Another 75bp hike, but end of tightening cycle on the horizon Mexico’s central bank delivered a fourth consecutive 75bp interest rate hike, to 10.00%, today but, with inflation now past its peak and the economy likely to slow sharply over the coming …
10th November 2022
China’s equities have received a boost recently from speculation that the country will ease its strict zero-COVID policy, but we don’t think this marks the start of a more sustained rally; we forecast benchmark Chinese equity indices to fall over the next …
While the renminbi, and many other currencies sensitive to the outlook for China’s economy, have rallied sharply against the dollar on hopes that China will shift away from its “zero-COVID” policy (and today’s softer-than-expected US CPI print), we doubt …
Commercial property valuations began to stabilise in Q3, as a large rise in property yields helped offset a further rise in alternative asset yields. And with the reversal of the “mini-Budget” meaning 10-year gilt yields have now likely peaked, a …
We think Malaysia’s GDP growth slowed sharply in Q3… (04.00 GMT) … and the UK economy contracted, marking the start of a recession (07.00 GMT) Consumer sentiment in the US probably remained low in early November (15.00 GMT) Key Market Themes US …
We doubt the recent underperformance of UK high-yield corporate bonds relative to those in the euro-zone will continue given the relative outlooks for monetary policy and economic growth. Corporate bond yields in developed markets (DMs), as measured by …
While the risk premium that pushed gilt yields up and the pound down after the mini-budget has mostly been reversed under the stewardship of Sunak and Hunt, the fear that the markets will baulk at any fiscal indiscipline means that the Chancellor will …
Nigeria’s demonetisation efforts are likely to add to already-high economic costs of the country’s unorthodox policies. The resulting currency falls will fuel inflation further and disruptions to activity are more or less inevitable, supporting our …
Egypt steps up renewables push at COP27 With the COP27 climate summit underway in Sharm El-Sheikh, Egypt announced it will build one of the world’s largest onshore wind farms with financing from the UAE as it steps up its green energy shift. The farm will …
Goods deflation begins; health insurance flips The better than expected 0.3% m/m increase in core consumer prices in October won’t on its own persuade the Fed to drop its hawkish stance. But we expect this to mark the start of a much longer …
Goods disinflation broadening; health insurance flips The better than expected 0.3% m/m increase in core consumer prices in October won’t on its own persuade the Fed to drop its hawkish stance. But we expect this to mark the start of a much longer …
A shift away from zero-COVID would be positive for China’s economy over the medium term. But the immediate disruption of reopening would probably exceed the cost of keeping the policy in place, especially if vaccine coverage among the elderly hadn’t …
Widespread downgrades, but still well short of the negative returns we expect Consensus forecasts for 2023 have been downgraded pretty sharply since the Spring, but we don’t think they have gone far enough. While the consensus is predicting total returns …
Further fall in inflation won’t stop Copom from keeping policy tight The fourth consecutive decline in Brazil’s inflation rate, to 6.5% y/y in October, will be welcomed by policymakers at the central bank. That said, inflation is still well above target …
The pace of global monetary policy tightening is slowing But neither history nor central bank guidance give a reliable steer of the future profile Early signs are that the Bank of Canada and US Fed will lead the retreat next year In recent weeks, …
Households stop borrowing outright as leadership recommits to zero-COVID Much weaker than expected credit growth – and an extremely unusual outright fall in lending to households – again underlines the difficulties policymakers are facing stimulating …
Chief UK Economist Paul Dales and Jonas Goltermann, a senior economist from our Global Markets team, held a client briefing shortly after the Chancellor’s 17th November statement, to discuss his final policy choices and their implications for the UK …
We’ll be discussing the implications for the economy and the financial markets of the Autumn Statement in a 20-minute online briefing at 4pm GMT on 17 th November. (Register here .) In his Autumn Statement on 17 th November the Chancellor, Jeremy Hunt, …
We still expect consumer spending to rise rapidly over the coming year. But with many overseas trading partners entering recession, exports will decline. That will prompt firms to pull in their horns and weigh on business investment. The upshot is that we …
Inflation hits a four-year high and will climb higher This publication has been updated with further analysis, as well as a chart and table of key data. The acceleration in Egypt’s CPI inflation rate from 15.0% y/y in September to a four-year high of …
Strong inflation requires Norges Bank to keep on hiking October’s stronger-than-expected inflation data pose an upside risk to our forecast for the policy rate to peak at 3%. But with house prices falling, the Norges Bank faces a tricky balancing act. The …
Demand collapses The October RICS Residential survey showed that the spike in quoted mortgage rates to over 6%, a level last seen in 2008, has triggered a collapse in buyer demand comparable to that seen in the financial crisis. That’s consistent with our …
The Philippines economy rebounded in the third quarter of the year, but we expect growth to slow over the coming months as high inflation, rising interest rates and weaker global demand weigh on prospects. GDP grew by 2.9% in seasonally-adjusted q/q terms …
