Filtered by Region: G10 Use setting G10
A combination of weaker UK growth, higher yields and more defence spending make for a difficult Spring Fiscal Forecast for Rachel Reeves. In this special preview, our economists highlighted what to watch for in the Chancellor’s upcoming statement to …
26th February 2025
Our ANZ Chart Pack has been updated with the latest data and our analysis of recent developments. The RBA began its easing cycle with a 25bp cut this month, but it appeared in no hurry to loosen policy settings further. We expect the Bank to cut again in …
This page has been updated with additional analysis since first publication. With price pressures remaining subdued, RBA can ease a bit further The relatively soft CPI print for January should ease some of the RBA’s concerns about the stickiness of …
The Prime Minister’s announcement that defence spending will rise from 2.3% of GDP now to 2.5% by 2027 is likely to be only the start of a more substantial and longer-lasting increase in defence spending that could be funded by cuts to public spending …
25th February 2025
House price growth unexpectedly reaccelerates The stronger 0.5% m/m rise in house prices in December suggests sellers still have the upper hand despite more homes coming onto the market and relatively weak buyer demand. This raises the risk that we have …
The strength of the recovery in housing activity and prices in the second half of last year caught many off guard. But can the market continue to recover at this pace in the face of higher stamp duty and a weaker economy? Members from our UK Housing, …
Underlying inflation picks up Headline inflation rose to 1.9% in January, from 1.8%, despite the partial GST/HST holiday that began in mid-December. (See here .) Excluding taxes, headline inflation climbed to 2.5%, providing a taste of what is to come now …
21st February 2025
Pills, chips and automobiles After last week’s focus on reciprocal tariffs, President Trump shifted his attention this week to product-specific tariffs targeting motor vehicles, semiconductors, and pharmaceuticals. Speaking to reporters on Tuesday, he …
Today’s inflation and PMI data in Japan bolster our view that the 10-year JGB yield will continue to rise. We are sticking to our forecast that it will end 2025 at 1.75%, as the BoJ tightens policy by more than is discounted in the money market. In …
Weak start to 2025 a sign of things to come The fall in existing home sales in January reflects weak deal-making at the end of last year due to the surge in mortgage rates. Given that borrowing costs have stayed above 7% since then, we expect this …
GST holiday temporarily boosts sales The jump in retail sales in December was partly due to the GST holiday, but also reflected strong gains in sectors that were unaffected by tax changes. Nonetheless, with sales dropping back in January, this release …
The news on inflation this week was worrying, raising the risk that CPI inflation will remain higher for longer and interest rates will be cut more slowly than we expect and/or not as far. (See here .) Data released this week revealed that wage growth was …
This page has been updated with additional analysis since first publication. Bad news continues for the Chancellor While January’s disappointing public finances figures may not be as bad as they first appear, they continue the run of bad news for the …
This page has been updated with additional analysis since first publication. Supermarkets win, restaurants lose The leap in retail sales volumes in January shows that the retail sector shot out of the blocks at the start of the year. But some of that …
Starts align for further rate hikes A recent Reuters survey showed that most economists expect just one more 25bp rate hike by the Bank of Japan this year. Even so, the financial markets are starting to come around to our view that the Bank will lift …
Risks are tilting towards less easing As most had expected, the Reserve Bank of Australia began its easing cycle with a 25bp cut this Tuesday. However, in her post-meeting press conference Governor Bullock took pains to rein in expectations for further …
This page has been updated with additional analysis since first publication. PMIs point to further rate hikes The further rebound in the composite PMI in February coupled with the persistent strength in manufacturing output prices suggests that the Bank …
Softer inflation ahead The acceleration in headline inflation and strength in underlying inflation in January should add to the Bank of Japan’s confidence that it can continue its tightening cycle over the coming quarters. In January, headline inflation …
20th February 2025
With Treasury yields rising in Q4 and property cap rates falling for the first time since mid-2022, our property valuation scores declined across the board. This supports our view that the recovery in 2025 will be weak. There remains a gap between …
The latest data suggest that, outside China, the world economy lost a bit of momentum heading into 2025. Around the turn of the year, manufacturing output kept treading water, retail sales weakened in advanced economies, and business survey indicators …
While our bullish year-end forecast of 7,000 for the S&P 500 assumes the index’s absolute valuation will approach its dotcom-era peak, that forecast is comparatively conservative based on relative valuation. If the equity risk premium reached its level in …
This page has been updated with additional analysis since first publication. Hot jobs report will keep the RBA vigilant The tight labour market reinforces our view that the RBA will deliver a shallow easing cycle. We expect the Bank to hand down only two …
Fed in no hurry to resume cutting rates The minutes of the Fed’s late-January policy meeting underline that, having cut rates by a cumulative 100bp, officials are in no hurry to resume loosening monetary policy, even though most still thought the current …
19th February 2025
The Bank of Canada has downplayed the recent stronger monthly increases in its preferred CPI-trim and CPI-median core measures, but we are not convinced by the Bank’s claim that these measures are overstating underlying inflation pressures. While the GST …
Although long-term government bond yields in developed markets (DM) have moved in tandem with those of US Treasuries in recent months, we think they will diverge in the coming months. 10-year government bond yields have risen across the board this week – …
Weather partly to blame for decline in housing starts The decline in housing starts in January is not a major concern, as it comes after a surge in starts in December and appears partly driven by the unseasonably harsh weather. Encouragingly, permit …
This page has been updated with additional analysis since first publication. Climb in inflation to 3% will be uncomfortable for the BoE CPI inflation took another step up from 2.5% in December to 3.0% in January (consensus, BoE, CE 2.8%) and will probably …
Having handed down a third consecutive 50bp rate cut at its meeting today, the Reserve Bank of New Zealand is likely to slow the pace of easing going forward. That said, we still think there’s a compelling case for a lower terminal rate than most are …
RBNZ to cut further than most expect Having handed down its third consecutive 50bp cut today, the RBNZ is likely to slow the pace of easing going forward. That said, we still think there’s a compelling case for a lower terminal rate than most are …
Wage pressures continue to soften Although the RBA will welcome the continued slowdown in wage growth, we still think it will deliver only a shallow easing cycle. The 0.7% q/q rise in the wage price index last quarter was a touch softer than most had …
Polar vortex freezes market The plunge in the sales-to-new listings ratio in January is a downside risk to our view that house prices will recover this year, particularly amid anecdotal evidence that US tariff threats are weighing on demand. Developers …
18th February 2025
The economy continues to do well with GDP growing strongly and employment growth solid. We are concerned, however, that the Trump administration’s policies will weigh on GDP growth over the course of this year. Nonetheless, with downward progress on core …
We think the window for further Fed interest rate cuts has closed, so mortgage rates should remain near their current 7% level this year, before a little more relief arrives in 2026. There will still be room for sales to improve, aided by less restrictive …
Underlying inflation pressures too strong beneath the surface The GST holiday meant that headline inflation remained below the 2% target in January, but there is clear evidence that underlying inflation pressures are building. Given the tariff threat …
This page has been updated with additional analysis since first publication. Weak employment, but wage growth still too high for BoE’s liking While there was a small improvement in labour market activity in December and January, employment growth remains …
When the Reserve Bank of Australia handed down its inaugural 25bp cut today, it indicated that any further withdrawal of monetary restriction would be limited, given residual inflationary pressures. Accordingly, we’re comfortable with our view that the …
RBA starts easing, but tempers expectations for further cuts When the Reserve Bank of Australia cut rates by 25bp at its meeting today, it signalled that any further withdrawal of monetary restriction would be gradual. Accordingly, we’re comfortable with …
A weaker economy than we previously thought could mean housing demand is a bit more subdued than we expect. But our forecast for mortgage rates to fall further than is widely anticipated suggests transactions will continue to recover and house prices can …
17th February 2025
While household incomes are rising the most since the early 1990s, households are saving rather than spending the bulk of those gains. And with real income growth set to slow this year, we expect consumption growth to remain solid rather than …
GDP growth should settle around trend this year Even though the jump in Q4 GDP wasn’t broad-based, it supports our view that the Bank of Japan will tighten policy more aggressively this year than most anticipate. According to the preliminary estimate …
Bank of Canada navigating without tariff roadmap The Summary of Deliberations from the Bank of Canada’s January policy meeting confirmed that tariff uncertainty had a hand to play in its decision to cut interest rates by 25bp. In particular, members of …
14th February 2025
Reciprocal tariffs will be a big deal January inflation bad, but could have been worse After a hot CPI report this week and a not-so-hot PPI report (at least not in the components that count) we estimate that the Fed’s preferred core PCE price measure …
Industrial output edged higher The rise in industrial production in January is not as good as it looks as it was driven by a weather-related surge in utilities and a further post-strike recovery in aerospace & parts output. Industrial production rose by …
The potential tariffs that UK exporters could soon face for sending goods to the US became bigger this week. On Monday, Trump said that US imports of steel and aluminium from all countries would face tariffs of 25% from 12 th March. Then on Thursday he …
Manufacturing recovery falls flat The sharp decline in manufacturing sales volumes in December suggests that the earlier recovery in the sector has hit a wall. New orders rose only modestly, by 1.3%, confounding hopes that the sector might benefit from …
A weak start to the year The large fall in control group retail sales in January, together with the timelier data showing a slump in vehicle sales, suggests that real consumption fell last month. While weather effects were probably partly to blame, that …
Tax cuts could kickstart the recovery With the New Zealand economy plainly in dire straits , the government is reportedly considering slashing the corporate income tax (CIT) rate in the upcoming May budget. There is certainly a compelling case for the …
10-year JGB yield climbs to 14-year high Even though the 10-year US Treasury yield has been little changed, the 10-year JGB yield rose to a 14-year high of 1.35% this week and we think that it will climb further to 1.75% by year-end. See our Global …
Reciprocal tariffs a bigger deal than universal tariff President Trump appears to have abandoned the idea of imposing a flat universal tariff of 10% or 20% on imports from all other countries. But the broad criteria that will be used to assess his new …
13th February 2025
PPI brings better news on core PCE inflation Final demand PPI increased by a bigger-than-expected 0.4% m/m, but the components that feed into the Fed’s preferred PCE price measure were, on the whole, very tame. As a result, we now estimate that core PCE …
