Slump in March to be followed by further weakness The 4.1% slump in euro-zone industrial production in March was much worse than expected and means that industry was a drag on GDP growth in Q1. While the fall seems to be partly driven by one-off factors …
15th May 2023
Borrowing over a longer period significantly reduces monthly mortgage payments. So the accelerated shift towards loans with a term of 35 or 40 years rather than 25 has probably helped to mitigate the drag on buyer demand from higher interest rates. Higher …
This webpage has been updated with a table and chart of key data. Inflation steady, but should resume its slowdown over the rest of the year Saudi Arabia’s inflation rate was unchanged at 2.7% y/y in April, as an increase in non-food inflation offset …
A flurry of data and policy announcements in recent weeks has provided more clarity about where the global economy is heading, even as it has highlighted some key risks to that outlook. Three things have become clear. The first is that the global economy …
Better showing for Erdogan, now in the driving seat for victory Turkey’s presidential election this weekend was incredibly tight and looks to have produced no clear winner, but President Erdogan performed better than recent polls had suggested and this …
Positive surprise brings end of tightening cycle nearer Inflation fell a bit more than we, the consensus and the Riksbank had anticipated in April, strengthening the case for the Riksbank to end its tightening cycle sooner rather than later. We still …
Drop in wholesale inflation reinforces our view of no more rate hikes The drop in Indian wholesale price inflation in April, to a 33-month low, further reinforces our view that the central bank’s tightening cycle has come to an end. Headline wholesale …
GDP figures released earlier today show the economy bounced back strongly in the first quarter of the year. Provided political stability is maintained, the economy is well placed to grow strongly in 2023. GDP rose by 1.9% q/q in Q1 following the 1.1% fall …
Australia’s house prices have rebounded over the last couple of months and most leading indicators suggest that the recovery has legs. However, we doubt that a sustained recovery is on the cards. While false dawns in the housing market are rare, they did …
Economic recovery underway Thailand’s election has dominated the headlines over the past 24 hours and we will have more to say on the economic implications later in the day, but GDP figures released just now show the economy bounced back strongly in the …
The Bank of Canada’s first-quarter Senior Loan Officer Survey (SLOS) showed a sharp tightening of mortgage lending standards, but we already know that has not been enough to prevent a resurgence in the housing market. While bank lending standards for …
12th May 2023
The PBOC is likely to leave the MLF rate unchanged at 2.75% (Mon) US retail sales probably rose in April, but industrial production may have declined (Tue) We think UK wage growth eased but labour market conditions probably remained tight (Tue) Key …
Inflation hits a new multi-year low Russian inflation continued to defy expectations in April as it slumped to a joint three-year low of 2.3% y/y, which will comfort the central bank . But it is a puzzle as to why inflation pressures remain so soft. We …
The US dollar looks poised to end the week stronger against most major currencies, with the DXY Index on track for its biggest weekly rise since the index peaked in late September 2022. We think this partly reflects that many of the factors which have …
We think that investors are underestimating the scale of interest rate cuts in the UK next year. If we’re correct, that could propel Gilts to the top of the class for local-currency returns over the rest of 2023. Local-currency returns from ICE BofA’s …
Note: We’ll be discussing the radical shake-up facing global energy markets and our long-term energy demand and climate forecasts on Wednesday, 17th May at 10:00 EDT/15:00 BST. Register here. The demand backdrop for commodities appears weak. While oil …
Core CPI inflation remains elevated The April CPI release was greeted enthusiastically by markets this week, with bond yields falling and equities rallying, even though the 0.4% m/m increase in core CPI was in line with consensus expectations. The annual …
The sharp rise in US manufacturing construction over the past two years is likely to continue into the medium term as firms take advantage of favourable government incentives. But as these expire, demand for the sector will wane as firms look overseas for …
An underwhelming set of data published over the past week have added to growing concerns about the state of China’s recovery. Imports , inflation and credit all came in below expectations for April. It might seem hard to square this with the more …
Some relief on the inflation front The past week or so has brought some positive news on the inflation front. Data from Brazil earlier today showed that the headline rate fell to a 30-month low in April. This followed data releases that showed falls in …
Czech government tightens the purse strings The Czech government’s long-awaited fiscal consolidation package this week will include fiscal tightening of around 1.5% of GDP over 2024/25 which will come at the cost of weaker growth. But this appears to be a …
The White House and congressional leaders are still working to try to reach agreement on raising the debt ceiling, but there’s no guarantee that a deal will get done in time. Deputy Chief US Economist Andrew Hunter and Deputy Chief Markets Economist Jonas …
It’s been a week to forget for South Africa, in which fears emerged that the improvement in the public finances is stalling and concerns about (even more) intense loadshedding surfaced. That was topped off by allegations that South Africa supplied weapons …
Yesterday’s 25 basis point rise in interest rates from 4.25% to 4.50% was widely expected in the end. But we’ve been forecasting that rates would rise to 4.50% since November last year. (See here .) The most striking thing coming out of yesterday’s …
Click here to read the full report . This revamped Global Markets Valuations Monitor combines and replaces our previous DM Valuations Monitor and EM Valuations Monito r publications. … Global Markets Valuations Monitor (May …
