Rates may have peaked, but risks of one or two more hikes remain Today’s 25bps rise in interest rates from 4.25% to 4.50% takes rates to our long-held forecast and may be the last hike, although another hike or two is perfectly possible. We suspect the …
11th May 2023
This page has been updated with additional analysis and charts since first publication. Credit demand much weaker than expected A widely-anticipated acceleration in credit growth didn’t materialise last month, suggesting that momentum may already be …
We were in the Gulf last week visiting clients and this Update takes stock of the key talking points that emerged, from a sense of optimism surrounding the Gulf economies to despair and fear regarding Egypt and other parts of North Africa. One thing that …
Governor Ueda presided over his first policy meeting late last month and opted to keep all monetary policy settings, including Yield Curve Control (YCC), completely unchanged. To be sure, Mr Ueda also announced that the Bank will conduct a thorough review …
Demand continues to slump In contrast to signs of a stabilisation in house prices and sales volumes in other indicators, the RICS survey remained downbeat in April. In particular, the renewed fall in the new buyer enquiries balance left it little higher …
Brighter outlook in Q2 The further rise in both the current and outlook readings point to continued upward momentum in services spending this quarter. Meanwhile, manufacturing conditions fell slightly but remained robust, boding well for industrial …
Growth slowed in Q1 and we expect the economy to weaken further over the coming quarters against a backdrop of weak global demand and high interest rates. According to the advanced estimate published today, GDP rose by 1.1% q/q last quarter, down from …
Economy set to struggle in 2023 Economic growth slowed in Q1 and we expect the economy to weaken further over the coming quarters against a backdrop of elevated interest rates and weak global demand. According to the advanced estimate published today, GDP …
This page has been updated with additional analysis and charts s ince first publication. Fluctuations in food and energy prices outweigh impact of reopening Producer price deflation deepened further last month to a 35-month low, and consumer price …
Oil demand holding up, but prices likely to remain subdued Today’s stocks report showed a rise in commercial crude inventories last week, confounding analyst expectations of a drawdown. However, total stocks fell, which helps to explain why oil prices …
10th May 2023
The US housing market has been largely unaffected by the banking sector turmoil. Indeed, buyer sentiment rose to an 11-month high in April and activity appears to have bottomed out. Tighter credit conditions could yet weigh on the market, but the latest …
We think annual CPI inflation fell further in China in April (02.30 BST) The Bank of England looks set to hike interest rates by another 25bp (12.00 BST) We will be hosting Drop-Ins on Thailand and the BoE tomorrow – sign up here Key Market Themes Despite …
The looming impeachment trial of Ecuador’s president Guillermo Lasso marks a further intensification of the country’s political crisis and suggests that the recent experiment with market-friendly governments is on borrowed time. There are lots of ways in …
With China’s economic rebound losing momentum and investors’ attention shifting back to concerns about the country’s political and economic model we think the near-term prospects for Chinese equities have become less bright. We now envisage the MSCI …
Although recent data suggest that Paris offices had a slow start to the year, we think this weakness will be short-lived. Indeed, with demand prospects looking favourable and new supply set to slow, we think Paris prime rental growth will outperform other …
Greece has arguably been the positive surprise in the euro-zone over the past few years and near-term prospects look good. However, the forthcoming election may usher in a coalition government which is less committed to reforms and fiscal stability than …
Most EM central banks have drawn their monetary tightening cycles to a close now and, if history is any guide, it looks like the conditions will be in place for an easing cycle to start from around July/August. EM central banks were quick off the mark to …
Core inflation refusing to budge The 0.4% m/m gains in headline and core consumer prices in April leaves core inflation at 5.5%, broadly unchanged from its level at the start of this year, further illustrating that the previous downward trend has …
Rates on hold, window for cuts this year narrows Poland’s central bank (NBP) left its main policy rate on hold as expected again today, at 6.75%, and we think there is a small window for rate cuts by year-end. But with core inflation proving sticky and …
Core inflation refusing to budge The 0.4% m/m gains in headline and core consumer prices in April leaves core inflation at 5.5%, broadly unchanged from its level at the start of this year, further illustrating that the previous downward trend has stalled. …
A stronger finish to Q1 The surprisingly strong 1.1% m/m increase in Brazilian industrial production in March suggests that the economy fared a bit better than we’d expected in Q1. The risks to our GDP growth forecast for this year of 1.0%, which had …
Disinflation process largely on track, rate cuts in 2024 Romania’s central bank (NBR) left its policy rate on hold as expected today, at 7.00%, and we think that it will keep policy rates unchanged throughout this year. Interest rate cuts are likely to …
Note: We discussed Turkey’s election in an online briefing on 10th May. Watch it here . There’s a lot of optimism that the opposition will emerge victorious in Turkey’s elections, which would pave the way for a return to orthodox economic policy. Were …
