Recovery in regional sentiment takes a breather The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were a mixed bag in May and our regional-weighted measure edged down slightly. Even so, that still leaves …
30th May 2024
This page has been updated with additional analysis since first publication. EC Survey points to weak economic growth and easing price pressures The EC business and consumer survey for May is consistent with weak growth in euro-zone GDP, while price …
Early signs point to low ANC vote, rand on the backfoot The early results from South Africa’s election which took place yesterday point to the ruling ANC securing a vote share closer to the low end of projections (at just over 40%), increasing the chances …
We expect the 10-year Bund yield to fall by the end of the year as the ECB loosens policy more than investors are currently discounting. Judging by the initial fall in 10-year Bund yield this morning, German state-level inflation data released earlier in …
29th May 2024
Sovereign bond yields in Russia have surged to multi-year highs this year as markets have increasingly questioned the trade-off between the war effort on the one hand and policymakers’ ability to maintain fiscal stability and control inflation on the …
Following the previous large quarterly increase, improvement in all-property valuations stalled in the first quarter of the year despite a rise in the 10-year Treasury yield. There was little change at the sector level. Industrial continued to look …
Pieces almost in place for the Bank of Canada to cut But economic and labour market resilience means Bank can wait to be 100% sure Rates to be cut by 25 bp at each meeting from July, faster than markets pricing in The rapid easing in core inflation …
A victory for Claudia Sheinbaum in Mexico’s election on Sunday is likely to see a continuation of Amlo’s generous social policies – which will also make Banxico’s fight against inflation harder. The main points of contrast with Amlo are that she will face …
The stickiness of inflation in April has led us to shift back our forecast for the timing of the first interest rate cut from 5.25% from June to August. Even so, our view that CPI inflation will fall from 2.3% in April to below 1.5% by the end of this …
While German property yields stabilised in Q1, further indications of rising distress give us confidence in our view that property values there have not yet reached the bottom. The stabilisation in German prime all-property yields in Q1 has led some to …
We think the Fed and most other DM central banks will be able to ease monetary policy this year and next more than investors currently anticipate. As a result, we forecast that Treasury yields will end 2024 below their current levels, putting downward …
The latest IPF Consensus Survey showed limited change on the previous forecast round in March. There was a small upward revision to all-property rental growth expectations for 2024, but a downgrade to total return expectations, which implies yields are …
The tick up in mortgage rates since the start of the year has caused demand to soften. As a result, house prices are likely to tread water over the coming months. But our forecast that Bank Rate will be eventually be cut further than expected suggests …
German state data point to smaller-than-expected rise in euro-zone inflation CPI inflation data published by the major German states this morning suggest that both German and euro-zone HICP inflation may come in a bit lower than expected and that though …
Low oil output in the Gulf has constrained economic growth so far this year and the upcoming OPEC+ meeting will prove pivotal to the outlook over the rest of this year. Elsewhere in Middle East and North Africa, external financial support has mostly …
Stalling disinflation means rates will remain higher for longer While inflation picked up further in April, we doubt that the Reserve Bank of Australia will respond with another interest rate hike. The 3.6% increase in the Monthly CPI Indicator was …
Africa Chart Pack (May. 2024) …
28th May 2024
The yield of 10-year Japanese government bonds (JGBs) is now almost where we forecast it to be at the end of the year. Admittedly, we doubt that the Bank of Japan (BoJ) will tighten policy as quickly as investors think in the next two years. But we …
While the timing of the sharp hit to UK commercial real estate values owes much to the ill-fated “mini-Budget” of September 2022, we think the UK’s role in leading the valuation downgrades also owes to its relatively insulated lending market in this …
House prices March on The solid 0.3% m/m rise in house prices in March suggests that competition among buyers for the limited number of second-hand homes on the market remains strong. We expect that to continue for the rest of the year, consistent with …
Fall in inflation means rate cut in June still in play The decline in Brazilian inflation to 3.7% y/y in the first half of this month, coupled with signs of easing price pressures in some core categories, will provide relief to policymakers at the central …
The debt-to-income restrictions launched by the Reserve Bank of New Zealand today won’t restrict the flow of new mortgage lending. In fact, the concurrent easing of restrictions on loan-to-value restrictions will result in slightly looser lending …
Labor’s regulatory push can’t be blamed for the recent slump in labour productivity and we aren’t convinced that it will hold back future productivity growth much either. Indeed, we still think that a boost from artificial intelligence will lift growth …
Falling real consumption will help to reduce inflation The weakness in retail sales is consistent with our view that inflation will reach the top end of the RBA’s 2-3% target band in the second half of the year. The 0.1% m/m rise in retail sales values in …
