The latest data suggest that the world economy has made a relatively weak start to 2025. Activity in China has been soft so far this year amid a pullback in fiscal spending, while a surge in US imports due to tariff front-running appears to have caused US …
21st March 2025
Overview – The euro-zone will get a boost from Germany’s decision to ditch its fiscal rules and ramp up defence spending, as well as the relaxation of the EU’s budget rules. But governments other than Germany won’t loosen policy very much, and the …
Erdogan alarms investors The arrest of a leading opposition politician in Turkey on Wednesday triggered a major sell-off in the country’s stock market and currency. Events are in flux at the moment, but there are three takeaways. The first is that the …
CBR sounds slightly less hawkish at it leaves rates on hold The decision by the Central Bank of Russia (CBR) to leave its policy rate on hold at 21.00% today was accompanied by somewhat less hawkish communications. While we doubt the CBR will cut interest …
Equity jump unlikely to be start of sustained rally At the time of writing, India’s benchmark Sensex stock index has risen by 4% this week, making it its best week in almost three years. The big picture, however is that the Sensex is still 11% off its …
BoK’s dovish minutes This week’s publication of the minutes from the Bank of Korea’s February meeting , at which it cut rates for a third time in four meetings, show the Bank is becoming increasingly worried about the poor growth outlook. The concern was …
This page has been updated with additional analysis since first publication. Gloomy news ahead of next week’s spring fiscal event Although it will have no impact on the fiscal update next week, the significant overshoot in borrowing in February highlights …
Foreign student arrivals not a gamechanger Yesterday the ABS published data showing that Australia’s population growth slowed from 2% y/y in Q2 to 1.8% y/y in Q3. That slowdown was driven primarily by easing net overseas migration: on a 12-month basis, …
Export volumes jump the most on record While export values have surged in recent years as the weaker exchange rate lifted the yen-value of shipments and firms passed on soaring input costs, the same can’t be said for export volumes, which have tread water …
Strength in inflation suggests BoJ will hike rates again soon The strength in underlying inflation in February suggests that the Bank of Japan could hike rates at its next meeting in May but we still expect that uncertainty over the impact of US tariffs …
20th March 2025
Norges Bank signalled in January that a rate cut was likely at its meeting next week, but we now think it will leave the policy rate unchanged at 4.5%. While we still suspect that it will lower interest rates a couple of times this year, the case for much …
Turkey’s central bank responds with a rate hike The decision by Turkey’s central bank (CBRT) to hike its overnight lending rate from 44% to 46% today suggests that policymakers have been spooked by the market volatility yesterday and are keen to reassure …
Overview – Mexico is one of the most vulnerable countries to US import tariffs and, at best, the economy will just about eke out positive growth this year. More sweeping tariffs than we have embedded in our forecasts could easily tip the economy into …
Kuwait’s debt law marks a new era for fiscal policy A new public debt law is set to be passed in Kuwait in the near future allowing for the government to finance budget deficits more sustainably. In 2017, Kuwait’s authorisation to issue or refinance debt …
The South African Reserve Bank left its repo rate on hold at 7.50% today, but a minority of MPC members voted for a cut and we do not think the easing cycle is over. If inflation continues to surprise on the downside as we expect and there is clarity on …
India has long had a relatively protectionist trade policy but, driven in part by the reciprocal tariff threat from the US, there appears to be a slight shift in approach from policymakers. Import duties on certain goods are being lowered as concessions …
While leaving interest rates at 4.50% today, the Bank of England seemed less committed to continuing to cut rates by 25bps every quarter. We had already been pondering this possibility and today’s news has tipped us towards putting a pause in the rate …
Unexpected rise not a sign of strength to come The small rise in existing home sales in February is unlikely to mark the start of a period of strength for buying activity given that purchase mortgage applications, which lead transactions by a month or …
A large drag from net trade will likely tip GDP growth into negative territory this quarter but we should see a rebound in Q2. Nonetheless, we expect quarterly growth to be weaker this year on average, as President Trump’s trade and immigration policies …
The financial market sell-offs in Indonesia, Turkey and Colombia this week are, in part, a reflection of concerns about strained balance sheets. We think that vulnerabilities in some frontier markets and slow-burning fiscal problems in a handful of larger …
For an updated and more detailed version of this analysis, click here . Committee less committed to collection of rate cuts The Bank of England was always going to continue its cut-hold-cut-hold pattern by leaving interest rates at 4.50% today but, in the …
Brazil’s inflation outlook appears increasingly worrying, and the headline rate is likely to hit around 6% y/y by year-end, which is a bit higher than most expect. That’s likely to trigger a few more rate hikes in the coming months, taking the Selic rate …
Despite numerous reports of firms rowing back on remote work, the evidence in the UK, US and the EU suggests that the share of jobs being done remotely has remained constant over the past couple of years. Admittedly, that may reflect relatively tight …
The Trump administration’s efforts to end to the war in Ukraine have raised the prospect of sanctions relief for Russia. This Focus outlines the main sanctions in place and the macroeconomic impact lifting them could have. While US sanctions relief …
The Riksbank left both its policy rate and its interest rate forecasts unchanged at today’s meeting, suggesting that monetary policy will be on hold for the foreseeable future. And while policymakers largely dismissed the sharp rise in inflation so far …
In the press conference following today’s SNB meeting, Chairman Martin Schlegel emphasised that inflation risks are mainly do the downside, suggesting that a further cut in June is possible. But we think today’s rate cut, taking the policy rate from 0.5% …
Our interactive ‘Corporate Bonds” dashboard features many of the charts shown in this report and more. It will be updated on a regular basis with our latest insights and forecasts. We don’t think US high-yield (HY) spreads would fall all the way back …
This interactive dashboard allows you to explore our forecasts for investment-grade (IG) and high-yield (HY) corporate bonds in the US, UK and euro-zone. This includes our forecast for yields, option-adjusted spreads (OAS), and total returns out to …
India’s economy is emerging from its recent soft patch. Headline CPI inflation should remain close to the RBI’s 4% target over the coming months, enabling the central bank to continue easing monetary policy. We’re expecting a further 75bps of cuts to the …
We still expect Treasury yields to rise by the end of the year, despite the seemingly reassuring news for bonds from the Fed on Wednesday. There were, at face value, a few things for Treasury investors to take heart from in the latest Fed meeting. The …
Riksbank's next move likely to be a hike The Riksbank left both its policy rate and interest rate forecasts unchanged at today’s meeting, suggesting that monetary policy will be on hold for the foreseeable future. However, we think the Bank is likely to …
On hold throughout 2025 Taiwan’s central bank (CBC) left its main policy rate on hold today (at 2.0%), and is likely to leave rates unchanged throughout 2025. The decision to keep rates on hold came as no surprise and was correctly predicted by all 33 …
Today’s cut the last of the cycle for SNB We think today’s SNB rate cut, taking the policy rate from 0.5% to 0.25%, will be the last in this cycle. While inflation was very low in February, at just 0.3%, and may fall further in the coming months, …
This page has been updated with additional analysis since first publication. Labour market cooling rather collapsing With the labour market cooling rather than collapsing and wage growth stuck in the 5.5-6.0% range, we doubt the Bank of England will cut …
Australia’s labour market won’t loosen much further The labour market remained tight in February and we don’t expect it to loosen much further. The 52,800 fall in employment in February was much weaker than the analyst consensus of a 30,000 rise and …
New Zealand economy escapes recession As expected, the New Zealand economy came out of recession at the end of last year. As the impact of recent monetary loosening filters through, we expect the recovery to continue apace in the coming quarters. The 0.7% …
19th March 2025
Copom shrugs off growth concerns and flags another hike The Brazilian central bank made clear in the statement accompanying today’s 100bp interest rate hike (to 14.25%) that it’s far more concerned about high inflation than weakness in the economy. We now …
Although the FOMC stuck to its projection for two rate cuts this year, a growing number of officials share our view that further loosening is unlikely amid the increased upside risks to inflation. Otherwise, the Fed confirmed that it will slow the pace of …
Fed continues to expect two rate cuts this year, while slowing QT to a crawl Although the FOMC stuck to its median projection for two interest rate cuts this year, some officials now share our view that further loosening is unlikely and we continue to …
News that Turkey’s main opposition leader has been arrested today raises concerns over a potential return to unorthodox economic policy in Turkey. While the risks to our relatively upbeat view on Turkey’s financial markets have plainly increased, we think …
Our UK Employment Indicator extracts the signal from a range of measures of actual employment growth and surveyed employment. This dashboard was last updated on 24th March 2025. If you have subscriber access to the data underlying this dashboard, you …
Our new CE UK Employment Indicator , which extracts the overall signal from a range of measures of employment, suggests that while employment growth has continued to slow in Q1 this year, it is cooling rather than collapsing. This lends support to our …
The recent slump in the S&P 500 raised the spectre of a bear market. But even if one happened this year – rather than next year as we have been tacitly assuming in our forecasts – in response to the bursting of a bubble in Artificial Intelligence (AI), we …
South Africa’s hard activity data for January show that the retail sector is steaming ahead and driving the recovery. We think the lagging industrial sector will start to catch up on the back of monetary easing and improved electricity and logistical …
China’s presence in Latin America is increasingly seen as a strategic threat by the US. This Focus uses interactive charts to map out economic, financial and institutional linkages between China and Latin America. While ties have expanded dramatically …
Euro-zone services inflation fell to a 10-month low in February and leading indicators point to further declines in the coming months. We think this will prompt the ECB to cut interest rates at its meetings in April and June, taking the deposit rate from …
