Has the EGP gone too far once again? The Egyptian pound has pared back its losses after sharp falls against the dollar on Wednesday in a sign that, just like 2016, the currency may have overshot. The authorities may keep the pound weak in a bid to rebuild …
12th January 2023
Drop in headline inflation suggests end of tightening is imminent The further easing in headline CPI inflation in December to a 12-month low of 5.7% y/y supports our view that the tightening cycle is in its final throes. We expect just one more hike in …
Construction activity contracts as profits decline The latest RICS Construction Survey showed the first contraction in workloads since the height of the COVID-19 pandemic in mid-2020. Weakening demand and rising financing costs are cutting profits and …
In the first instalment of our Election Watch series ahead of the late-February polls in Nigeria, we assess the economic policies proposed by key candidates. The elections offer a chance to depart from unorthodox policymaking under the outgoing …
We had expected disruption from China’s reopening wave of COVID infections to weigh heavily on activity well into Q1. But there is mounting evidence that much of China’s population has already been infected and that disruption is already fading rapidly. …
Some very modest reopening effects Consumer price inflation ticked up in December, while producer price deflation eased. There are some early signs that the transition toward living with COVID is starting to put upward pressure on prices. But the uptick …
Net trade to provide sizeable boost to Q4 GDP growth The trade balance widened to a five-month high in November even though import prices outpaced export prices last quarter, which suggests that net trade provided a sizeable boost to Q4 GDP growth. The …
Net trade to boost GDP growth in Q4 The trade balance widened to a five month high in November even though import prices probably outpaced export prices last quarter, which suggests that net trade provided a sizeable boost to Q4 GDP growth. The trade …
Our updated remote worker metro ranking shows some important changes since the end of the pandemic, though the winners remain in the South. Nashville tops the table, having climbed seven places. Tucson and Memphis also climb into the top 10, with …
11th January 2023
Commercial crude stocks surge and could have further to rise Commercial crude stocks surged last week at the fastest pace since February 2021, as net imports rose and disruption to refineries lingered from the recent cold weather disruption. Going …
December CPI inflation probably edged down in China despite reopening… (01.30 GMT) … and fell back in the US driven by softer core inflation and lower energy prices (13.30 GMT) Sign up here for our Drop-In on the implications of the US CPI print for …
November’s money and credit data showed that the effects of tighter ECB policy were only just starting to be felt. So while some of the recent economic data have been a bit stronger than expected, the drag from tighter monetary policy is set to …
Foreign capital inflows into EMs have picked up a little since the beginning of the year. This should provide some relief to those countries with sizeable current account deficits, including Chile, Colombia, Philippines, and several countries in Central …
Speculation is mounting that the Bank of Japan is finally moving to end its yield curve control (YCC) regime following December’s surprise policy tweak. How likely is the Bank to take this step, what would it mean for its monetary policy, and what impact …
The sharp fall in the Egyptian pound today means that, in real trade-weighted terms, it is at its lowest level since the 2016 devaluation. The experience from that period is that the boost to Egypt’s external competitiveness will lead to a sharp narrowing …
Industry stagnated towards end of last year, 2023 to be tough Mexico’s industrial sector stagnated in November as higher construction and utilities output offset a slump in manufacturing and mining. More timely survey indicators have continued to hold up …
Real estate equity prices pointed to around a 10% fall in euro-zone all-property capital values in 2022 and we expect a similar size fall this year. But while the latest REIT data show landlords were in a better financial position than before the GFC, the …
Reform of the French pension system is notoriously difficult and it is possible that the proposals unveiled yesterday will be watered down or even withdrawn completely. However, on balance, we think there are more reasons for cautious optimism that they …
Widening of tolerance band has done little to improve market functioning Nomination of less dovish Governor would signal Yield Curve Control is on its way out However, renewed slowdown in inflation will prevent policy rate hikes The widening of the …
Stubbornly high inflation will prompt further RBA rate hikes While falling job vacancies point to rising unemployment, the resilience in retail sales coupled with stubbornly high inflation will prompt the RBA to press ahead with another 25bp rate hike …
Stubbornly high inflation will prompt further RBA tightening The renewed rise in inflation in November coupled with strong retail sales data will prompt the Reserve Bank of Australia to press ahead with another 25bp rate hike at its February meeting. …
We think Australia’s consumer price inflation remained at 6.9% in November (00.30 GMT) Catch up here on today’s Global Macro Drop-In where we discussed our 2023 outlook… …and sign up here for tomorrow’s Financial and Commodity Markets Drop-In Key Market …
10th January 2023
The activity and labour market data imply the economy carried more momentum into 2023 than we expected, but the weakness of temporary employment suggests cracks are showing beneath the surface. The revised preliminary estimate that GDP edged up by 0.1% …