The dollar looks set to end the week broadly unchanged against most currencies, halting its slide over the past couple of weeks. Bond yields in the US rebounded this week, partly due to the Fed minutes published on Wednesday but have also risen in other …
24th May 2024
We doubt yesterday’s drop in the US equity market will prove a harbinger of further weakness to come – indeed, stocks have already rebounded today. But the unusual combination of a sizeable drop in the overall index even as one of its largest constituents …
The further fall in headline inflation in April, to a three-year low of 2.6%, means the 2% target could be achieved as soon as August. Whether the Bank of Canada cuts interest rates in a couple of weeks or waits until July, our key message is that the …
South Africa's pivotal election looms There’s less than a week to go until South Africa’s pivotal election and there remains significant uncertainty about the ANC’s vote share and, if it’s forced to go into coalition, who it will ally with. The ANC’s vote …
Fed in wait-and-see mode Fed to proceed with caution The minutes of the Fed’s early May policy meeting were, not surprisingly given the backdrop of data releases ahead of that meeting, somewhat hawkish. The resilience of economic growth and employment, …
Still too early for nominal TRY appreciation The Turkish lira has been surprisingly stable over the past two months and Finance Minister Simsek noted this week that the currency would have actually appreciated had the central bank not been buying dollars …
Mexico’s election race enters the final phase Next week marks the final week ahead of Mexico’s election, in which all seats in congress, thousands of local government positions and, most importantly, the presidency are up for grabs. The opinion polls …
Retail sales point to soft consumption growth The broad-based nature of the weakness in retail sales in March show that high interest rates are weighing on demand and, at the margin at least, provide a bit more justification for the Bank to cut interest …
Durable goods orders slowly trending up Headline and core durable goods both did better than we expected in April, suggesting that the earlier decline in corporate borrowing costs may be feeding through. Nonetheless, with growth in underlying capital …
It’s tempting to think that every bit of economic data released between now and the general election on 4 th July will make a difference to who will be Prime Minister on 5 th July. Inevitably, data releases will be written up as “good” or “bad” for Sunak …
Natural gas bucks the trend In a week dominated by sharp falls in oil and precious metals prices, the 12% jump in European natural gas prices has been a notable outlier. Although the front-month TTF benchmark price has slipped back in trading today, at …
Growth slowdown begins Nigeria’s GDP growth slowed to 3.0% y/y in Q1, driven by a halving in the oil sector growth rate, alongside high inflation and tighter monetary conditions continuing to drag on the non-oil economy. We expect growth to remain …
Worrying or reassuring? The wage growth data published this week were not good for the inflation outlook, but they weren’t as bad as they first appeared. As a re-cap, data released by the ECB showed that negotiated wages rose by 4.7% y/y in Q1, slightly …
Resolution of China’s property crisis would result in residential sales being substantially higher than today. Sales could rise by a third. But we wouldn’t expect prices to increase by much, if at all. And property construction activity will be weaker in …
Pullback in deposit growth is not a bullish signal After picking up during the pandemic, growth in bank deposits has slowed sharply recently. (See Chart 1.) They even fell outright in April, by a record RMB3.9trn, though this may partly reflect …
We think the kiwi and the aussie strength will continue over the next couple of years as we expect they will be among the last developed economies to start an easing cycle. The aussie and the kiwi have been among the best performing G10 currencies since …
The mammoth general election is entering its final week, with just 115 of the 544 constituencies left to vote before the result is announced on 4 th June. Clients can see all of our election insights here . We will also be discussing the election result …
Singapore’s economy to remain weak this year The second estimate of first quarter GDP (published on Thursday) confirmed that growth in Singapore slowed sharply last quarter. In q/q terms, the economy expanded by just 0.1%, down from 1.2% in the final …
The sharp drop in frontier market sovereign dollar bond spreads this year has caught many by surprise. We think there’s a case that the bond rally may have gone too far in Argentina, Ecuador and Tunisia. But the decline in spreads in some frontiers, …
Spanish industrial rent growth beat expectations in Q1 this year, outpacing rises elsewhere in the euro-zone. However, this was mainly due to Barcelona, where we have raised our prime rent forecast. Madrid rent gains were more sluggish and this trend is …
Inflation rapidly losing momentum The economic data released over the last couple of weeks hardly suggest that the Bank of Japan should tighten monetary policy any further. After all, GDP plunged by 0.5% q/q in Q1 and the April inflation data released …
Outlook for retailers remains bright despite soggy start to Q2 The 2.3% m/m fall in retail sales volumes in April was much bigger than our forecast for a 0.5% m/m fall and the consensus forecast for a 0.4% m/m decline as the unusually wet weather …
Households seem keen on saving more The minutes of the RBA’s May meeting confirmed that the Bank discussed a rate hike in response to the upside surprises in inflation and the labour market, but ultimately decided against it. One reason was that the …
