Labour market looks like it may be turning a corner September’s labour market figures reveal further signs that the labour market is becoming less tight. That may alleviate some of the pressure on the Bank of England to repeat November’s 75 basis point …
15th November 2022
Economy to continue struggling The October data point to a further loss of momentum, with retail sales dropping sharply amid worsening virus outbreaks. November is shaping up to be even worse. With exports cooling, the property sector still in the …
Technical recession looms in H1 2023 Japan’s economy contracted in Q3, with private consumption and business investment posting far weaker results than timelier data had suggested. Growth should turn positive in Q4, amid a rebound in inbound tourism and a …
Economy to rebound in Q4 after Q3 contraction Japan’s economy contracted in Q3, with both private consumption and business investment posting far weaker results than timelier data had suggested. The single largest drag was from net trade due mostly to a …
14th November 2022
OPEC supply drops but further falls to come OPEC’s monthly report for October showed a sharp drop in the group’s production, and further falls are likely if members are to abide by their new quotas from November. The OPEC Monthly Oil Market Report for …
We’re sticking with our view that the equity market rally will go into reverse as the world economy slips into a recession. Equities surged last week, boosted by a soft US CPI print . The ~5.5% gain in the S&P 500 on Thursday, for example, was its largest …
While Colombia’s President Gustavo Petro initially made a promising start to his tenure, his recent interventionist comments have led to a sharp sell-off in local financial markets. Regaining investors’ trust while navigating the economy through a period …
Activity data likely to show that China’s economy lost momentum last month… (02.00 GMT) …but we expect the PBOC to refrain from cutting its MLF rate tomorrow We think tightness in the UK labour market eased in September (07.00 GMT) Key Market Themes …
Romania’s current account deficit, which is among the largest in the EM world, has continued to widen this year and now exceeds 9% of GDP. It is reassuring that much of the deficit is currently being financed by relatively stable forms of capital inflows. …
Markets may have staged a meaty rally in the wake of the softer-than-expected October CPI print, but we’re not convinced the good times will last. Our latest Global Markets Outlook warns that a looming global recession means “risky” assets will struggle …
Bounce-back in lending not expected to last CRE lending saw a surprise uptick in growth in October following a rebound in the multifamily sector, although net lending remains below the average for this year. Despite the bounce-back this month, we still …
Prices pressures are moderating in earnest The substantial falls in both headline consumer and wholesale price inflation in October reinforce our view that the Reserve Bank will slow the pace of monetary tightening in its next scheduled policy meeting in …
We think the combination of subdued domestic activity and an economic downturn in most major economies will hurt demand for Chinese economic output in the coming months, prompting lower production and therefore import volumes of agricultural commodities. …
Resilience won’t last much longer The unexpected strength of euro-zone industrial production in September was largely due to the rebound in vehicles production and distortions affecting Ireland’s data. While vehicle output may continue to recover in the …
There’s a dirty secret at the heart of economics: economists – and by extension central banks – understand less about inflation dynamics than we would like to admit. Granted, we can model with reasonable accuracy what is likely to happen to fuel and …
Commodity prices surged late in the week on the back of a slump in the US dollar, a fall in US real yields and some easing of COVID-related restrictions in China. However, we doubt that this heralds the start of a renewed upturn in prices. The …
11th November 2022
We think economic activity was weak in China in October, but probably held up in the US We expect central banks in the Philippines and Indonesia to hike rates (Thu.) Clients can sign up here for our Drop-In on the UK Autumn Statement (Thu.) Key Market …
The dollar is set to end the week substantially lower, adding today to its broad-based weakness following the softer-than-expected US October CPI report . The data were in line with our view that inflation in the US economy is easing, and investors have …
Despite the recent sharp drop in the greenback, we doubt this is the end of the dollar bull market. Yesterday’s softer-than-expected US CPI print prompted the largest single-day drop in the DXY index since December 2015. Indeed, it was one of only a …
The global recession will drag on zinc consumption even further in the coming months, probably leading to renewed price declines. But, towards the end of 2023, supply concerns should push the price higher. Even though the price of zinc has risen recently, …
Sovereigns tap the dollar bond market Governments in Turkey and Poland made a splash this week as they announced rare dollar bond issues. Turkey appears to be taking advantage of low credit spreads but the decision in Poland follows recent concern among …
The news that the authorities in China plan to “optimise” their response to the pandemic while not abandoning their zero-COVID policy has coincided with a surge in its stock market. There is still a risk that this somewhat lighter-touch approach will lead …
Lula starting to show his true colours? Developments this week poured cold water on the rally in Brazil’s financial markets that followed Lula’s election victory. Comments from Lula himself yesterday suggesting that higher spending should be prioritised …
SA may have just avoided a technical recession The surprising strength of South Africa’s manufacturing data for September released this week has lengthened the odds that the economy was in a technical recession over Q2 and Q3. Figures released earlier …