NBR’s slows tightening again, likely the end of the cycle The 25bp interest rate hike by Romania’s central bank today, to 7.00%, probably brings the hiking cycle to an end. Today’s decision was expected by all analysts, including ourselves. The central …
Inflation still too high for Copom to breathe easily The higher-than-expected Brazilian inflation reading of 5.8% y/y last month, coming alongside growing fiscal concerns, will give Copom more cause to delay the start of its easing cycle. The outturn was …
There has been a further slight improvement in prospects for the euro-zone in recent weeks. Business surveys suggest that activity is no longer contracting sharply, headline inflation seems to be past its peak, and wholesale gas prices have plunged. …
In this Update , we take a look at the key elections that are scheduled across the emerging world this year. The most notable ones are in Argentina, Nigeria and Turkey, where opposition victories could be the catalyst for a shift away from the …
Getting worse in December but soon likely to be getting better The downturn in credit growth extended in December amid the economic disruption from reopening. But the worst of the disruption may have already passed. The shift toward living with COVID and …
After a stellar first six months, rising interest rates and a slowing economy brought commercial property returns crashing down in the second half of 2022. All-property total returns are therefore set for their worst year since 2008. And 2023 will not be …
Getting worse in December but soon likely to be getting better The downturn in credit growth extended in December amid the economic disruption from reopening. But the worst of disruption may have already passed. The shift toward living with COVID and …
While the shift towards higher taxes and spending after the pandemic appears to be here to stay, there is little to suggest an expanded state would curtail GDP growth. But without supply-side reforms aimed at solving the UK’s fundamental problems of low …
This report has been updated with additional table and chart of key data. Inflation surges higher on back of weaker pound Egypt’s CPI inflation rate jumped from 18.7% y/y in November to 21.3% y/y in December, its fastest pace since the end of 2017. (See …
Strong core inflation to prompt one final Norges Bank hike The continued strength of core inflation will encourage the Norges Bank to press on with another 25bp interest rate increase next week. While there is still some more upside risk to underlying …
Household spending may have fallen in Q4 already The slowdown in household spending in November largely reflects base effects from the ending of lockdowns in 2021. Even so, the data suggest that household spending may have started to fall last quarter. …
We think Norway’s headline inflation fell sharply in December… (07.00 GMT) … and edged lower in Brazil (18.00 GMT) Sign up for our Drop-In tomorrow on the outlook for the global economy in 2023 Key Market Themes The storming of Brazil’s congress by …
9th January 2023
The apparent resilience of employment in December has boosted hopes that the US can avoid a recession, but we still think that is unlikely. Employment is a coincident indicator whereas the only genuine leading indicators in the employment report – …
A large part of the real estate sector’s carbon footprint is related to electricity production and so will shrink over time as the use of renewables continues to expand. The biggest challenges to reducing property sector emissions will be in emerging …
Inflation falls again, Banxico to end tightening cycle in February Mexico’s headline inflation rate was unchanged at 7.8% y/y in December but policymakers at the central bank will have taken comfort from the fact that core price pressures are finally …
Labour’s big lead in the polls raises the question of what difference a Labour government would make to the economic outlook. The answer is probably not much. A tight grip on the public finances is likely by whichever party is in charge. And the …
Labour market even stronger than expected The stability of the euro-zone unemployment rate in November, at a record low of 6.5%, shows that the labour market held up even better than we expected at the end of last year. And the third successive monthly …
The implications of the invasion of Brazil’s congress by protestors yesterday are mainly political. But the riots could result in a long-lasting risk premium on the country’s financial assets, particularly if they prompt President Lula to double down on …
Mortgage rates have probably now peaked, but they remain at a level that makes further steep falls in house prices and a slump in housing market activity inevitable this year. If anything, the hard data show that the housing market slump has already begun …
Markets invariably quieten as the year turns, even as important developments continue to shape the macreconomic landscape. Below are three key issues that we’ve been focusing on during the relative quiet: The first relates to China’s reopening. Julian …
In less than two months, we should know who will replace Bank of Japan Governor Kuroda Haruhiko, whose term ends on 8 th April. Whoever replaces him will be under increasing pressure from the government to abandon Yield Curve Control (YCC), which has an …
The shift toward living with COVID will put some upward pressure on prices in China. But the uptick in inflation will not be as large as that seen in many other countries as they emerged from COVID controls over the past couple of years. While the initial …
Outlook improved, but headwinds remain The rise in German industrial output in November confirms that industrial output held up better than we had expected in Q4. However, while the recent slump in gas prices should help energy-intensive firms in the …
Outlook improved, but headwinds remain The rise in German industrial output in November suggests that industrial output has held up better than we anticipated in the fourth quarter in part because of an increase in production in energy-intensive …
