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Core inflation pressures better than they look Although the annual rates of CPI-median and CPI-trim edged up in October, the 3-month annualised rates that the Bank of Canada is now focussed on declined. As that for CPI-median is now in the 1% to 3% …
16th November 2022
Core inflation pressures better than they look Headline inflation was unchanged at 6.9% in October and the CPI-median and CPI-trim measures of core inflation increased, but the latter was mainly due to unfavourable base effects. It appears that the …
This checklist helps clients keep track of the key economic and public finances forecasts announced during the Chancellor’s Autumn Statement at 11.30am on Thursday 17 th November. We will send a Rapid Response shortly after the speech, we are hosting a …
The recent surge in rental growth to a record high has been widely reported, but the usual explanations are unsatisfactory. Population indicators don’t suggest a sudden rise in demand, and there is little evidence of landlords selling up. Instead, we …
Inflation may have peaked, but battle not yet won It’s possible that the big leap in CPI inflation from 10.1% in September to a new 40-year high of 11.1% in October will mark the peak. But core inflation may yet rise further, which is why we think the …
Losing streak has further to run Weakness in the manufacturing sector led to “core” machinery orders falling for a second consecutive month in September. Worse still, machine tool orders indicate that the two-month losing streak, rare as it is, hasn’t …
Imminent rebound in orders to be soft “Core” machinery orders fell for a second consecutive month in September due to weakness in manufacturing orders. While the usual see-saw patterns in orders point to a rebound that should materialise in October’s …
Even as Central London office vacancy rates rose to a 12-year peak in Q3, annual rental growth ticked-up to a three-year high. That marks a reversal from the situation prior to COVID-19, when a tight market failed to spark a strong rise in rents. But we …
15th November 2022
Manufacturing sales volumes set to fall further Manufacturing sales volumes edged down in September and, with the business surveys continuing to weaken and inventory levels now looking unusually high, they are likely to fall further. We expect weaker …
Recovery in sentiment won’t prevent recession The rebound in the ZEW and other sentiment indicators in November does not change the fact that the German economy is firmly headed for recession. The rise in the ZEW economic sentiment indicator from -59.2 …
Labour market looks like it may be turning a corner September’s labour market figures reveal further signs that the labour market is becoming less tight. That may alleviate some of the pressure on the Bank of England to repeat November’s 75 basis point …
Economy to rebound in Q4 after Q3 contraction Japan’s economy contracted in Q3, with both private consumption and business investment posting far weaker results than timelier data had suggested. The single largest drag was from net trade due mostly to a …
Activity data likely to show that China’s economy lost momentum last month… (02.00 GMT) …but we expect the PBOC to refrain from cutting its MLF rate tomorrow We think tightness in the UK labour market eased in September (07.00 GMT) Key Market Themes …
14th November 2022
Despite the recent sharp drop in the greenback, we doubt this is the end of the dollar bull market. Yesterday’s softer-than-expected US CPI print prompted the largest single-day drop in the DXY index since December 2015. Indeed, it was one of only a …
11th November 2022
We don’t expect the 10-year JGB yield to rise above the top of the Bank of Japan’s tolerance band, and think it may even fall back to the middle of that band next year as yields continue to decline elsewhere. Yields fell sharply around the world, and the …
The big fiscal tightening set to be unveiled at the Autumn Statement on 17 th November is coming at a time when the economy is probably already in recession. And the fiscal consolidation, rumoured to be worth a total of £54bn (1.9% of GDP), could risk …
Underlying price pressures to remain very strong The rise in core inflation in Germany in October confirms that underlying price pressure in the country are still building. We expect the core rate to remain well above 2% throughout next year. Final HICP …
Consumption resilient against Q3 virus wave The seventh COVID wave in Q3 has been the worst on record so far in terms of daily infections. Yet the Cabinet Office’s monthly estimate of private consumption for July and August was 0.6% above the Q2 average …
Recession begins and not because of the extra bank holiday About half of the 0.6% m/m fall in real GDP in September and half of the 0.2% q/q decline in Q3 as a whole was caused by the one-off reduction in the number of working days due to the extra bank …
Commercial property valuations began to stabilise in Q3, as a large rise in property yields helped offset a further rise in alternative asset yields. And with the reversal of the “mini-Budget” meaning 10-year gilt yields have now likely peaked, a …
10th November 2022
We think Malaysia’s GDP growth slowed sharply in Q3… (04.00 GMT) … and the UK economy contracted, marking the start of a recession (07.00 GMT) Consumer sentiment in the US probably remained low in early November (15.00 GMT) Key Market Themes US …
We doubt the recent underperformance of UK high-yield corporate bonds relative to those in the euro-zone will continue given the relative outlooks for monetary policy and economic growth. Corporate bond yields in developed markets (DMs), as measured by …
While the risk premium that pushed gilt yields up and the pound down after the mini-budget has mostly been reversed under the stewardship of Sunak and Hunt, the fear that the markets will baulk at any fiscal indiscipline means that the Chancellor will …
Goods deflation begins; health insurance flips The better than expected 0.3% m/m increase in core consumer prices in October won’t on its own persuade the Fed to drop its hawkish stance. But we expect this to mark the start of a much longer …
