While Q4 GDP was broadly in line with our expectations , a look under the hood shows that the Australian consumer is on much weaker ground than we had anticipated. The starting point for our pessimism is the ongoing weakness in household incomes. Indeed, …
3rd March 2023
The government will lay out its economic agenda for this year at the annual session of the National People’s Congress (NPC), which kicks off on Sunday. Most of the key documents, including the government Work Report and annual Budget are published on the …
Large fall in January industrial output The 4.6% m/m plunge in industrial production in January partly reflected disruptions caused by the early start to the Lunar New Year this year. Oddly, unlike export volumes, which typically show an equally strong …
Bank under political pressure to abandon Yield Curve Control as inflation surges Incoming Governor Ueda seems to have been given a mandate to end the policy However, existing Governor Kuroda may well spring one last surprise Yield Curve Control is on …
Broader inflation outlook still intact The unemployment fell slightly in January but we’re still expecting it to rise through mid-year due to an economic downturn. Meanwhile, energy inflation fell by less than we expected in Tokyo as government subsidies …
Overview – We think prices will drop a little further in the coming months as economic slowdowns in advanced economies weigh on commodities demand, even as China’s economic recovery takes hold. However, the prospect of a higher for longer Federal Funds …
2nd March 2023
Egypt’s government feeling the hit Recent falls in the pound and rising borrowing costs forced Egypt’s Ministry of Finance to revise up its targets for debt and the budget deficit earlier this week, but we remain of the view that the government will be …
We think inflation in Turkey eased slightly to 54% in February (07.00 GMT) Final PMIs in Europe may confirm that activity is holding up better than expected (09.00 GMT) We expect the US ISM services index to have fallen back in February (15.00 GMT) …
Labour markets look very tight in Central Europe and a handful of other EMs (particularly in Latin America), and we think that wage growth is unlikely to fall far enough in these countries to bring inflation back to target in the near future. One …
The current economic downturn will mean that short-to-medium term property performance is under-par. But over a longer horizon, we expect real estate returns to reassert their traditional position somewhere between bonds and equities. Last year was an …
After the blowout 517,000 gain in January, we expect a more modest 200,000 increase in non-farm payrolls in February. But given the potential impact of weather and seasonality effects in January there is the possibility of another shock last month, albeit …
The account of the ECB’s last meeting is consistent with our view that the ECB will raise its deposit rate to 3.0% a fortnight today and continue hiking beyond that. In light of the data released since the last meeting, there are growing upside risks to …
As political risks appear to be largely discounted by investors, we expect the Colombian peso to outperform other major EM currencies over the next couple of years. Although the Colombian peso is broadly unchanged against the greenback so far this year, …
Struggling amid high interest rates The 0.2% q/q fall in Brazil’s GDP in Q4, which was driven by weakness in domestic demand, provides clear evidence that high interest rates are taking a heavier toll on the economy. Taken together with the softness in …
Pakistan’s central bank (SBP) raised its policy rate by 300bps (to 20.0%) today, and signalled monetary policy would remain tight as policymakers look to secure a loan deal with the IMF and tackle multi-decade high inflation. We expect a further 200bps …
A sharp increase in property yields in Q4 helped European property valuations improve for the first time in two years. That said, spreads over alternative assets remained very narrow by past standards and all markets besides Istanbul were still …
Strength of core inflation means ECB has a long way to go February’s increase in core inflation will reinforce ECB policymakers’ conviction that significant rate increases are needed. For some time we have been forecasting a 50bp hike at the meeting in …
Euro-zone HICP (Feb.) Strength of core inflation means ECB has a long way to go February’s increase in core inflation will reinforce ECB policymakers’ conviction that significant rate increases are needed. For some time we have been forecasting a 50bp …
Tokyo CPI data suggest some upside risks to our inflation forecasts The unemployment rate edged down in January but the job-to-applicant ratio held steady, suggesting the labour market doesn’t have room to tighten much further. Meanwhile, Tokyo inflation …
Q4 GDP growth to remain at 0.2% The increase in capital spending reported in today’s “Financial Statements Statistics of Corporations” is broadly consistent with the preliminary Q4 GDP estimate. That means Q4 GDP growth is likely to remain at 0.2% q/q in …
Although the fall in house prices slowed significantly in February, we are not convinced that Australia’s housing market is out of the woods yet. Even so, there are growing indications that dwellings investment will take less of a hit than we had …
US crude exports could rise even further Commercial crude stocks rose only slightly this week but this was despite a jump in US crude exports to a new record. With US domestic fuel demand unlikely to surge anytime soon, crude exports should remain …
1st March 2023
Strong data in France and Spain suggest to us euro-zone inflation rose in February (10.00 GMT) We think Brazil GDP figures will confirm the economic growth was flat in Q4 (12.00 GMT) Clients can sign-up here to our Drop-In on the impact of elections in …
The Israeli shekel has been amongst the worst performing currencies over the past month amid a rise in risk premia in Israel. We think it may remain under pressure against the US dollar over the coming months; but we doubt it will keep underperforming its …
The manufacturing PMIs for February remained very weak in most EMs, but they did at least provide signs that industry across much of the emerging world has fared better so far this year than it did in late 2022. Meanwhile, there were encouraging signs …