We doubt sterling’s strong run will continue; we still think that an economic downturn in the UK and other advanced economies will lead to renewed downward pressure on sterling later this year. Despite falling back a bit, to ~1.25 against the US dollar, …
Over the past few years France has been an exception to the pattern in many other countries of falling labour supply and declining labour force participation. And there is no sign that this improvement is running out of steam. Total employment in France …
Sharp drop in confidence reflects poor expectations The tumble in the University of Michigan consumer sentiment index to 57.7 in early May, from 63.5 in April, leaves it at its lowest level since November and illustrates the impact of growing uncertainty …
Sharp drop in headline inflation suggests no more rate hikes The sharp drop in headline consumer price inflation in April, to an 18-month low, supports our view that the central bank’s tightening cycle has come to an end. Headline CPI inflation fell from …
Copom to stay hawkish despite inflation decline The sharp fall in Brazilian inflation, to 4.2% y/y last month, was encouragingly broad based among the sub-categories of the CPI basket. But we think the central bank will want to see more evidence that core …
The fragility of Sweden’s property sector hit the headlines again this week as commercial real estate firm SBB suffered a downgrade of its credit rating to “junk” status and cancelled its dividend. We covered the implications for property elsewhere but …
Close call in the Philippines The central bank in the Philippines (BSP) has tightened monetary policy aggressively over the past year as it has tried to crack down on inflation, which has been much higher than in the rest of the region. Its meeting on …
Sovereign debt risks are back in focus as some frontiers appear to be drifting closer to default. We remain most concerned about default risks in Tunisia and Pakistan, particularly in light of this week’s unrest and IMF deals now appear further away. Debt …
Q1 GDP releases have confirmed that the major economies avoided recession at the start of the year and some of the more recent survey data suggest that this resilience continued into Q2. The composite PMI output index for developed economies rose from …
Treasury won’t go on a spending spree Earlier this week, the Australian government boasted its first budget surplus in fifteen years. However, the picture in New Zealand is less rosy. The kiwi nation’s fiscal accounts are in worse shape than the …
Karnataka, at the forefront of the reform agenda The state election in Karnataka was held this week, with results due on Saturday. Our primer on why India’s state elections matter can be found here ; but the Karnataka election arguably matters more than …
Ueda leaves door open to acting before full review Bank of Japan Governor Ueda spoke on Tuesday in the Diet and mostly repeated what he said in the Bank’s post-meeting press conference on 28 th April, when he left monetary policy settings unchanged in his …
Still no recession, but economic growth soggy The news that the economy contracted by 0.3% m/m in March and grew by just 0.1% q/q in Q1 as a whole (consensus +0.1% q/q, Bank of England 0.0% q/q, CE +0.1% q/q) suggests that lower real household incomes …
Activity bounces back after earthquake disruption Industrial production and retail sales bounced back strongly in March, supporting our view that the impact of the earthquakes was short-lived. GDP growth is likely to have remained positive in Q1. But the …
The economy expanded in Q1 but failed to completely offset the decline from the previous quarter. Growth is likely to remain weak over the coming quarters as elevated interest rates and weak external demand drag on activity. According to figures published …
Still no recession, but economic growth soggy The news that the economy contracted by 0.3% m/m in March and grew by just 0.1% q/q in Q1 as a whole (consensus +0.1% q/q, Bank of England 0.0% q/q, CE +0.1% q/q) suggests that low real income and high …
Partial rebound, bleak outlook for the year The economy expanded in Q1 but failed to completely offset the decline from Q4, as we had expected. Economic growth is likely to remain weak over the coming quarters as elevated interest rates and weak external …
OPEC crude oil production declined in April due to export disruptions in Iraq. Production should fall even further in May when OPEC+ output cuts come into effect. Elsewhere, the easing of some US sanctions on Venezuela should mean production there rises …
11th May 2023
We expect Peru’s central bank to leave its policy rate unchanged (00.00 BST) GDP data may show that UK economy grew slightly in Q1 (07.00 BST) University of Michigan consumer sentiment index probably edged lower in May (15.00 BST) Key Market Themes …
We don’t think long-dated Treasuries are bound to fare worse than the S&P 500 in the coming weeks, even as the risk of US sovereign default looms larger. Our US Economics Service is the place to look for detail on the evolving debt ceiling spat, which …
The recent downgrading of Swedish property company SBB’s credit rating to “junk” and the ensuing market fallout have highlighted financing fragilities in the Swedish property market. But, while SBB is not alone in facing a sizeable financing challenge, we …
Substantial yield compression over the past two years meant that by the middle of 2022 industrial had become the most overvalued sector since our measure began in 1992. That helps explains the subsequent 26% crash in capital values. Perhaps worryingly, …
Today’s 25 basis point (bps) rise in interest rates from 4.25% to 4.50% takes rates to our long-held forecast and may be the last hike, although one or two more hikes are possible. We suspect the subsequent holding phase will be fairly long, lasting until …
Market nerves are becoming increasingly frayed as President Biden and congressional leaders continue to try to find a way out of the latest impasse over raising the US debt ceiling. Will they find their way to a deal in time? Economists from our US and …
Egypt’s make or break moment This week saw positive news in Egypt regarding the public finances and the privatisation drive. But next week’s MPC meeting will prove critical as to whether policymakers can get out of the economic crisis. Finance Minister …
