There’s a lot of uncertainty about how much impact monetary tightening has had in the global economy so far, but in Central and Eastern Europe (CEE) the hit to households has already been significant and we estimate that almost all of the impact from …
18th September 2023
The sustainability of above-target inflation is still in doubt However, Bank seems keen on getting rid of negative interest rates We now expect the Bank to lift its policy rate from -0.1% to +0.1% in January Even though the sustainability of …
As the ECB, Bank of England and Fed end their tightening cycles, attention invariably turns to when rates could be cut. Group Chief Economist Neil Shearing explains why investors hoping for clues on timing from central bankers are going to be …
15th September 2023
Another week, another rise in the DXY index, which at the time of writing is on track for a ninth consecutive weekly rise. Continued robust activity data in the US and the ECB signalling the end of its rate hiking cycle accounts for the greenback’s …
South Africa’s fiscal rule talk Reports emerged this week that, in a bid to keep investors on side amid a worsening budget position, South Africa’s Treasury is proposing to establish a new “fiscal anchor”. Even so, a looser fiscal stance still seems an …
We expect China’s equities to fare better than those in the US in the near term. Stronger-than-expected August activity data out of China seem to have given the country’s equities a bit of a boost today. But the gains haven’t been particularly broad …
Note: Join our online briefing on Tuesday, 19 th September about oil prices and the risks to the global inflation outlook. Register here . The mood was upbeat in commodity markets this week, with prices rising across all sectors. Oil stood out, with …
A recent poll suggests that Canadians are growing sceptical of the government's high immigration targets. Whether policy shifts or not, it is inevitable that net immigration will eventually slow from record rates, but there is no sign of that yet. Opinion …
Easing inflation expectations an encouraging sign for Fed The small fall in the University of Michigan index suggests that consumers remain downbeat in September. But the bigger news was the fairly sharp drop-back in households’ inflation expectations – …
We were not surprised that European Commission (EC) President Ursula von der Leyen announced in her State of the Union address this week that the EC will launch an anti-subsidy investigation into electric vehicle (EV) imports from China. Indeed, we had …
Argentina: Devaluation triggers inflation jump This week’s inflation data from Argentina made for a grim reading. Consumer prices rose by 12.4% m/m in August on the back of last month’s devaluation , pushing inflation to 124% y/y – the highest rate since …
Russia seeking closer friendship with North Korea The strengthening relationship between President Putin and North Korean leader Kim Jong Un was on show this week but we doubt the discussions will yield any meaningful benefits for Russia’s economy or …
Core inflation still on firm downward trend Although core CPI increased by 0.3% m/m in August (or 0.28% to be precise), up slightly on the 0.2% m/m gains (both 0.16%) in the preceding two months, the rise last month was still smaller than the average gain …
The recent outperformance of single-family REITs versus apartment REITs appears to be down to differences in the capital value outlook for the sectors, rather than any major difference in rental growth prospects. With our forecasts for single-family and …
Easing supply shortages continue to support activity The continued strength of manufacturing sales in July suggests that GDP may be stronger than initially expected, as easing supply shortages continue to support the manufacturing sector. While there may …
Drop back in motor vehicle output not a concern The 0.1% m/m increase in manufacturing output in August was marginally better than we had expected, but doesn’t change the broader picture, which is that, with global manufacturing still struggling, the …
Recent data show Sri Lanka’s economy is now rebounding strongly from last year’s political and economic crisis. We expect the recovery to continue over the coming months, helped by the sharp drop in inflation, lower interest rates, a recovery in tourism …
Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST on Thursday 21st September. (Register here .) We’ve been surprised by the resilience of the labour market over the past year. More recently, …
While policymakers’ efforts to prop up the renminbi and the yen alone are not enough to generate a lasting turnaround , they will probably do enough to buy time until US interest rate expectations and Treasury yields fall back and the dollar depreciates …
Property controls have been substantively relaxed in recent weeks. The big announcements came on the last day of August. But there has since been plenty of easing at the local level too. At least ten large cities have lifted all home purchase …
CBR delivers another large hike, more tightening still in the pipeline Russia’s central bank (CBR) raised its policy rate by 100bp, to 13.00%, at today’s meeting and with the ruble likely to remain under pressure and inflation pressures to keep building, …
We think the euro-zone economy will go into recession in the second half of 2023, and the subsequent recovery will be weak due to the lagged impact of monetary policy tightening as well as tight fiscal policy. Headline inflation in the euro-zone will …
The surprising strength of office market rents looks to reflect the increased use of incentives. Indeed, passing rents have seen a sharp decline, with all-office annual growth recently falling to a record low of minus 3.3%. Given an upcoming recession and …
Based on our view that US economic growth will prove resilient, despite the rise in interest rates, and that US inflation will ease, we expect the gold price to fall to $1,800 per ounce by year-end. Since rising to around $2,000 per ounce on safe-haven …
