After gaining ground since 2018, the recovery in Athens’ prime property values has stalled. However, we think that the catch up with the euro-zone will continue, albeit at a slower pace than in recent years. Athens’ prime property values have recovered …
6th July 2021
By tapering its bond purchases and watering down its commitment to keep its policy rate unchanged until 2024, the RBA is paving the way for interest rate hikes in 2023 . The Bank's decision to shift to a flexible form of quantitative easing that doesn't …
Israel’s strong economic recovery prompted the central bank to phase out one of its emergency support programmes at today’s meeting and Governor Yaron’s comments suggest that the next step towards policy normalisation may involve the end of the bond …
5th July 2021
Although oil prices and inflation compensation have historically moved in lockstep, we don’t think our projection that oil prices will fall over the next couple of years is inconsistent with our forecast for long-term Treasury yields to rise quite a bit. …
2nd July 2021
We think that there is more scope for earnings expectations to improve outside, than inside, the US. In both cases, though, we are not anticipating upward revisions on the scale seen over the past year . A significant degree of optimism about the economic …
The Russian ruble appreciated to a one-year high against the dollar recently but we think the rally will fade as oil prices fall back and US Treasury yields rise further. That said, the central bank’s determination to rein in inflation should keep Russian …
The government’s furlough scheme is regarded as one of the successes of the UK’s coronavirus policy response, but all good things must come to an end. Over the next few months, its unwinding will bring some risks, though we do not expect these to have a …
The PMIs for June show that manufacturing strengthened in most of Emerging Europe, but virus outbreaks, supply chain disruptions and a softening of demand created headwinds for industry in Asia. One common theme is that supply shortages persist, which is …
1st July 2021
Peru’s president-in-waiting Pedro Castillo seems more moderate than many initially feared, which bears a striking resemblance to former leader Ollanta Humala. The latter’s tenure suggests that, provided there are market-friendly appointments to the new …
The dip in the global manufacturing PMI in June left it at a very high level, with the advanced economies leading a continued strong recovery in output. But industrial recoveries seem to have lost pace in Asia, reflecting a slowdown in demand for imports …
The breakdown of China’s trade data for May shows that the recovery in imports of scrap and tin ore has hit a few stumbling blocks. Were these issues to persist, they could help to put a floor under prices even if, as we expect, the decline in demand for …
We think that the Norwegian krone will continue to strengthen against the euro over next year or so. This is despite our forecast for a pull-back in oil prices and reflects our view of the relative prospects for monetary policy in Norway and the …
The received wisdom is that inflation is worse for government bonds than for equities. Yet the S&P 500 has fared worse than 10-year Treasuries in a couple of periods of high inflation in the US since the 1960s. The definition of a period of high inflation …
Saudi inflation is set to fall sharply in July as last year’s VAT hike falls out of the annual comparison. While there will be some upwards inflation pressure from the re-opening of the economy and global supply shortages, a weak recovery in demand is …
China’s June survey data show softer growth in activity and supports our forecast that economic growth will slow from here, which will weigh on the prices of most commodities, especially the metals . The headline official and unofficial manufacturing PMIs …
Another strong batch of activity data for May suggest that Russia’s economy may have returned to just shy of its pre-pandemic level in Q2. The foundations are in place for the recovery to continue in Q3, but the latest virus wave and the possibility of a …
Revisions to the historic data following the recent census show that China’s population barely grew last year and that employment is already contracting faster than previously understood, having peaked in 2014 rather than 2017. The silver-lining, however, …
The Riksbank was always likely to maintain the status quo this morning, but against the backdrop of recent hawkish shifts by other central banks, notably the Fed, the focus was on how its thinking had shifted. The short answer is: not a lot. You did not …
Lingering restrictions on travel mean that weakness in foreign tourist spending will continue to weigh on retailers’ incomes in tourist-dependent retail markets this year. This supports our view that prime retail rents will fall, even as the domestic …
While the drop back in oil prices which we forecast would probably mean an end to the recent outperformance of the energy sector, we doubt it would halt several other features of the rotation trade. Notwithstanding their wobble over the past week or so, …
30th June 2021
Canadian firms are not currently suffering from labour shortages to the same extent as those in the US but, with immigration still muted, the issue is likely to get worse as the economy continues to recover. The clearest sign that labour shortages are not …
The EU’s digital Covid certificate, which is being launched tomorrow, will have very little impact on European tourism this year. Non-essential travel is already possible, but most adults are not fully vaccinated and the Delta variant is making people and …
After rallying from April onwards, the price of gold has dropped back in recent weeks. We expect the price of gold to fall further over the next couple of years as long-dated US real yields climb . The price of gold rallied from $1,700 to $1,900 per ounce …
Tighter supply conditions and the expected smaller hit from the shift to remote working mean that we think Paris office rents will continue to outperform Lyon over the next five years. Prior to the pandemic, Lyon prime office rental growth had outpaced …
