The strikes in December won’t help the economy when it is probably already in recession. But we think real GDP may only be around 0.0-0.5% lower in December than otherwise. More important may be larger pay rises on the back of the strikes possibly …
15th December 2022
Tightening cycle nearing an end The central bank in the Philippines (BSP) today raised its main policy rate by a further 50bps (to 5.50%), but with Governor Felipe Medalla sounding more dovish than expected on inflation, we think the tightening cycle will …
The downturn has deepened and reopening won’t reverse it overnight The disruption from virus outbreaks intensified in November, with retail sales, investment spending and industrial output all contracting by the most month-on-month since the Shanghai …
Labour market strength won’t last much longer With employment jumping in November, the labour market is still tightening, The upshot is that the RBA will hike rates more sharply than most anticipate over the coming months. The 64,000 rise in employment in …
Export downturn will start before long While the trade deficit narrowed sharply in November, most of that reflects falling import prices. Export volumes seem to hold up well but with the global downturn weighing on external demand next year, export growth …
Labour market strength won’t last much longer The continued strength in Australia’s labour market is consistent with our view that the RBA will hike rates more sharply than most anticipate over the coming months. The 64,000 rise in employment in November …
Exports downturn has begun The trade deficit narrowed substantially in November and has further scope to do so again in December. But with the global downturn weighing on external demand next year, further progress towards a more balanced goods trade …
14th December 2022
Growth burst will turn into slump next year The huge jump in Q3 GDP will prompt the Reserve Bank of New Zealand to press ahead with another 75bp hike in February, adding to our conviction that a recession lies ahead . The 2.0% q/q jump in production GDP …
Economy will fall into recession in 2023 The huge jump in Q3 GDP will prompt the Reserve Bank of New Zealand to press ahead with another 75bp hike in February, adding to our conviction that a sharp downturn lies ahead. The 2.0% q/q in production GDP was …
Despite the increasingly compelling evidence that core inflation will fall sharply next year, the Fed doubled down on its hawkishness today. We now expect two 25bp hikes from the Fed next year, with the fed funds rate peaking at 4.75% to 5.00% in …
As several forecasters now seem to share our view that the economy will suffer a moderate recession next year, in this Update we discuss the risks that could result in a much deeper downturn. The key risk is that economists are underestimating the impact …
The Fed strikes back Despite the increasingly compelling evidence that core inflation will fall sharply next year, the Fed simply doubled down on its recent hawkishness. As expected, the Fed issued an identical statement and raised interest rates by a …
Bumper rise in crude stocks, little in the details to explain it While this week’s report revealed a whopping increase in commercial stocks, prices were up a little following the release. Instead, most attention is on the latest oil demand forecasts …
We expect the Fed to slow the pace of rate hikes to 50bp later today (19.00 GMT) The BoE will probably also slow tightening and hike by 50bp on Thursday… (12.00 GMT) … and we think the ECB will follow suit with a 50bp increase too (13.15 GMT) Key Market …
A widening of Russia’s budget deficit next year to 2.5% of GDP will increase pressure on the government to keep a firm grip on non-military spending. But it should be able to finance the shortfall from its savings and domestic bond issuance. The bigger …
Office rental growth in London and RoUK was similar in the third quarter. But as the recession takes hold London firms will have a greater incentive, and opportunity, to make savings from the shift to working from home. That will cut demand just as a …
A fall in mortgage rates from 20-year highs supported the first rise in home purchase demand in eight months in November. Given that mortgage rates are likely to continue to trend lower from here, sales should soon bottom out. But the big picture is …
Sales volumes continue to struggle The strong rise in manufacturing sales in October was largely due to a jump in refined petroleum prices. Manufacturing sales volumes were unchanged and the business surveys point to outright falls ahead. The 2.8% m/m …
Peru ’s newly-inaugurated President Boluarte’s call to bring forward the next general election to 2024 has failed to pacify protesters who took to the streets following the impeachment of President Castillo last week. The unrest is already causing …
Click here to read the full report. Overview – Property yields have risen on the back of higher interest rates and have started to drag materially on values. We expect this to continue in 2023, as valuations are still highly stretched. Given downgrades to …
OPEC lowers its oil demand forecasts for H1 2023 OPEC lowered its world oil demand forecasts for the next six months yesterday, but raised its demand forecasts for the following six months. This supports our view that the cut to OPEC+ output quotas from …
Economy lost momentum at the start of Q4 October’s hard activity data out of South Africa showed the economy’s strong performance in Q3 did not last into Q4. Industrial sectors, in particular, faltered. As headwinds mount, we expect a sharp slowdown. …
October’s fall in output sets the tone for a bleak Q4 Industrial production in the euro-zone declined by 2.0% m/m in October with all the largest economies showing a reduction in output. While output held up better than we had expected in Q3, this is …
Softer inflation will allow SARB to slow tightening Inflation in South Africa eased a bit more than expected, to 7.4% y/y, in November and there were encouraging signs that core price pressures are fading. The figures will provide room for the Reserve …
