Clear signs of weakening product demand Even though the recovery in refinery activity stalled last week, petroleum product stocks rose amid weakening demand, which we expect to persist for a bit longer as the US economy slows further. The EIA’s weekly US …
25th January 2023
We think the US economy expanded by nearly 2% annualised in Q4... (13.30 GMT) South Africa’s central bank will probably hike by 50bp on Thursday Sign up here for our Drop In on the latest economic and market developments in Asia Key Market Themes …
The Bank of Canada accompanied its smaller 25 bp hike with new guidance that it intends to hold the policy rate at the current 4.5% while it assesses the impact of the cumulative interest rate increases so far. While the Bank did not rule out future …
We think equities in Japan will come under renewed pressure in local-currency (LC) terms over the coming months, amid an economic slowdown and further strengthening in the yen. So far this week, equities in Japan have generally outperformed equities in …
China’s re-opening will have a significant impact on the rest of the emerging world by lifting commodity prices. That will improve the terms of trade of EM commodity producers, particularly Chile, Peru and the Gulf economies. However, we think that this …
Bank hints that smaller 25 bp hike likely to be the last The Bank of Canada accompanied its smaller 25 bp hike with new guidance that it intends to hold the policy rate at the current 4.5% while it assesses the impact of the cumulative interest rate …
Saudi Arabia’s economy enjoyed bumper growth in 2022, but there were signs that activity was slowing in the final months of the year and we expect this trend to continue into the early part of 2023. Saudi Arabia’s economy was one of the best performers in …
Markets still nervous over EU natural gas supply, despite high storage This is the first edition of a new monthly publication in which we will outline the latest moves in commodity futures markets and assess how they relate to our own view on …
Many officials support downshift to 25bp hike at upcoming policy meeting. But officials still see multiple hikes beyond next week. We expect rates to peak just below 5%, with cuts starting later this year. We expect the Fed to downshift to a 25bp rate …
S ince the end of last year, developments have been more positive in the retail sector. However, we still think 2023 will be a difficult year. The weak outlook for consumer spending and more spending online and in out-of-town shops point to rising high …
Recession might be avoided, but outlook still poor The further increase in the Ifo Business Climate Index in January confirms that the recovery in German business sentiment that started at the end of 2022 has continued this year. But the fall in its …
The Bank of Thailand hiked interest rates today by a further 25bps (to 1.50%), and hinted that more rate hikes were likely in the near term amid worries about rising underlying price pressures. We expect one more 25bps increase this year before the …
Recession might be avoided, but outlook still poor The renewed increase in the Ifo Business Climate Index in January confirms that the recovery in German business sentiment that started at the end of 2022 has continued this year. But the fall in its …
The losses which central banks are now incurring on the bonds they bought via their quantitative easing (QE) programmes are not a big cause for concern. These losses will not compromise central banks’ ability to operate monetary policy. And while …
More tightening still to come The Bank of Thailand hiked interest rates today by a further 25bps (to 1.50%), and hinted that the tightening cycle still has further to run. The decision was correctly predicted by 21 out of the 23 economists polled by …
Sri Lanka’s central bank (CBSL) kept interest rates unchanged today, and we expect it to leave rates on hold for the rest of the year as it aims to strike a fine balance between supporting a struggling economy and clamping down on high inflation. The …
Rates set to stay on hold in 2023 Sri Lanka’s central bank (CBSL) kept interest rates unchanged today and we expect it to leave rates on hold for the rest of the year as it aims to strike a fine balance between supporting a struggling economy and clamping …
Stubbornly high inflation will prompt further RBA rate hikes Inflation rose further last quarter and remains far too high for the RBA’s liking. Accordingly, we’re sticking to our non-consensus forecast that the Bank will lift the cash rate to 3.85% by …
Some nuggets of comfort for the RBNZ The Q4 CPI data revealed a smaller rise in non-tradeable prices than the RBNZ had expected but, with those prices still rising at a worrying pace, it is not clear that this alone will be enough for the Bank to drop …
24th January 2023
We expect the Bank of Canada to hike by 25bp… (15.00 GMT) … and clients can register here for our Drop-In following that decision (17.00 GMT) We think rates will be raised by 25bp in Thailand and be left on hold in Sri Lanka Key Market Themes Today's …
The flash PMIs for January provide further evidence that the euro-zone economy has so far avoided the deep downturn that most economists anticipated, whereas the US and UK surveys still point to recessions in both cases. Supply shortages have become less …
As 2023’s calendar of central bank meetings began, we held a special briefing on the first Federal Reserve, European Central Bank and Bank of England policy decisions of the year. Chief Global Economist Jennifer McKeown lead a discussion with economists …
A closer look at Spain’s inflation data shows that there are significant measurement difficulties affecting both energy and core price data. However, we still expect measured headline inflation to remain lower in Spain than in most of the euro-zone and …
Recent data have shown that activity in the US is weakening as we had expected while that in the euro-zone has been surprisingly resilient. The resilience seems to reflect a combination of supply and demand factors, including easing shortages, lower gas …
The outlook for emerging markets is looking better than it did just a few weeks ago. Most obviously, China’s shift to living with COVID means that its economy will rebound far sooner than we had previously thought. That will provide a lift to countries …