Terrible 2022 helps boost outlook for 2023 The latest IPF Consensus Survey showed a modest upgrade to forecasts for total returns in 2023, driven by an uplift to the capital value view. That looks to reflect the larger-than-expected fall in capital values …
The broad-based improvement in the output components of February’s manufacturing PMIs suggests that the worst of the global industrial downturn is already in the rear-view mirror. That said, it is too early to call a durable turnaround in industrial …
Still firmly in contractionary territory The modest rebound in the ISM manufacturing index to 47.7 in February, from 47.4, leaves it firmly in contractionary territory. That should temper talk of a manufacturing resurgence on the back of improvements in …
The annual meeting of China’s National People’s Congress began this weekend with the publication of key economic targets for the coming year. This year’s NPC also marks the crescendo of a major government reshuffle which is expected to confirm the …
The February PMI data out of China suggest economic growth is rebounding rapidly. While growth should moderate over the second half of year, it still points to higher metals and crude oil demand. Overall, the PMI surveys suggest that the risks to China’s …
Still firmly in contractionary territory The modest rebound in the ISM manufacturing index to 47.7 in February, from 47.4, leaves it firmly in contractionary territory, and should temper recent talk of a manufacturing resurgence on the back of …
Household spending in Saudi Arabia appeared to soften in the final months of 2022, but surveys suggest that consumers are optimistic about the outlook. The backdrop of loose fiscal policy, an improved labour market and falling inflation means that …
In our view, the Chairman of the SNB has over-stated the role of the exchange rate in explaining why inflation has remained so comparatively low in Switzerland in the past two years. However, policymakers’ focus on the currency will encourage them to …
Renewed rise in inflation will worry ECB The renewed rise in headline inflation in Germany, France and Spain in February suggests euro-zone inflation edged up this month, rather than falling as had been expected. With signs that underlying inflationary …
Encouraging signs in January CPI and economy has slowed sooner than expected But labour market still tight and wage pressures too strong Risk of higher interest rates elsewhere also keeps pressure on the Bank The fall in CPI inflation in January and …
Rise in mortgage rates cuts home demand Stronger-than-expected economic data led to a resurgence in mortgage rates in February, which put a stop to a tentative recovery in mortgage applications for home purchase. This points to sales staying close to …
Hopes that Nigeria’s elections would usher in a markedly more business-friendly administration were dashed after the ruling party’s Bola Tinubu was declared president-elect. Economic policy under a Tinubu administration is likely to shift only marginally …
Higher interest rates hurt housing, but other borrowing remains strong While January’s money and credit figures suggest that higher interest rates are continuing to act as a drag on the housing market, they appear to be having less influence in other …
Net lending holds up as even as investment collapses Net lending to property was once again positive in January, even as commercial property investment collapsed in the final quarter of last year. Investors may be preparing to re-enter the market and …
Q4 spike in mortgage rates continues to depress approvals The spike in mortgage rates in October and November last year ensured that mortgage approvals remained at a similar level to the depths of the 2007-09 financial crisis in January. That could mark …
RBA’s hawkishness suggests rates will rise for a few more months However, softer incoming data suggest that the peak in rates isn’t far off Looming slowdown in activity and inflation opens door for rate cuts before year-end The RBA adopted a more …
Electricity woes put further pressure on economy The sharp fall in South Africa’s manufacturing PMI last month provides further signs that the country’s electricity crisis is taking a heavy toll on the economy. And the jump in the prices component …
Industrial downturns in CEE bottoming out The manufacturing PM Is for February suggest that industrial sectors in Central and Eastern Europe are continuing to struggle, but there are tentative signs that the region may now be past the worst of its …
House prices continue to slide The further fall in house prices in February will keep optimism based on reports that demand has recovered in check. Indeed, even if buyer volumes have recovered, the amount they can spend on a new home has been reduced by …
Signs of improvement Manufacturing PMIs in Emerging Asia rose in February, helped by a rebound in the export orders sub-component. While the data provide the first tentative signs that the worst may be over for the region’s manufacturers, the recovery is …
Manufacturing PMI likely to drop back further India’s manufacturing PMI reading edged down in February to a four-month low. We expect the reading to drop further over the coming months as both external and domestic demand soften. The manufacturing PMI …
A very rapid recovery The latest survey data are exceptionally strong across the board, consistent with our expectation for a rapid near-term rebound. We expect this recovery to lose momentum later in the year but the risks to our forecasts look …
A very rapid rebound The latest survey data is exceptionally strong, consistent with our expectation for a rapid near-term rebound in economic activity. The Caixin manufacturing PMI rose from 49.2 in January to 51.6 in February (the Bloomberg consensus …
Stretched affordability will continue to push down prices Although the decline in house prices slowed markedly in February, we’re not convinced the worst is over. As such, we expect house prices to fall by another 6% before the year is up. The 0.2% m/m …
Slowdown in inflation won’t prevent RBA from lifting rates to 4.1% GDP growth softened last quarter and inflation slowed sharply in January. But with inflation still very high, that won’t prevent the RBA from hiking the cash rate to a peak of 4.1% in May …