We suspect investors are underestimating how disruptive the transition from zero-COVID will prove for China, which could threaten some of the recent rises in the country’s equity prices, bond yields and currency. But once that disruption has begun to …
The Bank of England can breathe a sigh of relief knowing that CPI inflation has peaked. But with activity holding up and wage growth still strengthening, the 2.0% inflation target is still a long way from being hit. As such, the Bank will still probably …
Core inflation likely to come down more slowly than Riksbank hopes The increase in Sweden’s measure of core inflation to 8.0% was a touch below expectations but it still marks a new 31-year high. With CPIF inflation having risen to well above the …
Wholesale inflation drops to 21-month low The fall in Indian wholesale price inflation to a 21-month low in November chimes with the sharper-than-expected drop in headline consumer price inflation released earlier this week. We maintain our view that the …
Inflation passed its peak, slower rate hikes more likely The fall in CPI inflation, from 11.1% in October to 10.7% in November (consensus 10.9%, BoE 10.9%, CE 11.1%,), means that inflation has peaked and the fall in core inflation from 6.5% to 6.3% will …
Strong investment intentions won’t survive coming recession Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen. Meanwhile, machinery orders were …
Services race ahead while manufacturing struggle Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen. The Tankan’s headline index for large …
On the face of it, the news of unlisted REITs reaching redemptions limits suggests cause for concern as it could point to forced sales over the coming months. However, both BREIT and SREIT have solid cash balances that can last through at least three more …
13th December 2022
Click here to read the full report. Overview – Economic growth will slow sharply in most of the region in 2023 as higher interest rates and weaker exports drag on demand. Our GDP growth forecasts are below consensus in most countries. With inflationary …
The recent slump in oil prices tells us one thing – that demand concerns are in the driving seat. Given that we expect a further slowdown in global growth in Q1 2023, we think prices could fall further. The Brent crude oil price has fallen by about 16% …
Click here to read the full report. Overview – Growth across the Middle East and North Africa is set to slow sharply, and by more than most expect, next year. Oil output cuts will weigh on the Gulf even as fiscal policy stays loose. And while IMF deals …
We think UK CPI inflation held steady at 11.1% in November (07.00 GMT) Euro-zone industrial production probably fell by about 2% m/m in October (10.00 GMT) We expect the Fed to deliver a 50bp hike and project a higher peak in rates (19.00 GMT) Key …
While today’s agreement on the EU’s “Carbon Border Adjustment Mechanism” leaves vital questions unanswered, it is a step towards the valid goal of making users pay for the emissions that they consume – wherever such emissions are produced. This Update …
Despite some mixed signals in the recent data, we still expect the tentative easing of labour market conditions already seen to push wage growth lower soon, with that slowdown gathering pace as employment growth continues trending lower. The November …
Stick a fork in it, inflation is done The Fed will still hike its policy rate by 50bp tomorrow and the new projections could show the peak in rates above 5%, but the 0.2% m/m increase in core consumer prices in November provides strong support to our …
Stick a fork in it, inflation is done The Fed will still hike its policy rate by 50bp tomorrow and the new projections could show the peak above 5%, but the 0.2% m/m increase in core consumer prices in November provides strong support to our long-held …
Q3 likely to mark a peak for lending volumes The detailed mortgage lending data for Q3 show that demand was resilient to rising mortgage rates at first. Loan-to-income ratios crept up despite rising financing costs. But with interest rates on new …
Recession still likely, despite improvement in sentiment The further recovery in the ZEW in December confirms that sentiment in Germany has improved a bit, but it remains at a very low level and we still think Germany is now already in a recession. The …
Still a long road ahead to restoring debt sustainability The news that Ghana has secured a $3bn staff-level agreement with the IMF will go some way to easing the country’s economic crisis, but the government still needs to clear a number of hurdles to put …
Accelerating wage growth won’t make the Bank of England’s task easier Coming on the back of yesterday’s larger-than-expected rise in GDP in October, today’s news that the labour market is loosening only gradually and wage growth continues to accelerate …
Economy shows some resilience The large increases in both industrial production and retail sales in Turkey in October provide clear signs that activity is holding up well despite the various domestic and external headwinds. But we doubt this resilience …
Consumers shedding virus-related caution and inflation surging to multi-decades highs However, global headwinds are strengthening and import prices are slowing Bank would be very brave to start tightening during a global recession Window for policy …
The full impact of the RBA’s aggressive tightening cycle on household finances hasn’t been felt yet because one-third of all mortgages have fixed-rates. Around 60% of those will expire next year and the impact on household finances will be equivalent to …
We think tightness in the UK labour market eased in October (07.00 GMT) Germany’s ZEW survey may show an improvement in investor sentiment (10.00 GMT) US consumer price inflation probably fell back further in November (13.30 GMT) Key Market Themes With …
12th December 2022