Weaker growth ahead as headwinds mount The Philippines economy rebounded sharply in the third quarter of the year, but we expect growth to slow over the coming months as high inflation, rising interest rates and weaker global demand weigh on prospects. …
We think US consumer price inflation fell back in October (13.30 GMT) Mexico’s central bank is likely to deliver another 75bp hike… (19.00 GMT) … but we expect policymakers in Peru to keep interest rates on hold (23.00 GMT) Key Market Themes The …
9th November 2022
Oil demand defies high prices and slowing economy, for now Commercial crude stocks rose this week even though more crude was used by refiners. And despite the increase in refining output, gasoline and distillate stocks fell on strong demand. We think …
Doves take control at the NBP Poland’s central bank (NBP) announced (very late by its usual standards) that it had left interest rates unchanged at 6.75% at today’s MPC meeting, confirming previous comments from policymakers that they believe the current …
Inflation pressures remain soft Inflation in Russia fell more sharply than expected in October, to 12.6% y/y, but this won’t be enough to prompt the central bank to restart its easing cycle as policymakers are concerned about inflation risks in the …
While mobile and other digital payment methods are still used less in India than in many EMs, the rapid expansion initially triggered by the pandemic has continued over the past year. A well-developed payments infrastructure should support continued …
Republicans fail to deliver knock-out blow While the results remain too close to call, the Republicans are on course to win only the narrowest of majorities in the House, and control of the Senate will probably be decided by another run-off election in …
Softer inflation gives Banxico food for thought, but 75bp hike on the cards Mexico’s headline inflation rate came in at a weaker-than-expected 8.4% y/y in October and, while this is unlikely to prevent Banxico from delivering another 75pb interest rate …
The recent IMF deals reached by governments in Egypt and Tunisia are positive developments and will help ease balance of payments strains in both countries. Egypt has already made progress with meeting the IMF’s demands and restoring macro stability, …
The ECB might start quantitative tightening next year but that’s not guaranteed, and even if it does so we doubt that it will make much of a dent in its government bond holdings. As a result, interest rates will remain the most important tool for …
Spanish office rental values are expected to be harder hit than the euro-zone average as the looming recession weighs on occupier demand and higher interest rates push up yields. However, at a market level, Barcelona is most exposed given its looser …
Q4 spending rebound may not materialise Current readings picked up in October’s Economy Watchers Survey but remain well short of the peaks seen after previous virus waves ended. The deepening gloom captured by the outlook readings suggest that spending …
Factory-gate deflation setting in Consumer price inflation eased last month from September’s 29-month high and remained below the government’s preferred ceiling of 3%. It is set to stay low by global standards over the coming quarters. Meanwhile, producer …
PPI deflation setting in Consumer price inflation eased last month from September’s 29-month high and remained below the government’s preferred ceiling of 3%. It is set to stay low by global standards over the coming quarters. Meanwhile, producer price …
House prices may soon leap above the weather as the number one topic of conversation, but for all the wrong reasons. The housing market has been on a great run since the pandemic caused people to seek, and place more value, on more living space. In the …
8th November 2022
Overview – We expect mortgage rates will hold close to 7% over the remainder of the year, leaving affordability at its worst since 1985. That will lead to another sharp fall in activity. As the economy dips into a mild recession in 2023, sales and …
US petroleum product prices have risen again, mainly due to refinery-side supply constraints. We think this will translate into fewer product exports, but potentially even more crude oil exports. As we expected, US wholesale fuel prices have remained …
The latest activity indicators show that the economy contracted in October, and the forward-looking measures of new orders and expectations suggest that the downturn will get worse. We have pencilled in a contraction in GDP of 0.5% q/q for the fourth …
We think CPI inflation eased in China in October … (01.30 GMT) …but remained well above the central bank’s target in Mexico (12.00 GMT) We expect Poland’s central bank to announce a 25bp hike Key Market Themes Although US “big-tech” stocks have had a …
The Fed’s mounting losses are an expected result of surging interest rates and will not prevent officials from continuing to tighten policy, nor will they require the Treasury to step in and “recapitalize” the central bank. But it does mean that …
The Polish central bank’s dovish monetary policy stance is becoming increasingly at odds with the severity of inflation pressures and this reinforces our long-held view that inflation won’t return to the central bank’s target until 2025 at the earliest. …
In line with changes in our global economic view, we have made significant downgrades to our commercial real estate forecasts for the next couple of years. As a result, we now expect a much bigger drop in property values next year that will cause annual …
