This week, we published our latest Europe Economic Outlook . Three key points are worth highlighting. First, the euro-zone economy is likely to remain in recession for the rest of 2023. Admittedly, this year’s fall in gas prices will support demand and …
23rd June 2023
Support measures could take time to draw up Hopes for more policy easing intensified last week after the surprise cut to the PBOC’s reverse repo rate and the release of weak activity data for May. Late last Friday, the State Council said that it was …
Swiss offices have already seen the second sharpest price correction across the major European markets. And with stretched valuations set to face renewed pressure from rising bond yields, we think office yields will edge higher and that sluggish rent …
If the weather forecasters are right, El Niño conditions have arrived in the Pacific and are set to build over the next few months. The negative impact on agricultural production will depend upon the strength and duration of these conditions but sugar, …
The Central Bank of Egypt (CBE) decided to leave interest rates unchanged at 18.25% at Thursday evening’s MPC meeting, but with the lingering threat of another fall in the pound and the slightly more hawkish tone from the accompanying statement, we think …
This page has been updated with additional analysis since first publication. Services price inflation still sticky June’s flash activity PMIs won’t do much to ease the Bank of England’s inflation fears, which suggests that yesterday’s interest rate rise …
The fall in the euro-zone flash Composite PMI from 52.8 in May to 50.3 in June left it even lower than our below-consensus forecast. On the face of it, the index still points to a small expansion in Q2, but it hasn’t been a good leading indicator …
This page has been updated with additional analysis since first publication. Sales boosted by hot weather, but drag from soaring mortgage rates yet to bite The further rebound in retail sales volumes in May suggests the recent resilience in economic …
Labour market will cool In a speech earlier this week, Deputy RBA Governor Michele Bullock noted that employment was above what the Board would consider to be consistent with its 2-3% inflation target. Indeed, jobs data released last week showed that the …
Strength in inflation not prompting a rethink A Reuters survey published before last week’s Bank of Japan meeting showed that two-thirds of analysts polled expected the Bank to scale back policy easing this year, with 43% predicting it would happen as …
This page has been updated to include additional analysis and charts. PMIs suggest economic downturn might have started in June The fall in manufacturing PMI readings in June’s flash estimates suggest the recession we’re expecting in the second half might …
This page has been updated to include additional analysis, charts and a table. Inflation should fall below 3% by year-end Nationwide inflation played out largely in line with the timelier Tokyo CPI data in May. Headline inflation fell largely due to a …
Inflation to dip below 3% by year-end Headline inflation fell nationwide largely in line with the timelier Tokyo CPI data, while once again, underlying inflation rose despite that. As falling import price inflation brings down inflation in consumer prices …
Banxico stands pat as inflation drifts lower The further falls in headline and core inflation in recent months prompted Mexico’s central bank to leave its policy rate on hold at 11.25% at today’s Board meeting, but we doubt that monetary loosening will be …
22nd June 2023
A disparate range of global central banks have delivered their latest policy rate verdicts over the past 24 hours. We think there are four key points for investors to note. First, European central banks are clearly still in hawkish moods. But while that …
Near-term risks ease, but still high Easing financial conditions, improving consumer sentiment and the stabilisation in housing suggest that the risks of an imminent recession have eased slightly. Nonetheless, our tracking models still imply that an …
The reduction in office demand due to remote work will cause a hit to NOIs on a par with, or worse than, that experienced by malls over the last six years. And in line with the experience of malls, the structural nature of this hit to demand means the 35% …
Overview – GDP growth has slowed sharply across most of Emerging Asia since the middle of last year and looks set to remain weak over the coming quarters, as tight monetary policy at home and subdued activity abroad weigh on demand. We anticipate …
The rapid depreciation of the Swedish krona has pushed the currency down to its lowest ever level against the euro. Worse still, we do not think the krona is significantly below “fair value”, nor do we expect the headwinds facing it to abide anytime soon. …
Sales remain weak As expected, existing home sales remained relatively unchanged in May, rising by +0.2% m/m to 4,300,000 annualised. Despite this marginal rise, a decline in mortgage applications for home purchase in May suggest we have further falls to …
Egypt: fiscal policy on right path, but not yet for EGP The key message from the briefing that we attended with Egypt’s Finance Minister Mohamed Maait in London last Friday was the government’s commitment to tight fiscal policy and that a devaluation is …
Note: We’ll be discussing the UK inflation, growth and policy outlooks after the June CPI release on Wednesday, 19 th July . Register here to join that 20-minute online briefing. The 50 basis point (bps) interest rate rise by the Bank of England today, …
The 650bp interest rate hike by Turkey’s central bank today (to 15.0%) will underwhelm investors that wanted a faster and more aggressive monetary tightening. The currency has come under a bit of pressure since the announcement. But the communications …
All-property yields have seen no movement for the past two months and combined with resilient rental growth that means capital values have held firm since March. (See Chart 1.) But stubbornly high inflation has led to a resurgence in interest rates and …
This webpage has been updated with a table and chart of key data. Falling inflation to keep Banxico on hold later today The further decline in Mexico’s headline inflation to 5.2% y/y in the first half of June will comfort policymakers at Banxico and …
