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Higher interest rates continue to weigh on the economy November’s money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market. And this will be a constant theme throughout the year …
4th January 2023
The US ISM Manufacturing Index may have dipped further in December (15.00 GMT) We expect Poland’s central bank to keep rates on hold on Wednesday Read our key calls for the global economy and financial markets in 2023 here Key Market Themes After …
3rd January 2023
London house prices are likely to continue to underperform even if the shift in buyer demand away from the capital due to remote working ends. More stretched house prices in the capital prior to the jump in mortgage rates means the impact of higher …
We estimate that employment growth slowed more sharply in December, with non-farm payrolls rising by 160,000. The unemployment rate probably edged up to an 11-month high of 3.8%. Although employment growth has been solid in recent months according to the …
Plunge in inflation in December likely to reverse in January The sharp fall in German inflation in December was due to one-off energy subsidies so it will probably reverse in January. Headline inflation is still likely to decline rapidly in March, but we …
Breakneck housing downturn has much further to run Australia’s house prices have never fallen so fast in such a short period of time and the risks to our forecast of a 15% peak-to-trough fall are shifting to the downside. The 1.2% m/m fall in house prices …
Click here to read the full report. We now expect a small fall in rents next year in a handful of metros as affordability constraints and falling employment take their toll on demand. At the same time, a wave of completions in some of the markets with the …
29th December 2022
New home sales increase despite jump in mortgage rates New home sales increased for the second month in a row in November. That is at odds with other measures of market activity, which have fallen sharply in response to the jump in mortgage rates. We …
23rd December 2022
This week brought further signs of slowing activity growth and falling inflation, trends we expect to intensify next year. Meanwhile, Congress has averted a government shutdown, but there appears to be a growing risk of another damaging stand-off over the …
Click here for full report: Overview – Consistent with our national office story, we expect a few years of insipid rent growth and returns for most US office markets. Expensive coastal metros will continue to see weak demand as high rates of sublease …
Q4 growth looking ok, but economy losing momentum Real consumption is on course for solid growth of 3.5% annualised in the fourth quarter, but the income and spending data show that it stalled in November. The soft durable goods orders data for last month …
Q4 growth looking ok, but economy losing momentum Real consumption is on course for solid growth of around 3.5% annualised in the fourth quarter, but the income and spending data show that it stalled in November. The sharp fall in durable goods orders …
This week we learned that the economy contracted by more than we previously thought in Q3. The 0.2% q/q fall in real GDP in Q3 was revised down to a 0.3% q/q decline. More striking is that real GDP was a huge 6% below our pre-pandemic forecast in Q3. …
Inflation will fall below 2% by mid-2023 Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of Japan’s 2% target by mid-2023. The increase in inflation from 3.7% to 3.8% in …
We are resending this publication due to an error in the previous version. Inflation will fall below 2% by mid-2023 Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of …
22nd December 2022
Even though we expect the Bank of England to raise interest rates further from 3.50% now to a peak of 4.50%, we doubt the recent increase in gilt yields will be sustained. Instead, we think yields may fall from 3.60% currently to 2.75% by the end of 2023 …
21st December 2022
The November CPI report marked the second successive undershoot in inflation and there is mounting evidence that it will continue to fall sharply in 2023. (See Chart 1.) Core goods prices are coming under broad-based downward pressure, as easing supply …
We expect Indonesia’s central bank to hike by 25bp tomorrow (07.20 GMT) Turkey’s central bank will probably leave policy on hold (11.00 GMT) We think inflation in Mexico edged down in the first half of December (12.00 GMT) Key Market Themes We doubt the …
The renewed rise in the three-month annualised rates of CPI-trim and CPI-median inflation in November call into question the idea that the Bank of Canada has already finished its tightening cycle. Those rates are not published by either Stats Can or the …
Spike in mortgage rates feeds through to sales Existing home sales experienced their largest drop in nine months in November, as October’s spike in mortgage rates fed through to sales. But mortgage rates have since dropped back and are likely to fall …
Fiscal stimulus pushes borrowing to a record November high November’s public finances figures showed that government borrowing is rising fast. And with pressures from the weakening economy and most of the costs from the government’s energy price support …
Fiscal stimulus and high inflation pushes borrowing to a record November high November’s public finances figures showed that government borrowing is rising fast. And the trio of the government’s energy price support, cost of living payments and pressures …
The jump in bond yields and the further strengthening of the yen following the widening of the Bank of Japan’s tolerance band for 10-year JGB yields will lower the value of assets owned by Japanese investors. Insurance firms will be most affected by …
The surge in government bond yields around the world in response to today’s decision by the Bank of Japan (BoJ) to tweak its policy of Yield Curve Control (YCC) highlights the risks to international markets posed by the country’s huge investment overseas. …
20th December 2022
Headline inflation may have dropped back in Canada in November (13.30 GMT) We expect the Czech central bank to keep interest rates on hold (13.30 GMT) Sign up here for our Drop-In on Wednesday to discuss the BoJ decision Key Market Themes Although …
