The US dollar has finally hit a speedbump this week, with the DXY index registering its first weekly drop since late September. Given the continued resilience of the US economy – we expect next week’s US ISM surveys and non-farm payrolls to have rebounded …
29th November 2024
CBN makes case inflation close to peaking Central Bank of Nigeria Governor Yemi Cardoso set out the case at this week’s MPC meeting for inflation to slow down, suggesting that officials are eyeing the end of the tightening cycle. The CBN’s …
Activity data highlight need for further support We were one of the few analysts to correctly predict this week’s rate cut by the Bank of Korea , and we think it is only a matter of time before the Bank cuts again. The central bank’s statement and the …
US President-elect Donald Trump’s pledge this week to levy a 25% tariff on all products imported from Canada is clearly more of a bargaining tool than a genuine threat. However, it is now apparent that the USMCA will not spare Canada from Trump’s wrath. …
Mexico in Trump’s crosshairs President-elect Donald Trump fired the opening salvo in the next round of the trade war this week, threatening to impose a 25% tariff on all imports from Mexico (as well as from Canada, plus a separate tariff on China) on day …
China Chart Pack (Nov. 24) …
We have been forecasting the ECB to cut interest rates by 50bp in December for some time, and we think the case for such a move remains strong. The latest surveys suggest that the economy is hardly growing. November’s Composite PMI points to the economy …
In an economy where the government is boosting its spending and investment, we need to be extra cautious when interpreting the activity data. This is because there are lots of frequent indicators on private sector activity, but fewer indicators on public …
50bp rate cut hopes not dead yet The 1.0% annualised gain in third-quarter GDP was not as bad as it looks, with most of the weakness due to a big drag from the volatile inventories component and the Bank of Canada likely to be encouraged by the sharp …
The ruble’s rollercoaster ride Donald Trump’s election victory has made some form of an end to the war in Ukraine more likely. (For more, see here .) His appointment this week of Keith Kellogg as his Russia-Ukraine envoy also points in this direction. Mr. …
BJP’s Maharashtra win reduces fiscal slippage risks The convincing win for Prime Minister Modi’s BJP-led alliance in the election in Maharashtra (see Chart 1) is likely to have provided some reassurance to the ruling national party that it maintains …
Coffee prices at the whim of the weather Fans of hockey-stick graphs would appreciate recent developments in the coffee market, where prices have surged by 30%+ this month . (See Chart 1.) Chart 1: Coffee Prices (2024) Source: LSEG For context, coffee …
Note: We'll be discussing US climate policy under Trump, Elon Musk, and the future of the Inflation Reduction Act in a Drop-in on Wednesday 4th December 15:00 GMT/10:00 EST . Register here for the 20-minute online briefing. States take the lead on …
Sharp fall in Growth GDP figures show the economy slowed sharply last quarter, and we expect economic activity to struggle over the coming quarters. That bolsters the case for policy loosening, but the recent jump in inflation means the RBI won’t feel …
The spread between 10-year French and German government bond yields has risen again, and we forecast that it will continue to trend up next year. The spread between the yields of 10-year French OATs and German Bunds has surged in recent days, reaching a …
This page has been updated with additional analysis since first publication. Inflation data make 50bp December cut less likely The continued strength of euro-zone services inflation in November reduces the chance that the ECB will cut interest rates by …
Net lending to property on a firm upward trend Net lending to property totalled £1.16bn in October, marking the third consecutive month of net lending exceeding £1bn. Indeed, at £3.93bn in the three months to October, lending was at its highest since May …
We held an online session on US import tariffs on 26th November. (See a recording here ). In this Update we answer the questions we were most asked. What are Trump’s motives for threatening tariffs and will he follow through? Trump has spoken about using …
Asia Chart Pack (November 2024) …
This page has been updated with additional analysis since first publication. Pre-Budget jitters clearly influenced households’ financial decisions October’s money and lending figures suggest that Budget worries prompted households to become more cautious …
Rebalancing underway The 0.2% q/q contraction in the Turkish economy in Q3 suggests that policymakers’ efforts to weaken demand and tame high inflation are taking effect. We still think that it would be premature for the central bank to start an easing …
Markets remain unmoved by inflation The RBNZ slashed rates by another 50bp at its meeting on Wednesday, taking its policy rate below that of the RBA for the first time since 2013. By contrast, the Australian CPI released this week dashed any remaining …
Trump links some tariffs to the drug trade Earlier this week, President Trump threatened to impose an “additional” 10% tariff on imports from China, along with tariffs on Mexico and Canada. We gave our initial thoughts here , noting that because the …
Inflation gaining renewed momentum The October activity data suggest that the economy continued to lose momentum this quarter. But with the labour market still very tight, we doubt that the Bank of Japan will be very concerned. Instead, the Bank will feel …
Activity data point to sluggish Q4 While industrial production and retail sales both rose in October, the figures are consistent with output stagnating at best this quarter. Taking industrial production first, the 3.0% m/m rise marked the second …
Underlying inflation set to remain above 2% The Tokyo CPI suggests that inflation excluding fresh food and energy rose further above the Bank of Japan’s 2% target in November, supporting our long-held view that the Bank will hike rates in December. In …
28th November 2024
The weak run of activity data out of Emerging Europe continued over the past month and, while the region is more insulated from Trump’s tariff threats than some other EMs, the risks to our already below-consensus growth forecasts have shifted further to …
National inflation data for November released today suggest that euro-zone inflation has edged up this month, but we think this is just a blip. We still expect inflation to drop below target next year and the ECB to cut interest rates by more than …
Economic spillovers of regional conflict may fade The Israel-Hezbollah ceasefire agreed this week may present a stepping stone towards broader de-escalation of the regional conflict. For Egypt and Jordan, among the countries most directly affected by …
This week we held a series of roundtable discussions with clients in our London office about the outlook for European commercial property. This Update outlines our thoughts on some of the most interesting questions raised, covering the likely winners in …
It now seems increasingly likely that, as we had been expecting, Germany will loosen its strict fiscal rule after the upcoming general election. However, hopes of a big fiscal stimulus are likely to be disappointed as any reform will be modest and …
Lower than expected German HICP inflation The inflation data for Germany and Spain do not significantly alter our forecast for euro-zone inflation which will be published tomorrow. We are forecasting a 50bp rate cut by the ECB in December but recent …
The Chancellor, Rachel Reeves, has confidently claimed that she will not be “coming back with more taxes”, but developments since the Budget have already whittled away her fiscal ‘headroom’. Further tax hikes are not inevitable, but they are more likely …
The fiscal tightening measures announced by Brazil’s finance minister late yesterday failed to live up to expectations and reinforce the idea that political commitment to stabilising the public finances is lacking. One consequence is that the central …
This page has been updated with additional analysis since first publication. EC Survey consistent with economy stagnating The EC survey was little changed in November and is still consistent with weak growth at best, while the price components suggest …
The Bank of Korea cut interest rates again today by a further 25bps (to 3.00%) and made clear in its statement that more easing is on the way. We are sticking with our view that the central bank will continue to cut interest rates steadily over the coming …
While the RBNZ started hiking rates earlier during the recent tightening cycle than the RBA, it also lifted rates to a higher peak. The RBA tempered the degree of tightening in order to preserve the large falls in unemployment seen during the pandemic and …
Interest rates cut, further easing ahead The Bank of Korea cut interest rates today by 25bps (to 3.00%) for a second meeting in a row. We were one of the few analysts to correctly predict a cut, with 34 out of 38 forecasters polled by Reuters expecting …
The reversal of weather- and strike-related disruptions leave us anticipating a 190,000 rise in nonfarm payrolls in November. We expect the unemployment rate to be unchanged at 4.1%, while wage growth should tick down to 3.9%. Hurricane and strike effects …
27th November 2024
We’re launching an updated version of our China Activity Proxy this month, alongside an interactive dashboard that gives clients access to the data. Our expanded model suggests that China’s growth so far this year has been weaker than we originally …
The China Activity Proxy (CAP) is our attempt to track the pace of economic growth in China without relying on the official GDP figures. It is based on a set of carefully selected low-profile indicators that capture activity across a broad spectrum of the …
Trump tosses first social media hand grenade Here we go again. This week President-elect Donald Trump lobbed his first social media hand grenade since the election – threatening to impose a 25% tariff on Canada and Mexico if both countries didn’t do more …
The fact that climate mitigation policies can manifest themselves in a range of macroeconomic outcomes will make it difficult for central bankers to know how to respond appropriately. Meanwhile, the increased push-back against low-cost Chinese green …
The failure of COP29 to deliver on ambitious climate finance targets means that developing economies still lack sufficient low-cost finance for climate adaption. That leaves them reliant on debt-based finance, adding to debt burdens and raising the risk …
Another above-target-consistent rise in core PCE prices The 0.27% m/m rise in the core PCE deflator in October was a little lower than we feared based on the earlier CPI and PPI data, but still confirms that prices rose at an above-target rate for the …
The latest IPF Consensus Survey was broadly unchanged from the previous forecast round. Total returns at the all-property level are forecast to be 7.7% p.a. over 2024-28, up from 7.6% p.a. previously. That contrasts to downward revisions in our forecasts, …
EM GDP growth ticked up in Q3 but is likely to fall short of expectations over the coming quarters as stimulus in China disappoints and still-tight monetary policy takes it toll. For most EMs, a universal 10% tariff on US imports – our working assumption …
What will a second Trump presidency mean for the green transition? Should investors and companies expect an across-the-board rollback on regulation? What does the presence of Elon Musk in the president-elect’s orbit mean for climate policy? Our Climate …
One of the many problems that the next German government will have to contend with is the struggling car sector. Unfortunately, the sector’s challenges are only likely to intensify given the prospect of sluggish European demand, rising competition from …
US tariffs on oil imports from Canada and Mexico would probably result in lower oil output in Canada and Mexico and higher US gasoline prices in the short term, and could also lead to a tightening in the global oil market over the medium term. Although US …