Widespread downgrades, but still well short of the negative returns we expect Consensus forecasts for 2023 have been downgraded pretty sharply since the Spring, but we don’t think they have gone far enough. While the consensus is predicting total returns …
Chief UK Economist Paul Dales and Jonas Goltermann, a senior economist from our Global Markets team, held a client briefing shortly after the Chancellor’s 17th November statement, to discuss his final policy choices and their implications for the UK …
We’ll be discussing the implications for the economy and the financial markets of the Autumn Statement in a 20-minute online briefing at 4pm GMT on 17 th November. (Register here .) In his Autumn Statement on 17 th November the Chancellor, Jeremy Hunt, …
We think US consumer price inflation fell back in October (13.30 GMT) Mexico’s central bank is likely to deliver another 75bp hike… (19.00 GMT) … but we expect policymakers in Peru to keep interest rates on hold (23.00 GMT) Key Market Themes The …
9th November 2022
Oil demand defies high prices and slowing economy, for now Commercial crude stocks rose this week even though more crude was used by refiners. And despite the increase in refining output, gasoline and distillate stocks fell on strong demand. We think …
Overview – We expect mortgage rates will hold close to 7% over the remainder of the year, leaving affordability at its worst since 1985. That will lead to another sharp fall in activity. As the economy dips into a mild recession in 2023, sales and …
8th November 2022
US petroleum product prices have risen again, mainly due to refinery-side supply constraints. We think this will translate into fewer product exports, but potentially even more crude oil exports. As we expected, US wholesale fuel prices have remained …
We think CPI inflation eased in China in October … (01.30 GMT) …but remained well above the central bank’s target in Mexico (12.00 GMT) We expect Poland’s central bank to announce a 25bp hike Key Market Themes Although US “big-tech” stocks have had a …
In line with changes in our global economic view, we have made significant downgrades to our commercial real estate forecasts for the next couple of years. As a result, we now expect a much bigger drop in property values next year that will cause annual …
A strong rebound in working hours in the accommodation and food services sector is one reason why regular pay is growing at the fastest pace in a generation. However, there’s been a broad-based upward shift in the distribution of pay hikes so the …
The proposed price caps on thermal coal and natural gas would knock off around one to 1.25%-pts from overall inflation though the full impact would only materialise in the second half of next year. Wholesale gas and thermal coal prices have surged in …
Inflation and reopening boost to keep earnings growth high Overall earnings rose 2.1% y/y in September, the fastest since 1997, but we don’t think this can be kept up consistently, given that a large spike in volatile bonus payments was key to hitting …
7th November 2022
Germany’s industrial production probably slumped in September (Mon.) We think annual US core CPI inflation fell in October (Thu.) We expect rate hikes in Mexico, Poland and Romania Key Market Themes While we still think a sustained fall in Treasury …
4th November 2022
The modest fiscal loosening unveiled in the Fall Economic Statement this week is unlikely to move the needle much for monetary policy, but the surge in employment in October and the acceleration in wage growth nevertheless leave the Bank of Canada’s …
Jump in employment and wage growth pressures the Bank to do more The 108,300 surge in employment in October makes a mockery of claims that the economy is on the cusp of recession and, with wage growth accelerating sharply despite favourable base effects, …
Improvement in headline index will not last long As was the case last month, an improvement in delivery times and subcontractor availability drove a surprise rise on the headline construction PMI in October. But a slowing economy and higher financing …
Chief Markets Economist John Higgins held a discussion with economists from across our Markets team shortly after the release of our Q4 Outlooks. During this briefing, John and the team answered client questions and highlighted key takeaways from their …
Gold and silver prices fell following Chair Powell’s hawkish comments yesterday. But if we are right in thinking US rates won’t rise by as much as markets expect, gold and silver prices should increase next year. We forecast prices to rise from $1,630 and …
3rd November 2022
The differing tones of the Fed, ECB and BoE at their recent meetings have seen yields rise in the US more than elsewhere and reignited the rally in the US dollar. That pattern could last a few more months. But we expect falling inflation in the US to mean …
Composite PMIs for Italy and Spain probably fell further in October (09.00 GMT) We think US non-farm payrolls rose by 225,000 in October (12.30 GMT) Sign-up to our Global Economics Drop-In on the upcoming recession Key Market Themes We’re inclined to …
Although the Monetary Policy Committee (MPC) raised interest rates today by 75 basis points (bps), from 2.25% to a 14-year high of 3.00%, it sent the strongest signal yet that it thinks rates won’t need to rise much above 4.00%. But with price/wage …
Dovish tilt, but rates may still rise to 5.00% Although the Monetary Policy Committee (MPC) raised interest rates today by 75bps, from 2.25% to a 14-year high of 3.00% (consensus 3.00%), it sent a strong signal that it is unlikely to raise rates to the …
Construction activity set to slow as financing constraints bite The latest RICS Construction Survey showed a rise in workloads in Q3, although the gain was small. Looking ahead, a slowing economy and higher financing costs will soon lead to a cut in …
Rebound in trade surplus won’t prevent drag from net trade in Q3 While the trade surplus bounced back in September, we’ve pencilled in a drag from net trade to Q3 GDP growth as export volumes probably didn’t rise fast enough to offset a surge in imports. …