G20 summit exceeds low expectations T he G20 managed to deliver a joint statement at its summit in New Delhi, which was deemed as something of a foreign policy triumph for Prime Minister Modi given the uncertainty ahead of the event. This owed much to …
Hold likely in Philippines despite jump in inflation The scheduled highlights of the coming week are monetary policy meetings in Indonesia, Taiwan and the Philippines. While Indonesia and Taiwan are very likely to leave policy settings unchanged, the …
We think Norges Bank will go through with its plan to raise its policy rate by 25bp next week, to 4.25%, and signal that its tightening cycle is over. It is then likely to will wait until around the middle of next year before cutting interest rates, but …
This page has been updated with additional analysis since first publication . Inflation accelerates once again, setting the stage for more tightening Nigeria’s headline inflation rate rose again to an almost-18 year high of 25.8% y/y in August, as the …
This page has been updated with additional analysis and charts since first publication. Economy regains momentum as consumers step up Although a slight uptick in activity was expected, the August data turned out to be even better than anticipated. Fiscal …
Wage growth will remain contained Data published by the Fair Work Commission on Monday showed that average annualised wage increases under new enterprise bargaining agreements (EBAs) soared to 4.4% in the two weeks leading up to August 11 th . That meant …
Ueda signals tighter policy Bank of Japan Governor Ueda’s comments over the weekend that the Bank may have enough information by the end of this year to call time on negative interest rates sent 10-year JGB yields above 0.7% for the first time since 2014. …
We think emerging market (EM) equities in Asia will outperform those in EMEA and Latin America over the next couple of years, although we doubt they’ll do better than developed market (DM) equities. EM equities have struggled this year, at least judging …
Given our dovish view of monetary policy in Emerging Markets (EMs) – and our increasingly less bearish view of the US economy – we think that EM local-currency government bond yields will fall across the board in the next couple of years, particularly in …
14th September 2023
We’ve revised up our projections for the S&P 500 and the 10-year Treasury yield, but still expect both to fall a bit by the end of this year. We have also tweaked our forecast for the US dollar. We had been projecting that the S&P 500 would struggle over …
The Riksbank looks all but certain to follow the ECB’s example and raise its key policy rate by 25bp next week, to 4.0%. However, while that could mark the end of its tightening cycle, on balance we think It is more likely to deliver one last hike, in …
We think that the ECB is more likely than the Fed to keep rates “higher for longer”, even as the euro-zone heads for a recession. That is one reason why we expect core euro-zone bond yields to fall by less than Treasury yields over the next year or so, …
On balance, we think the SNB will look through the recent low inflation and hike rates by 25bp one last time to 2.00%, given policymakers’ previous hawkish commentary. But with the economy stagnating in Q2 and wage growth suppressed, we would not be …
Yesterday, we hosted a Drop-in webinar taking a closer look at the state of play in Egypt and whether the country can get its IMF deal back of track. You can view on-demand here . This Update addresses some of the questions we received during the event. …
Today’s 25bp rate hike by the ECB probably brings its tightening cycle to an end. Given our view that underlying inflation will ease only gradually even though the euro-zone is heading for a recession, we think policymakers will leave rates at this record …
We think the recent rally in the iron ore price will soon go into reverse. Steel demand in China has surged in recent months, but we think that will prove temporary. China’s steelmakers should cut back on production once the boost to demand from a pick-up …
CPI food inflation has remained elevated in recent months but, with wholesale price growth easing rapidly, we are confident it will soon fall sharply. That will help to offset the impact of higher oil prices on energy inflation and means there is still …
Note: Join our online briefing on Tuesday, 19 th September about oil prices and the risks to the global inflation outlook. Register here . While we think Saudi Arabia and Russia’s supply cuts, which have sent oil prices surging in recent weeks, will be …
This page has been updated with additional analysis since first publication. Consumer strength fading The 0.6% m/m rise in retail sales values in August was mostly due to price-related strength in gasoline sales, with the muted 0.1% rise in underlying …
A gesture of support from the PBOC The People’s Bank has just announced a cut to bank reserve requirements. With private sector credit demand still weak, this is a gesture rather than a meaningful support measure. Substantial rate cuts or a sea change in …
End of the tightening cycle The ECB’s decision to raise interest rates by a further 25bp today probably brings the current tightening cycle to an end. But given the strength of underlying inflation, we expect rates to remain at this level for at least a …
While economic activity was generally more resilient than feared in the first half of 2023, there are growing signs that many major economies are losing momentum. We expect most advanced economies to experience mild recessions in the quarters ahead as …
South Africa’s unemployment rate has dropped back over the past year or so but it remains far above its pre-pandemic level. The rise in long-term unemployment, which has its roots in both cyclical and structural factors, is particularly worrying and could …
All eyes on the CBE The Central Bank of Egypt (CBE) resumed its tightening cycle in August and, with inflation rising further, we expect interest rates to be hiked again. More than anything, though, investors will be looking for any shift in the exchange …
