position to be the first G10 central bank to …
Despite growing talk of another bubble in the US housing market, its valuation remains far less stretched than that of the US stock market and is not alarming in our view given the prospects for monetary policy. Our US Housing service is the place to look …
18th August 2021
China’s latest activity data are further evidence of a slowdown in its economy. This aligns with our view that industrial metals demand will soften in the year ahead, putting downward pressure on prices . China’s July industrial data were generally much …
The spread of the highly transmissible Delta variant has driven a sharp rise in virus cases, hospitalisations and deaths in Israel this month. Evidence of waning vaccine efficacy prompted the government to roll out third booster jabs at the start of …
New plans have extended Permitted Development Rights (PDRs) on commercial property, allowing swifter conversion to residential use. These have been cautiously welcomed, but, in our view, they do not radically shift the outlook for either residential or …
The sharper-than-expected 2.4% q/q fall in Colombia’s GDP in Q2 was largely due to protest-related disruption in May and masked a strong rebound in output at the end of the quarter. The economic recovery appears to be progressing well so far in Q3, so we …
Five years ago this October, we published a piece arguing that the “golden age” for emerging markets had ended and that they were entering a period of permanently weaker growth. Since then, many of the structural problems that we anticipated have begun to …
The RBNZ sounded hawkish when it left rates on hold today, but the decision demonstrates that the Bank is taking a cautious approach in light of the current lockdown. Assuming restrictions can be eased before long we still expect the Bank to hike rates to …
Most attention has been concentrated on the transient drivers of higher inflation, but a more sustainable pick-up in rent inflation is also underway in the US. This Update recaps how rents are treated in the CPI data in major advanced economies and …
17th August 2021
A rise in oil prices has supported an improvement in Saudi Arabia’s current account position, which should be in surplus over the coming years. That, combined with signs that the sovereign wealth fund is slowing its international investments, will help to …
16th August 2021
The victory of Hakainde Hichilema in last week’s Zambian elections will probably nudge the country in the direction of more prudent macroeconomic policies and reforms under an IMF deal. These may bear fruit over a long time horizon, but we think that the …
While the Monetary Policy Committee (MPC) became more hawkish at its August meeting, an increase in interest rates on the scale it expects would not undermine house prices. But more stubborn inflation than anticipated and a hike in Bank Rate to 1.5% by …
We expect prime retail rents in both Lyon and Paris to struggle to make up lost ground this year, and even after a return to growth next year, the pace of increases will be subdued. After falling by 15% y/y last year, prime retail rents in Paris edged …
The widening in India’s goods trade deficit in July was due in large part to the continued rebound in imports as containment measures were scaled back further. The trade deficit may widen a little further over the coming months but the big picture is that …
Our Mobility Trackers suggest that the Delta variant has had limited impact on economic activity outside parts of Asia. The risk of stricter containment measures will continue to be greater in much of the emerging world than it will be in developed …
13th August 2021
We think tapering by the Fed will remove an obstacle in the way of higher long-term yields, supporting our view that their latest rebound will continue, in general, over the next couple of years. Recent commentary by Fed officials has brought a slowing of …
We expect further rises in US Treasury yields to support continued gains in the US dollar against most other developed market (DM) currencies, especially the yen and the Swiss franc. Since near the start of the month, the yields of 10-year US Treasuries …
Given our forecasts for the paths of monetary policy across developed markets, we expect a general ‘bear steepening’ of sovereign yield curves in the near term, particularly in the US, Canada and Australia. As it stands, our forecasts imply that most …
Mexico’s central bank hiked interest rates by 25bp, to 4.50%, yesterday but the split vote suggests that the tightening cycle will continue to proceed slowly despite the growing inflation risks. This reinforces our view that the policy rate will continue …
The improvement in South Africa’s budget position at the start of this fiscal year has probably now been partially reversed and we think that policymakers will find it increasingly difficult to remain on the narrow path to stabilise the debt-to-GDP ratio …
12th August 2021
Turkey’s central bank (CBRT) left interest rates on hold at 19.00% today and, with inflation likely to remain elevated over the coming months and the economy having bounced back quickly from May’s lockdown, an easing cycle is unlikely to commence until …
The Philippines’ central bank (BSP) left its main policy rate on hold at 2.00% today, but with inflation fears receding, more rate cuts to support the beleaguered economy are likely soon. The BSP has kept the policy rate on hold so far this year after …
Distortions to the data mean it is hard to gauge the current pace of wage growth, but the business surveys suggest it will soon head back to pre-pandemic levels. Given the Bank’s upbeat view on the outlook for productivity growth, it may not be too …