50bps and at least another 25bps hike to come The Bank of England’s decision to raise rates by 50bps, from 4.50% to a near 15-year high of 5.00%, is unlikely to be the last hike given the UK’s higher and longer lasting inflation problem. We think the …
CBRT underwhelms with rate hike, but communications provide room for hope The 650bp interest rate hike by Turkey’s central bank today (to 15.0%) will underwhelm investors that wanted a faster and more aggressive monetary tightening. But the communications …
Some observers have suggested that the strength of Swedish inflation in May reflected buoyant demand driven by Beyoncé’s Stockholm concerts but the Riksbank is more likely to view it as evidence that underlying price pressures are too high. We expect a …
The 25bp rate hike announced by the SNB this morning was smaller than the 50bp hike we had predicted. But the accompanying statement and upward revision to inflation forecasts for 2024 and 2025 strongly suggest that there will be at least one more hike in …
Today’s 50bp rate hike by the Norges Bank, taking its policy rate to 3.75%, was accompanied by new hawkish guidance and projections. As a result, we have revised up our already above-consensus forecast for the peak in the policy rate to 4.25%. It could …
The somewhat cautious tone of the statement accompanying yesterday’s Brazilian central bank meeting (at which the Selic rate was left at 13.75%) will disappoint those hoping for an interest rate cut at the next meeting in August. But the statement does …
This page has been updated with additional analysis since first publication . Economy continues to struggle May’s industrial production and retail sales data out of Poland were weaker than expected and are consistent with our forecast that GDP growth …
Norges Bank steps up the pace of rate hikes, more to come Today’s 50bp rate hike by the Norges Bank, taking its policy rate to 3.75%, won’t be the end of its tightening cycle. We already expected the policy rate to hit 4%, above the consensus forecast, …
SNB hikes by 25bp and signals more to come The 25bp rate hike announced by the SNB this morning was in line with market expectations but less than the 50bp we had predicted. However, the accompanying statement and upward revision to inflation forecasts …
With inflation back to target, rate cuts likely to come soon Bank Indonesia’s (BI) decision to keep interest rates unchanged today at 5.75% came as no surprise and was correctly predicted by all 34 analysts polled by Reuters. With the economy struggling …
Philippines Monetary Policy Meeting (June) Tightening cycle at an end, rate cuts early next year The central bank in the Philippines today left interest rates unchanged (at 6.25%) for a second consecutive meeting. While it gave no clear guidance over its …
Yet another upside surprise to UK inflation today has put the spotlight squarely back on Gilts and sterling, both of which have come under pressure ahead of tomorrow’s Bank of England policy announcement. There are four key points to consider for the …
21st June 2023
Click here to read the full report. Overview – Downturns in activity are bottoming out in Emerging Europe, current account deficits are narrowing and disinflation has taken hold across the region. But the road ahead still looks challenging. We expect GDP …
Overview – Economic growth across the region will be much weaker this year than last and our forecasts are generally below the consensus. We think regional growth will come in at just 1.4%, one of the weakest rates in the past two decades. The latest …
Note: We’re holding a 20-minute briefing on the challenges that aviation and other key industries face in decarbonising at 10:00 EDT/15:00 BST on Thursday, 29th June. Register now . Despite jet fuel being a fairly small share of total oil consumption, …
Overview – We expect the mild recession in the euro-zone to drag on for the rest of the year. The drop-back in energy prices will provide some relief for households and companies but will be partly offset by governments withdrawing policy support. …
Treasury volatility has fallen over recent weeks but remains high by historical standards, and we wouldn’t be surprised if it remained so over the rest of 2023 even after the Fed has concluded its tightening cycle. All else equal that could put upwards …
This page has been updated with additional analysis since first publication. Broad-based resilience in spending The stronger-than-expected rise in retail sales in April suggests that household spending was resilient going into the second quarter. Both the …
Our new Dashboard allows clients to track the key housing market indicators that we follow in real time. (See here .) This Update outlines what has driven recent developments in these indicators, and our view for the rest of the year. (See also our US …
This page has been updated with additional analysis since the post-meeting statement and press conference. Hawkish CNB will turn dovish by year-end The Czech National Bank (CNB) left its main policy rate on hold again today, at 7.00%, and the hawkish …
Steel mills slamming the brakes on production Global steel production fell sharply in y/y terms in May. Against the backdrop of subdued demand and stringent supply caps in China, the supply outlook over the next few months appears bleak. According to the …
Governments in Turkey and Nigeria have started to turn away from unorthodox economic policies in recent weeks, and in both cases currencies have been allowed to move closer to fair value. The key thing to watch next is whether central banks in both …
This webpage has been updated with a table and chart of key data. Weaker inflation probably means tightening cycle is over The larger-than-expected decline in South Africa’s headline inflation rate, to 6.3% y/y, reinforces our view that the tightening …
Ugly inflation print tips balance to 50bp hike tomorrow In response to May’s inflation data , released earlier today, we now expect the MPC to raise interest rates by 50bps to 5.00% at tomorrow’s meeting. A lot of attention has focussed on the fact that …
This page has been updated with additional analysis since first publication. Public finances limits the Chancellor’s room for manoeuvre Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision …
