Click here for full report: Overview – Consistent with our national office story, we expect a few years of insipid rent growth and returns for most US office markets. Expensive coastal metros will continue to see weak demand as high rates of sublease …
23rd December 2022
Q4 growth looking ok, but economy losing momentum Real consumption is on course for solid growth of 3.5% annualised in the fourth quarter, but the income and spending data show that it stalled in November. The soft durable goods orders data for last month …
Economy starting to lose momentum The modest gain in GDP in October and upward revision to activity in previous months suggest the economy was coping well with higher interest rates at the start of the fourth quarter, but the preliminary estimate that …
A year to write home about 2022 was in many ways a memorable year for Latin America. With Argentina’s World Cup victory the trophy returned to Latin America for the first time in 20 years. And it’s been a good year off the pitch too. GDP growth has …
Economy beginning to lose momentum The modest gain in GDP in October and upward revision to activity in September suggest the economy was coping well with higher interest rates at the start of the fourth quarter, but the preliminary estimate that GDP was …
Q4 growth looking ok, but economy losing momentum Real consumption is on course for solid growth of around 3.5% annualised in the fourth quarter, but the income and spending data show that it stalled in November. The sharp fall in durable goods orders …
Energy sanctions starting to take effect in Russia This week brought signs that newly imposed Western sanctions and recent falls in global energy prices are putting renewed pressure on Russia’s economy. It’s still too early to fully assess the impact of …
The BoJ’s surprise decision to widen the tolerance band around its yield curve control target earlier this week will hopefully prove the final curveball of what has been an eventful year across currency markets. The yen has surged around 3% against the …
This week we learned that the economy contracted by more than we previously thought in Q3. The 0.2% q/q fall in real GDP in Q3 was revised down to a 0.3% q/q decline. More striking is that real GDP was a huge 6% below our pre-pandemic forecast in Q3. …
Big falls in inflation now behind us The Brazilian mid-month inflation figure for December was unchanged from the November full-month figure of 5.9% y/y, which provides an early sign that the big falls in inflation have now happened and it will be a much …
It was a fairly quiet week in commodity markets. The only notable move was a slump in natural gas prices. The EU eventually agreed its long-discussed natural gas price cap early in the week, but it comes with so much conditionality that it is difficult to …
2022 will be a year to forget for most African economies – one marked by a slowdown in growth, tighter external financing conditions and balance sheet strains. This culminated in Ghana opting to default on much of its external debt earlier this week. …
Demand growth for industrial metals slowed in October and almost certainly weakened further last month. We expect demand growth to remain sluggish, or even contract, in the first half of 2023 as the global economy slides into recession, whereas investors …
Recent trade data from Emerging Asia have been downbeat and, with the global economy heading for recession, worse is still to come. China, Taiwan, Korea and Singapore all reported big falls in exports in November. For the region as a whole, we estimate …
Will policy loosening come onto the agenda? A s we explained in our Outlook for Q1 2023 , the hiking cycle that has dominated the discourse for much of 2022 is likely to come to an end early next year. The question then is, when will thoughts turn to …
Yet another surprise from Governor Kuroda The Bank of Japan surprised everyone on Tuesday by widening the tolerance band around its 0% target for 10-year Japanese Government Bond (JGB) yields by 25bp to 0±50bp. The Bank argued that this decision was …
The next couple of weeks will be crucial in China’s battle with COVID. It is possible, given reports of how widespread infections currently are, that the outbreak in Beijing is close to a peak (the official infection data are no longer reliable, so we …
NZ activity outlook plunges to near record low Following the Reserve Bank of New Zealand’s hawkish 75bp rate hike last month, several clients asked us if New Zealand is the canary in the coalmine. The evidence suggests it may well be: the RBNZ was the …
Inflation will fall below 2% by mid-2023 Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of Japan’s 2% target by mid-2023. The increase in inflation from 3.7% to 3.8% in …
We are resending this publication due to an error in the previous version. Inflation will fall below 2% by mid-2023 Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of …
22nd December 2022
CBE acts aggressively to counter inflation surge and weaker pound The 300bp interest rate hike by the Egyptian Central Bank (CBE), which took the overnight deposit rate to 16.25%, suggests that policymakers are even more concerned about rising inflation …
A renewed pullback in global equity markets and rise in bond yields in December is set to cap off a historically poor year for returns from both “risky” and “safe” asset classes. In fact, once the surge in inflation in 2022 is accounted for, returns …
Unusually, investors have been reducing their net-long position in the oil futures market, but increasing their position in industrial metals. We suspect this reflects optimism about China reopening at a time when the global economy is entering …
We expect US data to show weak economic momentum in November (13.30 GMT) Clients can read our World In 2023 reports here … …and register for the related Drop-In sessions, in early January, on the same page The next edition of the Capital Daily will be …
A ceiling agreed but with lots of caveats We don’t think the EU announcement of a cap on wholesale gas prices from February next year will have any practical impact. At first sight, the mechanism looks like a big deal. The ceiling of €180/MWh is much …
Jump in money supply won’t worry the SNB Swiss money supply data for November, released earlier this week, showed that M3 increased at its fastest year-on-year pace since February. (See Chart 1.) This could, at least in theory, encourage policymakers to …
Fall in inflation paves the way for end of tightening cycle The second consecutive fall in Mexico’s mid-month inflation, to 7.8% y/y in December, confirms that inflation is now on a downward trajectory. This will allow Banxico to draw its tightening cycle …
Tunisia’s debt problem: resolution further away? Parliamentary elections in Tunisia last weekend saw only 9% of the electorate turn out to vote after a boycott by opposition parties. The new parliament will be dominated by independent politicians, which …
Global steel supply well and truly in the doldrums Global steel output is now firmly in contractionary territory by any measure. With several headwinds unlikely to relent soon, it is likely that output will weaken even further from here. Figures released …
Although prime property in Turkey saw strong rental gains in 2022, a slowing economy looks set to weigh on occupier demand and cause rent growth to decelerate next year. Meanwhile, the risk of a sharper depreciation of the lira risks pricing out local …
We think investors are still too optimistic on global growth, and that “risky” assets will struggle over the first half of 2023 as a result. Investors seem increasingly to have come around to our view on inflation over the past couple of months, namely …
CBRT on hold … for now Turkey’s central bank (CBRT) stuck to its previous guidance today and left its policy rate on hold, at 9.00%, but there is clearly a risk that President Erdogan forces the CBRT to restart its easing cycle, particularly with the 2023 …
Our China Activity Proxy (CAP) reveals the extent of the economic damage being done by the zero-COVID policy in its final weeks. Hopes that its ending would lead to a rapid recovery have been dashed though, as the rapid spread of infections has caused …
Bank Indonesia (BI) today raised interest rates for a fifth consecutive meeting, but slowed the pace of tightening with a 25bp hike (to 5.50%). With inflation still well above target, the central bank has more work to do. But provided the currency …
Bank Indonesia slows pace of tightening, but further hikes are likely Bank Indonesia (BI) today raised interest rates for a fifth consecutive meeting but slowed the pace of tightening by raising interest rates by just 25bps (to 5.50%) from 50bp at its …
Even though we expect the Bank of England to raise interest rates further from 3.50% now to a peak of 4.50%, we doubt the recent increase in gilt yields will be sustained. Instead, we think yields may fall from 3.60% currently to 2.75% by the end of 2023 …
21st December 2022
Flat US production will keep stocks low This week’s report showed a sizeable drop in commercial crude stocks as net imports fell sharply. With US production unlikely to rise by much and plans for strategic reserves to be refilled next year, crude stocks …
The dollar has stabilised over the past month after its sharp fall in November, and we continue to think that a slowing global economy and worsening risk sentiment will lead to another (possibly final) leg up in the dollar over the first half of 2023. …
The November CPI report marked the second successive undershoot in inflation and there is mounting evidence that it will continue to fall sharply in 2023. (See Chart 1.) Core goods prices are coming under broad-based downward pressure, as easing supply …
We expect Indonesia’s central bank to hike by 25bp tomorrow (07.20 GMT) Turkey’s central bank will probably leave policy on hold (11.00 GMT) We think inflation in Mexico edged down in the first half of December (12.00 GMT) Key Market Themes We doubt the …
The renewed rise in the three-month annualised rates of CPI-trim and CPI-median inflation in November call into question the idea that the Bank of Canada has already finished its tightening cycle. Those rates are not published by either Stats Can or the …
Spike in mortgage rates feeds through to sales Existing home sales experienced their largest drop in nine months in November, as October’s spike in mortgage rates fed through to sales. But mortgage rates have since dropped back and are likely to fall …
Upside surprise keeps the pressure on the Bank Overall inflation pressures were stronger than anticipated in November and the 3-month annualised measures of CPI-trim and CPI-median both increased. This supports our view that the Bank of Canada will err on …
Jump in rents drives upside surprise in inflation Overall inflation pressures were stronger than anticipated in November and support our view that the Bank of Canada will err on the side of hawkish caution with a final interest rate hike in the new year. …
Rate cuts to arrive in mid-2023 The Czech National Bank (CNB) left its policy rate on hold, at 7.00%, as expected again today and, with inflation set to drop sharply from Q1, we think the CNB will be one of the first EM central banks to cut rates next …
Tightening cycles have been a key feature of 2022 across the emerging world, but the end is in sight as we enter 2023. Some EM central banks that began tightening early – for example Brazil, Chile and Czech Republic – have already brought an end to …
We expect lower global risk appetite, as well as rising country-specific risk premia in some cases, to put upward pressure on the yields of 10-year local-currency (LC) government bonds in emerging markets (EM) in the first half of 2023. But later in the …
The slide in the price of oil since November has a little further to go in early 2023 and, while we think prices will recover later in the year, hydrocarbon revenues in the Gulf will be lower than this year. Even so, most of the Gulf economies will run …
Resilience to give way to mild recession November’s activity data for Poland were much better than expected and provide further evidence of the economy’s relative resilience to the drags from high inflation and interest rates. Even so, we still expect a …
The impending recession will hit jobs growth across the office-based sector. But the impact on office demand is likely to be greatest in markets that have a large exposure to the tech sector. This reflects that the recent pace of tech jobs growth looks …
