Sales level off, but leading indicators point to declines New home sales have levelled off in recent months, but leading indicators support our view that sales will fall a little further by the end of the year. Looking ahead, we expect stretched …
23rd November 2022
Despite the resilience evident in the latest round of hard data, our recession tracker models suggest the odds of a downturn next year are still rising. Odds of recession rising Our recession tracker indicators all but guarantee the economy will contract …
We estimate that non-farm payroll employment increased by a more modest 175,000 in November, although that should be sufficient to leave the unemployment rate unchanged at 3.7%. Payroll gains slowing only gradually The pace of monthly gains in non-farm …
The record-low yields on rental properties and fall in house prices we forecast imply poor returns for Buy-to-Let (BTL) landlords over the next few years. Moreover, the jump in mortgage rates means a significant minority of them will see mortgage …
Equipment investment refusing to roll over despite surging rates The solid 1.0% m/m rise in durable goods orders in October indicates that business equipment investment continues to hold up reasonably well in the face of higher borrowing costs, helped by …
Despite its strength this month, we think the headwinds facing the South African rand remain in place and expect it to reach fresh lows against the US dollar through the middle of next year. Amid the broad-based weakness in the dollar following the …
We think that headline inflation in the euro-zone is nearing its peak and will begin to fall quite sharply early next year. But the core rate will probably peak a little later and decline more slowly. Data released on Monday showing a sharp fall in German …
With the global economy headed for recession and commodity prices likely to come off their recent highs, Latin American exports will struggle over the coming quarters. Weakening global growth is also likely to cause risk appetite to deteriorate and large …
With fiscal policy no longer expected to be ultra-loose and some signs emerging that domestic price pressures will ease further ahead, we no longer expect the Bank of England to raise interest rates to a peak of 5.00%. Our new forecast of an increase …
Having surged for the best part of two years, EM inflation appears to have passed the peak in this cycle. Our measure of aggregate EM inflation dropped from 7.8% y/y in September to 7.4% y/y in October. (See Chart 1.) Looking ahead, we think that …
PMIs suggest we’re already in recession While the composite flash PMI improved marginally in November, it stayed firmly below the no-change level of 50.0, which is consistent with our view that the economy is already in recession. However, with domestic …
Property yield rises stepped up in Q3, causing all-property capital values to fall on a quarterly basis in the CEE markets except for Bucharest. (See Chart 1.) This was despite solid office and industrial rental growth. Looking ahead, stretched …
Industrial metal prices are starting to come under pressure again, after rallying by 10% in the first two weeks of November. We think that weak global demand will drag prices lower over the next few months. After rallying to a five month high, …
Economies across North Africa have endured severe balance of payments strains this year and governments in Egypt and Tunisia finally secured staff-level agreements with the IMF over the past month. Markets have welcomed the news with sovereign dollar bond …
Our China Activity Proxy (CAP) suggests that virus disruption led to a further decline in output in October. The combination of tightening COVID restrictions, voluntary isolation in the face of rising cases, problems in the property sector and falling …
PMIs suggest we’re already in recession While the composite flash PMI improved marginally in November, it stayed firmly below the no-change level of 50.0, which is consistent with our view that the economy is probably already in recession. The composite …
Recent monthly data from the advanced economies have tended to exceed analysts’ gloomy expectations. This is partly due to an easing of supply shortages, which could offer some further support to output and spending in the near term. However, this …
Soft start to Q4 October’s activity data for Poland suggest that the economy lost some steam at the start of Q4 and we think it was probably at the start of recession. We expect that evidence of a deeper downturn taking hold over the coming months will …
Contraction in Q4 very likely, inflation nearing a peak The flash PMIs for November add to the evidence that the economy will contract in Q4. The price indices suggest that inflation will soon peak, but they remain extremely high by past standards. The …
Surprisingly strong inflation to keep hawks in majority South Africa’s headline inflation rate picked up unexpectedly in October, to 7.6% y/y, and the jump in core inflation will be a particular worry for policymakers. Another 75bp hike in the repo …
Contraction in Q4 very likely, inflation nearing a peak The flash PMIs for November add to the evidence that the economy will contract in Q4, with the downturn in the services sector intensifying. The price indices suggest that inflation will soon peak, …
Revised GDP data confirm that the economy rebounded strongly in the third quarter. However, we don’t expect this strength to last. A combination of weaker global growth, high inflation and tighter monetary policy will weigh heavily on activity over the …
