Physical retail demand has not only been shaped by online shopping, but also by shifting working patterns which have redistributed where we spend our money since COVID-19. Nevertheless, we expect a more even retail performance with the worst-hit …
26th March 2025
For updated and more detailed analysis see here . Markets may be concerned about unfinished fiscal business Despite saying the “world is changing”, the Chancellor, Rachel Reeves, today just tinkered with fiscal policy. This left the impression that bigger …
Tariff effects help lift core orders Stronger orders for primary metals and fabricated metal products in February suggest that tariff effects helped to drive up core durable goods orders last month, while transportation orders also did better than we …
We think China’s tech stocks could rally a bit further yet, and perhaps outperform those globally for a while. The breakneck rally in China’s tech stocks has come to a shuddering halt lately. Thanks to a couple of sharp falls they’ve now made no ground …
The outlook for EM GDP growth appears increasingly challenging and our growth forecasts for this year generally sit below the consensus. Monetary easing will continue although, outside Asia, high inflation means that interest rate cuts will be smaller …
This page has been updated with additional analysis since first publication. Temporary dip in inflation may not help the BoE or Chancellor much The dip in CPI inflation from 3.0% in January to 2.8% in February (CE & consensus 2.9%, BoE 2.8%) is a bit of a …
The Reserve Bank of Australia will leave policy settings unchanged at its upcoming meeting that ends on 1 st April and will probably still sound hawkish. However, with inflation set to soften a touch faster than the Bank had anticipated, we still expect …
Weakness in Australia’s underlying inflation points to May rate cut The weakness in underlying inflation means that the RBA will probably cut rates again 25bp in May and creates some downside risks to our forecast that the Bank will only cut rates to …
While the drop and partial rebound in the US stock market over recent weeks has in many ways followed a familiar pattern, it has also seen some relatively unusual characteristics that point to the potential for a wider and sustained reset in financial …
25th March 2025
The divergence between the struggling western metros and the better-performing southern metros remains the key story in office markets. That expectation is underpinned by both higher office utilization rates in southern metros and by their better …
Overview – We expect economic growth across the region to remain subdued, with most economies set to record below-trend and below-consensus growth this year. While lower interest rates will provide some support to growth, this boost is likely to be offset …
We think markets are too optimistic about Fed rate cuts this year, meaning the recent dip in mortgage rates is just a temporary respite. We expect rates to rebound to 7% and hover around that level throughout the rest of the year. There is still room for …
Environmental, Social and Governance, or ESG, investing has come under renewed pressure due to pushback from the new US president. Despite that, we think that demand for ESG investments is here to stay and that their performance won’t buckle much in the …
While US equity outperformance could reassert itself in the near term if concerns about US growth waned and enthusiasm about AI returned, we suspect that the longer-run story is brighter for equities elsewhere. US equity exceptionalism is under pressure. …
Small rebound in sales shows new home market still in good health After a large partly weather-driven fall in January, last month’s small rebound in new home sales was a little underwhelming but still illustrates that the market for new homes is in decent …
It is becoming clear that President Trump’s actions are driven by both his fixation on reducing the US trade deficit and his transactional approach to dealing with other countries. So, even though the Trump administration’s ideas to transform the entire …
House price inflation rises to five-month high The solid 0.5% m/m rise in house prices in January and accompanying pick-up in house price inflation to 4.7%, from 4.6%, confirms that the market has stopped cooling for now. While we still expect house price …
As expected, Australian Treasurer Jim Chalmers unveiled a slew of new spending measures in today’s pre-election Budget. However, we don’t believe the scope of fiscal expansion is large enough to keep the RBA from cutting rates a bit further this year. In …
MNB on hold, high inflation to tie new governors hands The Hungarian central bank (MNB) left its base rate unchanged today, at 6.50%, and we think its easing cycle will remain on pause throughout 2025 as inflation remains stuck above target. Analysts have …
Following President Trump’s threats of secondary tariffs on buyers of Venezuelan crude, the upside risks to oil prices from his foreign policy are crystallising. That said, OPEC+’s spare capacity and apparent willingness to raise output blunt some of the …
The protests that have swept several EMs in recent weeks are likely to have a longer-lasting economic impact in countries with weak balance sheets and/or where they lead to a major shift in policy. It’s too early to conclude that any of the affected EMs …
A combination of stronger oil output and a thriving non-oil economy will support stronger growth in the UAE’s economy this year, helping it to retain its crown as the fastest growing economy in the Gulf. The UAE has continued to abide by OPEC+ policy, in …
Because the concept of ‘reciprocal tariffs’ is merely a cover for the White House to impose whatever tariffs it likes, they pose a potentially considerable threat to world trade. This Update provides answers to ten questions regarding what we know, as …
This publication has been updated with additional analysis. Sentiment improving but activity still weak still weak The Ifo Business Climate Index (BCI) and other surveys for March confirm that the prospect of fiscal stimulus is boosting sentiment in …
Overview – Both Antipodean economies seem to have turned a corner at the end of last year, and we expect the recoveries to gather momentum in the coming quarters. Given the tight labour market and elevated public demand, we believe the RBA will only …