Exchange stocks of base metals have risen this year, which usually suggests that markets are well supplied. But much of the recent build in stocks has been opportunistic and driven by financial considerations rather than a surplus in the market. …
29th June 2021
The recent softening in some indicators of activity is probably mostly a result of shifts in spending patterns within the economy rather than a sign that the recovery has already stalled. As such, we still expect monthly GDP to rise back to its …
Saudi Arabia’s economic recovery seems to have got back on track in Q2 and, as virus restrictions are eased further and oil production cuts are scaled back, a strong second half of the year lies in store. The final Q1 GDP figures confirmed that the Saudi …
The further tightening of virus containment measures in South Africa for at least the next two weeks is unlikely to inflict severe damage on the economy. But it reinforces our view that the Reserve Bank will be in little rush to follow other EM central …
28th June 2021
The next EM central banks likely to raise interest rates are those whose economic recoveries are relatively advanced and can focus on inflation and/or financial risks. Chile and Korea fit into this group and we expect rate hikes from both in August. …
Strong industrial demand and constrained domestic supply will support US natural gas prices throughout the remainder of this year. However, we expect that the average price will fall in 2022 in large part because of higher production . The ongoing …
The labour force survey overstates the strength of the recovery in employment because it doesn’t capture the plunge in the number of non-resident workers. However, their impact on the labour market isn’t as large as the headline figures suggest as they …
27th June 2021
The student accommodation sector faces high levels of uncertainty for the fall 2021 academic year. In our view, demand for student housing will rebound from last year, but fall short of its pre-pandemic peak. Overall, we expect vacancy to nudge higher and …
25th June 2021
The surprise 25bp rate hike by Mexico’s central bank (to 4.25%) suggests that its reaction function is less dovish that we had expected, as it is now reacting to quell high inflation. With the headline and core rates set to remain above target over the …
The further slowdown in the money supply growth in May is due to big changes during the first lockdown dropping out of the annual comparison. Money supply data will be affected by the pandemic for a while, making them difficult to interpret, but the …
We doubt that US equity REITs would significantly outperform US equities in a period of higher inflation. US REITs have performed strongly in Q2 so far, with the 13.2% return from the FTSE Nareit Equity REIT index beating the 7.5% return from the MSCI USA …
24th June 2021
Although the 10-year Treasury yield has eased back following last week’s FOMC meeting, we still expect it to increase again before too long. To recap, after surging following the FOMC meeting, the 10-year Treasury yield has since given up its gains . At …
We think that delayed Central London office projects and new industrial starts will drive commercial construction output this year. But once the backlog of delayed projects has been exhausted, we think structural factors and high costs will deter …
Lingering restrictions on international travel to control the spread of the Delta variant mean that Spanish foreign tourist revenues this year will probably be only half what they were in 2019. That will hold back the pace of the overall recovery, even as …
Argentina’s GDP expanded by a stronger-than-expected 2.6% q/q in Q1 and, while the recent third virus wave has dragged down activity in Q2, we are sticking with our above-consensus forecast of 8% growth over 2021 as a whole. One implication is that the …
Other than the Monetary Policy Committee (MPC) noting the growing upside risks to inflation alongside today’s policy decision, there were no real signs that it is thinking about tightening policy sooner, à la the Fed. We think policy will be tightened …
Inflation in the cost of construction materials has soared as resurgent new home development led to strong demand at the same time as supply was still recovering from disruption due to the pandemic. It is likely to peak soon as supply disruptions ease, …
The central bank in the Philippines (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 only a few months away. The BSP has been on hold so far this year after …
The surge in consumption in Q1 resulted in the savings rate falling to a 15-year low. While we expect households to respond to falling house prices with higher savings, the rebound in GDP could be even stronger than we currently assume if households keep …
PM Suga unveiled his administration’s first mid- to long-term growth strategy – known as the “big-boned policy” – on Friday. While most themes have been carried over from the Abe administration, PM Suga’s economic strategy contains new angles such as a …
Although we remain optimistic about the near-term demand outlook, we think that the price of US lumber will fall further in the coming months as domestic supply continues to revive . The price of US lumber (CME random lengths) briefly rose to a record …
23rd June 2021
A year ago, we were just digesting the impact of remote working, but already permanent change looked likely. And while we know more now and continue to refine our views, we see little reason to change our conclusions from last summer that office demand …
The pandemic has heightened occupiers’ focus on the quality and green credentials of the space they occupy. This trend is set to impact on demand, with modern, well-configured buildings with green building certifications set to attract tenants at the …
Inflation indicators in the flash PMIs for June reached new record highs and supplier delivery times lengthened still further. However, outside the US at least, there are few signs that goods shortages and higher costs have held back the recovery in …
The Czech National Bank (CNB) raised its two-week repo rate by 25bp to 0.50% at today’s meeting and the accompanying communications support our view that this marks the start of what will be the most aggressive tightening cycle in Europe. We expect that …