Many of the Q3 GDP releases of early-reporting economies have beaten consensus expectations in the past few weeks, especially in Europe. Not only did energy-crisis-laden Germany grow in Q3, rather than contract as expected, but the economy managed to …
Sentiment buckles under weight of higher interest rates The drop back in the University of Michigan’s consumer sentiment index to a five-month low of 54.7 in November, from 59.9, appears to reflect the damage that higher interest rates are doing, …
Despite the rumours, the Chinese government isn't about to abandon zero-COVID. Although new measures to tweak the rules raise hopes of a near-term end to the draconian policy, Mark Williams and Julian Evans-Pritchard explain the many difficulties involved …
We don’t expect the 10-year JGB yield to rise above the top of the Bank of Japan’s tolerance band, and think it may even fall back to the middle of that band next year as yields continue to decline elsewhere. Yields fell sharply around the world, and the …
Below consensus growth for Taiwan in 2023 Surging demand for electronics products helped Taiwan’s economy sail through the pandemic. But with this tailwind now turning into a headwind, growth looks set to slow sharply. Export volumes have fallen back …
As the global economy enters recession, the outlook for natural rubber (NR) demand appears bleak. What’s more, stocks are already high. We expect prices to fall further in the near term, before some recovery in late 2023 on hopes of monetary easing and a …
Bank of Canada Governor Tiff Macklem said this week that the unemployment rate will need to rise to help restore price stability, but he also played down the significance of the strong gains in employment and average earnings in October. That suggests …
The big fiscal tightening set to be unveiled at the Autumn Statement on 17 th November is coming at a time when the economy is probably already in recession. And the fiscal consolidation, rumoured to be worth a total of £54bn (1.9% of GDP), could risk …
US CPI number triggers euro-zone rally Euro-zone financial markets rallied yesterday after US inflation data for October came in lower than expected. Immediately after the data release, Bund yields fell by around 15bp and the euro and DAX rose by 2-3%. …
Industry rebounds, but headwinds growing Industrial production in India rebounded strongly in September, but we don’t expect this strength to last. Higher interest rates and the slowdown in global demand look set to weigh heavily on the sector over the …
While the outcome of the midterms remains unclear, far more important for the economy was October’s softer-than-expected core CPI data, which support our view that the Fed won’t need to raise interest rates as far as markets had feared. Softer core CPI …
House prices falling in Sweden and Norway Sweden’s housing market has cooled significantly this year and prices are likely to fall outright soon. SEB’s monthly survey showed that in October, 22% of households expected house prices to rise whereas a much …
The dramatic improvement in EM public finances since the height of the pandemic is starting to run out of steam. And we think that fiscal dynamics are likely to get worse next year in parts of Central Europe and in most commodity-producing countries. …
Virus disruption has intensified recently, with COVID infections hitting a six-month high. The Politburo Standing Committee (PBSC, China’s highest leadership body), met yesterday to discuss the situation. According to the meeting readout, they agreed to …
Falls in Paris prime retail rents are set to continue into 2023 as weaker domestic and foreign spending weigh on tenant demand. And while the prospects for both are brighter for 2024, we think the high level of vacancy will ensure only a modest rebound in …
Underlying price pressures to remain very strong The rise in core inflation in Germany in October confirms that underlying price pressure in the country are still building. We expect the core rate to remain well above 2% throughout next year. Final HICP …
Power sector appears to be managing coal better Power shortages just over a year ago prompted a push by the government to shore up coal supply. Among the changes was a revamp of benchmarks for the stocks of coal that power stations should hold. …
Consumption resilient against Q3 virus wave The seventh COVID wave in Q3 has been the worst on record so far in terms of daily infections. Yet the Cabinet Office’s monthly estimate of private consumption for July and August was 0.6% above the Q2 average …
Recession begins and not because of the extra bank holiday About half of the 0.6% m/m fall in real GDP in September and half of the 0.2% q/q decline in Q3 as a whole was caused by the one-off reduction in the number of working days due to the extra bank …
Savings rate fell below pre-virus level in Q3 Comments by RBA Deputy Governor Bullock suggest that the risks to our above-consensus policy rate forecasts are shifting to the downside. Bullock noted today that the Bank is getting closer to the point where …
A slowdown in Q3 Turkish activity data for September show that industrial production has come under more pressure while retail sales have continued their remarkable resilience in the face of high inflation. On balance, we think that GDP growth slowed from …
Malaysia’s economy slowed in Q3, and we think growth will struggle over the coming quarters as lower commodity prices, weaker global demand and tighter monetary policy drag on prospects. According to figures published today, economic growth slowed to 1.9% …
Recession begins and not just because of the extra bank holiday Although at least half of the 0.6% m/m decline in GDP in September (consensus -0.4% m/m, CE -0.5% m/m) and the 0.2% q/q decline in Q3 as a whole (consensus and BoE forecasts -0.5% q/q) was …
Growth likely to decelerate further The economy slowed sharply during the third quarter, and we think growth will ease further over the coming quarters with lower commodity prices, weaker global demand and tighter monetary policy set to drag on prospects. …