Our China Activity Proxy suggests that China’s economy slowed over January and February, driven by a sharp slowdown in services sector growth. Fiscal expenditure is set to pick up over the coming months, but that will largely be offset by the drag from US …
24th March 2025
Over the past month or so, economic data have generally surprised to the downside in the US, whereas they have done the opposite in the euro-zone. This may be one reason for the intervening shift in the performance of their stock markets. Admittedly, much …
The latest flash PMIs suggest that while economic activity may have picked up a bit in advanced economies towards the end of Q1, the outlook remains fairly bleak. And while inflation seems to finally be receding in the euro-zone, price pressures remain …
Overview – While tariffs and geopolitics complicate the near-term outlook for many commodities, the backdrop generally remains one of weak fundamentals; our end-2026 price forecasts for energy and industrial metals are well below consensus. Gold is a …
The further easing of core services inflation in Mexico in the first half of March combined with recent weak activity data paves the way for Banxico to deliver another 50bp cut at its meeting on Thursday. The headline rate was unchanged from the first …
How to fix the global economy? I explained last week why global trade imbalances matter and outlined a framework for thinking about a ‘grand bargain’ to reform the global trade system. The core challenge is reducing trade imbalances while keeping the …
Residential has been the Netherlands’ strongest performing commercial property sector since the GFC, with bumper rent growth a key contributor to that outperformance. Looking ahead, slower wage growth and inflation will bring an end to the recent boom in …
This page has been updated with additional analysis since first publication. Stubbornly high UK price pressures will add to BoE’s worries With the downside risks on activity shrinking and high price pressures being sustained, the Bank of England is …
Weak data to bolster calls for monetary easing The weaker-than-expected February retail sales data out of Poland suggests that the economy may have slowed a bit more sharply than we had been anticipating this quarter. While this won’t prompt the central …
This publication has been updated with additional analysis. Germany recovering but euro-zone still weak February’s Flash Composite PMI provides more evidence that, after expanding by only 0.1% in Q4, the euro-zone economy remains all but stagnant in Q1. …
While Korea’s productivity growth has slowed, this has been offset by faster employment growth as more women and elderly have entered the labour market. If that trend continues and productivity growth picks up a bit in response to the AI revolution, …
Could a ‘Mar-a-Lago Accord’ fix what ails the US balance of payments? Group Chief Economist Neil Shearing is on the show this week to tackle the various ideas around what the Trump administration could do to address long-standing global imbalances. He …
21st March 2025
The dollar is ending the week broadly flat on net, continuing its stabilisation after February’s sell-off. With the latest round of central bank policy announcements in the rear view mirror (having brought no major surprises) and the Trump …
The prospect of looser fiscal policy in Germany isn’t the only significant reason MSCI’s Europe Index has outperformed its USA Index since Donald Trump returned to the White House. The ‘big-tech’ sectors’ fall from grace in the US has also been very …
Inflation at risk of takeoff On Tuesday we learned that headline inflation jumped to 2.6% in February, from 1.9%. While a rise had been expected given the resumption of GST in the middle of last month, broader price increases elsewhere in the economy …
With the Fed almost certain to leave interest rates unchanged on Wednesday, the real focus was on how FOMC participants would update their economic forecasts to fit the policy course being charted by the new Trump administration. In the end, policymakers …
Structural weakness weighs on long-run outlook While China’s treasury yields have picked up in recent weeks, we don’t think that the trend decline of the last decade is over. We expect China’s 10-year government bond yield to fall below Japan’s this year, …
A pause for thought? The Bank of England was never going to do anything but continue the cut-hold-cut-hold pattern and keep interest rates unchanged at 4.50% this week. But the Monetary Policy Committee’s (MPC) hawkish tone suggests it is preparing to …
Colombia: public finance risks back to the fore The resignation of Colombia’s finance minister Diego Guevara after just over three months in office has thrown the Andean nation into renewed disarray and raises big questions about the outlook for the …
Kenya and the IMF agree to disagree Kenya and the IMF abandoned talks over the ninth review of the country’s existing financing programs this week and, while a new deal is in the offing, public debt concerns are likely to build. It’s been clear for some …
Gilt yields should fall back this year, but with property looking somewhat overvalued we doubt that will trigger much in the way of yield compression. That means the recovery in all-property returns will be weak by past standards. Thanks to stronger …
Gold smashes through $3k In what feels a lot like déjà vu at this point, gold set yet another record high this week, this time as it smashed through the $3,000 per ounce mark. The financial press have linked the latest leg up in the price over the last …
Heightened military threat… but stronger GDP The rise in optimism about the euro-zone economy over the past few weeks has been remarkable. The ZEW index of investor sentiment in Germany saw one of the biggest increases on record in March. (See Chart 1.) …
China’s exports of the “New Three” technologies fell in early 2025 as the boost from front-running tariffs in the US appeared to fade. With tariffs only likely to climb and the adoption of clean technologies slowing in some developed markets, China will …
Consumption outlook deteriorating The sharp drop in retail sales volumes in January is not a major concern, coming off a massive GST holiday-driven surge the month before. The worry is that it could signal what's to come, with the preliminary estimate …