The Central Bank of Nigeria (CBN) raised the benchmark rate by 100bp, to 17.50%, today in a surprisingly aggressive decision. But with incoming data likely to add to evidence of easing price pressures, we are not convinced that this hawkish tilt will …
Interest rate cuts still some way off Hungary’s central bank (MNB) left its base rate on hold today, at 13.00%, and we don’t think that it will cut its main policy interest rates until late-2023. In the meantime, we expect that the MNB will continue to …
Persistent price pressures may prompt more tightening from Banxico The small rise in Mexico’s headline inflation rate, to 7.9% y/y, in the first two weeks of January means that there is a growing risk that Banxico delivers a bit more tightening beyond the …
Recession on the cards for 2023 The renewed fall in the flash UK composite PMI in January suggests that some of the resilience in economic activity towards the back end of 2022 petered out in early 2023. That supports our view that the economy is …
Further improvement in activity amid high prices pressures The increase in the flash euro-zone Composite PMI for January left it consistent with the economy roughly stagnating. With employment intentions and price pressures still high, there is nothing …
Further improvement in activity amid high prices pressures The increase in the flash euro-zone Composite PMI for January was a little better than expected and left it consistent with the economy roughly stagnating. With employment intentions and price …
While China’s reopening has improved the prospects for copper demand, the price has, in our view, surged by more than can be justified by developments there alone. We expect the copper price to drop back over the next few months as several advanced …
Big Budget giveaways will have to wait until March 2024 December’s worse-than-expected public finances figures suggest the Chancellor will wait until closer to the next election before announcing any significant tax cuts and/or spending rises. Public …
Borrowing overshoot further limits chances of big Budget giveaways December’s public finances figures provided more evidence that the government’s fiscal position is deteriorating fast. And high government spending in the early months of 2022/23 and the …
The flash PMI might have edged up in the euro-zone in January… (09.00 GMT) … but we think it fell back in the UK (09.30 GMT) We expect central banks in Hungary and Nigeria to keep interest rates on hold Key Market Themes We don’t think government bond …
23rd January 2023
Recession on the cards in 2023 The renewed fall in the flash UK Composite PMI in January suggests that some of the resilience in economic activity towards the back end of 2022 started to peter out in early 2023. While still very high, the price indices …
The sharp fall in hiring intentions in the Bank of Canada’s Business Outlook Survey suggests that the 104,000 surge in employment in December is not a sign of things to come. The survey points to a slowdown in average monthly employment growth to just …
Pakistan’s central bank (SBP) raised its policy rate today by a further 100bps (to 17.0%), and we expect more tightening over the coming months amid concerns about high inflation and the worsening external position. Interest rates have now been raised …
The shift away from variable towards fixed-rate mortgages in many European countries over the past 15 years means that it will take longer than in the past for interest rate hikes by the ECB to feed through to household interest expenditure. This …
Further tightening on the cards Pakistan’s central bank (SBP) raised its policy rate today by a further 100bps (to 17.0%), and we expect more tightening over the coming months amid concerns about high inflation and the worsening external position. …
Near term economic headwinds suggest the slowdown in investment activity in Scandinavia will continue in 2023. However, with policy rates near a peak, and improving economic activity and falling bond yields expected later in the year, we think that the …
Industry resilient, but retail sales hit by high inflation Polish industrial production remained resilient in December but high inflation weighed heavily on real incomes and took its toll on retail sales. On balance, we think that Poland’s economy is …
Fracturing is going mainstream. We argued last year that we were entering a new era of global fracturing , in which the world’s major economies coalesce around rival blocs. Since then, a debate has picked up about what will follow this most recent phase …
Headlines have been dominated by talk of what follows this most recent era of globalisation, forming the basis of this year’s Davos meetings and a new IMF paper warning of a potentially major hit to the global economy. It’s a theme we’ve been discussing …
22nd January 2023
Nigeria’s loan-to-bond swap up in the air Plans by the government of Nigeria to swap central bank loans to bonds have hit a sticky patch, making it unclear whether the country can reap the associated economic gains. Parliamentarians in Nigeria have …
20th January 2023
The US dollar looks set to end the week broadly flat against most other major currencies after, by recent standards, a quiet week in FX markets. But Wednesday may have offered a glimpse of what is to come over the coming months – weak US retail sales and …
We expect rate hikes in Canada, Colombia, South Africa and Thailand… …but expect central banks in Hungary and Chile to leave rates on hold US data likely to show that economic momentum faded in December (Thu. & Fri.) Key Market Themes Although the …
The end of China’s zero-COVID policy continued to support most commodity prices this week, with many industrial metals prices extending their recent rallies. Economic activity appears to be recovering unexpectedly quickly in China and we have upgraded our …
The CPI-trim and CPI-median measures of core inflation will be revised up next month but that does not change our view that they will fall sharply over the first half of this year. We think the 25 bp hike from the Bank of Canada next week will mark the …