Weak new home demand weighs on starts Single-family housing starts continued to fall in November as weak new home demand weighed on homebuilder confidence. We expect this to push starts down to a trough of 650,000 annualised in the coming months, before a …
Sales volumes struggling for momentum Retail sales volumes are struggling for momentum and, with the services spending indicators also showing some weakness, household consumption may be heading for a second consecutive quarterly contraction. The 1.4% …
Does the Bank of Japan’s surprise announcement about changes to its yield curve control policy point to a fundamental shift in its monetary stance? Is this new regime defensible? And what will these changes mean for JGBs the yen, and for financial markets …
While we had expected the rise in risk-free rates and upcoming recession to boost yields, the speed at which they have increased has been surprising. All-property equivalent yields rose by a total of 78bps in October and November, reversing all the …
Chief Global Economist Jennifer McKeown and colleagues from across our macro services held a special briefing on what to expect from major DMs and EMs in 2023. In this 20-minute session, the team will be answered client questions as they discussed the …
Wider YCC band not start of tightening cycle The Bank of Japan today tweaked its Yield Curve Control (YCC) settings by widening the tolerance band around its yield target but we don’t expect it to hike its short-term policy rate anytime soon. The Bank’s …
Bank won’t follow band widening with rate hikes The Bank of Japan today widened the tolerance band around its yield target but we don’t expect it to hike its short-term policy rate anytime soon. The Bank’s decision to keep its short-term policy rate at …
End of RBA’s tightening cycle is nearing The fact that the RBA discussed keeping the cash rate unchanged for the first time since the start of the current tightening cycle at its December meeting suggests that it won’t hike rates much further, though we …
The return of inflation for the first time in the inflation-targeting era has led to the biggest jump in Bank Rate and mortgage rates since the late 1980s. (See Chart 1.) The steady downward trend in mortgage rates from 6.5% in 2008 to 1.5% at the end …
19th December 2022
Click here to read the full report. Overview – We think the euro-zone is now at the start of a recession, driven by high inflation, tightening financial conditions and weak external demand, and anticipate two quarters of contraction followed by a gradual …
Click here to read the full report Overview – The sharp rise in interest rates this year has prompted a price correction, which is now coming through in valuation-based indices. Combined with the mild recession we are forecasting for 2023, this will weigh …
Click here to read the full report. Table of Key Forecasts Global Overview – We continue to expect the world to slip into recession in 2023 as the effects of high inflation and rising interest rates are felt. Our forecasts are below the consensus across …
Sentiment recovers further, but recession still coming The further increase in the Ifo Business Climate Index in December and the general improvement in the surveys over the past two months suggests the outlook for the German economy has improved. But …
A mooted adjustment to the joint statement between the Bank of Japan and the government has been widely interpreted as a step towards the withdrawal of ultra-loose policy. However, the policy implications of giving the Bank more flexibility in meeting its …
Sentiment recovers further, but recession still coming The renewed increase in the Ifo Business Climate Index in December and the general improvement in the surveys over the past two months suggests the outlook for the German economy has improved. But we …
One third of the rise in household net worth during the pandemic has now been reversed and the further fall in house prices in November points to another deterioration this quarter. Lower net worth, in turn, is a headwind to consumption in 2023. Net …
16th December 2022
Click here to read the full report. Overview – Property values in Scandinavia and Switzerland have taken a hit as yields jumped in recent quarters. With valuations still stretched, we are forecasting a further 50bps and 30bps of rises at the …
We think the three main economic themes of 2023 will be falling inflation, peaking interest rates and recession. We explained these forecasts in detail in our recent UK Economic Outlook , which carried the title a “A tough year”. (See here .) In short, …
PMIs suggest we’re in recession, but inflationary pressures continue to ease The flash PMIs for December are consistent with our view that the economy is probably in a recession, although a relatively shallow one at the moment. While the price indices …
PMIs suggest we’re in recession, but inflationary pressures continue to ease The flash PMIs for December are consistent with our view that the UK economy is probably in a recession, although a relatively shallow one at the moment. While the price indices …
No early festive cheer for retailers The 0.4% m/m fall in retail sales volumes in November was well below both our and the consensus estimates for 0.5% m/m and 0.3% m/m gains, and resumes the downward trend seen across most of the year. While we think …
No early Christmas cheer for retailers The 0.4% m/m fall (consensus +0.3%) in retail sales volumes in November resumes the downward trend seen across most of the year. Sales volumes in November were 4.5% lower than at the start of the year. And despite …
Annual falls in industrial output to continue while services recover December’s flash PMIs point to further annual contractions in industrial output but suggest services spending rebounded towards year-end. According to today’s flash estimate, the …
Divergence between manufacturing and services to continue According to today’s flash estimate, the manufacturing PMI fell slightly deeper into contraction from 49.0 in November to 48.8 in December. The output sub-index rose to 46.4 but is still the second …