11th August 2021
Many countries are increasingly well-placed to ‘live with COVID’ and will be able to avoid the need for occasional lockdowns. However, this requires reaching and maintaining a high level of immunity in the community and there is a risk that this will be …
Although the currencies of most commodity exporters appear undervalued in the context of high commodity prices, we still think most commodity currencies will depreciate further against the US dollar. The run-up in commodity prices this year has not been …
Following larger-than-expected falls in Q2 and positive near-term developments, we expect prime office and industrial yields to end the year lower than previously forecast. However, we think prime retail yields will trend upwards again as the impact of …
While we expect both drilling activity and oil production in the US to pick up slightly over the next year or so, we doubt it will return to pre-pandemic levels anytime soon. This should keep the Brent-WTI spread narrow but is unlikely to prevent oil …
The ongoing surge in both job openings and quits in June suggests that labour shortages are still getting worse. (See Chart 1.) While the acceleration in payroll gains in recent months suggests that is not proving as long-lasting a drag on hiring as we …
9th August 2021
We expect that most commodity prices will come off the boil, which will weigh on recoveries across Latin America, particularly in Peru and Chile. While the brightening domestic picture will boost overall GDP growth in the very near term, this emerging …
The strength of mortgage and unsecured consumer lending in Russia has concerned the central bank and raises the threat of a build-up of financial vulnerabilities, but for now we think these risks are low. Since we last looked at Russia’s mortgage boom in …
The latest trade data out of China adds to the evidence that demand growth in the world’s key commodity consumer is slowing. This supports our view that the broad-based rally in commodity prices from their pandemic-induced lows has run its course, and …
The latest data show pipeline price pressures continuing to mount in the euro-zone, pointing on the face of it to much higher consumer price inflation. But while there is arguably scope for a small rise in core goods inflation, subdued wage growth will …
The worsening prospects for the Thai economy and the shift in the current account from a huge surplus to a sizeable deficit mean the Thai baht is likely to weaken further over the coming year. The baht has fallen again over the past week and is now down …
6th August 2021
While the earnings of firms in the S&P 500 have generally surprised to the upside in the second quarter of this year (Q2), we think the scope for further positive earnings surprises from here is limited . With around 80% of companies in the S&P 500 now …
Following better-than-expected Q2 data, we have revised up our Helsinki office returns forecasts for this year. And given a robust rental outlook, returns are set to outpace the euro-zone over the next few years. After a fall of nearly 4% last year, 2021 …
The Central Bank of Egypt (CBE) kept its policy rate on hold on Thursday, and we continue to hold a non-consensus view that a fall in inflation later in the year will allow the CBE to resume its easing cycle in Q4. The decision to keep the benchmark …
The Reserve Bank kept the repo rate on hold at a record low today and announced plans to ramp up government bond purchases on the secondary market, underlining its commitment to supporting the economic recovery. We don’t expect policy normalisation to …
The Reserve Bank of Australia signalled today that it’s unlikely to reverse the tapering of its bond purchases even as Sydney’s virus outbreak is getting worse. We still expect the tight labour market to deliver stronger wage growth and inflation than the …
The Czech National Bank (CNB) raised its two-week repo rate by 25bp to 0.75% at today’s meeting, and its communications signalled that policymakers will raise rates more quickly than they had previously signalled to tackle above-target inflation. We …
5th August 2021
Whether President Joe Biden chooses to reappoint Jerome Powell or to nominate Lael Brainard to be the next Fed Chair, it is unlikely in itself to have much impact on the near-term outlook for monetary policy. With up to three other vacancies for Biden to …
Although the headline data show bank loans stagnant (see Chart 1), that is mostly due to the forgiveness of Paycheck Protection Program loans and mortgage securitisations, with the broader evidence pointing to an acceleration in credit growth. Narrow …
The Monetary Policy Committee’s (MPC) policy statement sent a clear signal that higher interest rates are on the horizon. But there were few signs that it is preparing to hike rates soon. What’s more, we continue to envisage inflation dropping back more …
A decision by the Biden administration to increase US biofuel mandates in 2021 and 2022 has the potential to be a gamechanger for corn demand. However, we think that this is unlikely, which is one reason why we think that corn prices will fall over the …
The hawkish statement accompanying yesterday’s 100bp rate hike by the Brazilian central bank (to 5.25%) means that the Selic rate will increase further than we had anticipated. We now expect it to be raised to 7.50% by year-end (previously 6.50%). The …
While the unemployment rate is now back at its pre-virus low, a range of indicators suggest that there is still some slack in the labour market. We think the unemployment rate may eventually fall to 3.5%. However, mounting staff shortages will act as a …