The Reserve Bank of New Zealand hiked the overnight cash rate by 75bp as most had anticipated but signalled a much higher peak in the OCR than in August. We’re now forecasting another 75bp hike in February followed by a final 50bp hike in April, but we …
RBNZ will hike rates above 5.0% The Reserve Bank of New Zealand hiked the overnight cash rate by 75bp as most had anticipated and it now seems likely that rates will peak closer to 5.5% instead of our current forecast of 5.0%. The statement was very …
Although the annual rates of core inflation increased in October, we suspect the Bank of Canada will point to the declines in the 3-month annualised rates of CPI-trim and CPI-median to justify dropping down to a 25 bp interest rate hike at its meeting …
22nd November 2022
Reserve Bank of New Zealand will probably hike by 75bp on Wednesday (01.00 GMT) We think South Africa’s inflation softened in October (08.00 GMT) We expect UK Flash PMIs to show further weakness in November (09.30 GMT) Key Market Themes Supply …
The sharp rise in Treasury yields this year has finally begun to feed through to the property data. Q3 investment activity fell by more than 20% on both a q/q and y/y basis, with loan originations also falling back notably. And valuers have begun to …
The next few weeks could be the worst in China since the early weeks of the pandemic both for the economy and the healthcare system . Efforts to contain the current outbreak will, at the very least, require additional localised lockdowns in many cities, …
The Central Bank of Nigeria (CBN) raised the benchmark rate by 100bp, to 16.50%, today, and MPC members appear to be itching to take their foot off the monetary policy brakes. But we suspect that the incoming inflation data will prevent them from doing so …
Italy’s draft 2023 budget confirms that, for now, the new right-wing government is committed to fiscal responsibility. As a result, the risk of turbulence in BTP markets has fallen, but it remains high given Italy’s large public debt and the prospect of …
The resilience of consumer spending is keeping hopes of a soft landing alive. Although GDP growth looks to have slowed in the fourth quarter, and most leading indicators of recession are flashing red, solid retail sales and a jump in vehicle sales …
Retail sales struggling for momentum The small fall in retail sales volumes in September appears to have been reversed in October but, more generally, sales volumes have been little changed for the past six months and the low leve of consumer confidence …
Cracks in global steel supply widening Global steel production growth is deteriorating a bit faster than we had thought. Even very flattering base effects failed to keep steel output growth in positive territory. With global economic activity weakening …
MNB hasn’t won its inflation battle yet Hungary’s central bank (MNB) left its base rate on hold today, at 13.00%, for a second consecutive meeting and reaffirmed that it would continue to use its “market stabilisation” tools to defend the forint. With …
The euro-zone economy is heading for a deep and protracted recession – but it’s one that won’t stop the European Central Bank from continuing to raise interest rates. Our Euro-zone Economics team also warns in its latest quarterly Outlook that, rather …
Prime property yields rose significantly in Q3. (See Chart 1.) This caused a sharp slowdown in capital value growth, even though rental growth was solid in the Scandinavian office and industrial sectors. Stockholm and the Swiss markets fared worst, with …
The Ukraine war has sent the risk of Russian cyberattacks on the West soaring up the agenda, with an attack on critical infrastructure potentially bringing whole economies to a halt. In most cases, a few days of disruption would not actually put much of …
Energy price support puts borrowing back on upward trend October’s public finances figures showed that government borrowing is no longer coming in below last year’s monthly totals. And the combination of the government’s energy price support and …
Energy price support puts borrowing back on upward trend October’s public finances figures showed that government borrowing is no longer coming in below last year’s monthly totals. And the combination of the government’s energy price support and pressures …
We expect Nigeria’s central bank to hike by 100bp to 16.5%… …but Hungary’s central bank is likely to keep policy settings unchanged (13.00 GMT) We think retail sales in Canada fell by 1.0% m/m in September (13.30 GMT) Key Market Themes The …
21st November 2022
Although we think the yields of high-grade, long-dated government bonds will fall in general in the next couple of years, we expect those of Bunds to fall by less than those of Treasuries, as comparatively sticky inflation in the euro-zone keeps monetary …
Here's all our key analysis about 2023's make-or-break elections and their macro and market consequences. … Turkish presidential elections …
The Bank of Israel (BoI) slowed down the pace of tightening today with a 50bp rate hike, to 3.25%, as it emphasised the tightening delivered so far and the early signs that economic activity is slowing. We think it will end its tightening cycle early next …
High oil prices have led to a recovery in US oil investment this year. But US crude production gains have been tempered by rising business costs and an emphasis on returning profits to shareholders. We expect the situation to be similar next year, with US …
Russia’s agreement to extend the Black Sea grain deal with Ukraine should help to keep a lid on wheat and corn prices over the coming months, reducing upward pressure on inflation in the emerging world and alleviating economic imbalances. Countries that …