This webpage has been updated with additional analysis and key chart and table of data. Inflation eases, but another rate hike on the cards next Thursday Egypt’s inflation rate slowed from a near-five-year high of 32.7% y/y in March to 30.6% y/y in April, …
Core inflation edges up again The higher-than-expected core inflation rate for April supports our view that the Norges Bank will raise its key policy rate from 3.25% to a peak of 3.75% later this year. The small reduction in headline CPI inflation, from …
The 2023/24 Budget unveiled yesterday by Treasurer Jim Chalmers was something of a mixed bag. On the one hand, the modest spending measures proposed by the government will not break the bank, thanks in large part to the government’s commodity-driven tax …
Although global energy consumption has increased 300% since 1965, the energy mix has barely budged, with the share of fossil fuels falling to just 82% from 93%. However, as economies of scale kick in and governments mobilise to try to meet climate …
9th May 2023
US core CPI inflation probably fell down to 5.3% y/y in April (13.30 BST) We think the central banks of Poland and Romania will leave rates on hold Sign-up here for our Drop-in on the upcoming elections in Turkey Key Market Themes With credit conditions …
Flash GDP figures showed that Saudi Arabia’s economy contracted in Q1 on the back of OPEC+-agreed oil output cuts, but growth in the non-oil economy remained strong. The “voluntary” oil production reductions announced last month will continue to weigh on …
We think migration patterns of footloose workers will continue to play the largest role in driving the rental outlook across metros. But rent as a share of income will also have a bearing, weighing on prospects in major markets such as NYC, LA and Boston, …
China’s commodity imports were generally weak in April. We suspect that import volumes generally could soften a bit further as any reopening effect on commodity demand fades and export demand deteriorates owing to sluggish growth in the rest of the world. …
More dovish consensus emerging The record of the Riksbank’s April policy meeting underlines that there was unanimous agreement to slow the pace of rate hikes in future. After the 50bp hike in April, the Bank is likely to raise rates by 25bp at the end of …
Inflation drops, but 25bp hike next week still more likely than not The drop in Mexico’s headline inflation rate, to 6.3% y/y in April, was broad-based and will provide some comfort to officials at the central bank that price pressures are finally easing. …
While world trade fell further in February, the available data point to a rise in March, especially due to a strong rebound in China. But that rebound looks to have already reversed in April. And with high interest rates set to weigh on demand for goods …
Prices slip in April, but remarkably resilient overall The small slip in the Halifax House Price index in April bought it a little more in line with the Nationwide figures. But prices remain remarkably resilient to the largest rise in mortgage rates since …
This page has been updated with additional analysis and charts since first publication. Exports set to struggle further China’s export volumes partially reversed March’s jump last month. Shipments of most consumer goods declined due to weak global demand …
Gloomy wage growth outlook in H2 2023 Wage growth held steady in March from February, as a further slowdown in regular and overtime pay growth was offset by a decent increase in volatile payments. We still see further scope for wage growth to slow this …
The recent turmoil in the banking sector doesn’t appear to have triggered a severe further tightening in credit conditions, but since lending standards were already being tightened to a degree only previously seen during recessions, the lack of any …
8th May 2023
More scope for wage growth to slow Labour cash earnings rose by 0.8% for the third consecutive month, broadly in line with our 0.7% forecast and far below the average 1.8% increase across 2022. As we had expected, regular earnings growth slowed from 0.8% …
Note: We’ll be discussing the upcoming Thai general election and the country’s near to long-term economic risks in a 20-minute online briefing at 09:00 BST/16:00 SGT on 11th May. Register now. Provided Thailand’s general election on 14 th May does not set …
Last week began with another US bank failure and ended with hotter-than-expected headline jobs data. In between, Jerome Powell sounded optimistic about the likelihood of a soft economic landing. But how realistic is that? Group Chief Economist Neil …
7th May 2023
Fed’s Senior Loan Officer survey likely to show tightening in bank lending standards (Mon.) We expect the downward trend in US core inflation to have resumed in April (Wed.) The Bank of England looks likely to hike interest rates by another 25bp (Thu.) …
5th May 2023
Note: We’ll be discussing the economic and market risks around the upcoming Turkish presidential and parliamentary elections on at 09:00 EDT/14:00 BST on 10 th May . Register now. Despite a bumper week for economic data, currency markets remain in limbo. …
Most commodity prices, but especially energy and industrial metals, fell this week. Concern about demand in advanced economies, particularly in the US due to the banking sector problems, contributed to the declines. What’s more, China’s April PMIs …
Concern about banks and the US debt ceiling will keep the gold price historically high in the next few months. However, once these worries fade, we think that longer-term headwinds will come into play. At around $2,010 per ounce today, the gold price …
