The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone. With the economy holding up well and inflation likely to remain above the 4% target for a few more months yet, we doubt the central bank will loosen …
8th February 2024
Demand firming up and activity increasing The strongest set of survey results since the tail end of the 2020-22 house price boom provided further evidence that lower mortgage rates have led to a recovery in demand. We suspect that respondents are right to …
RBI not ready to pivot yet The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone. With the economy holding up well and inflation to remain above the 4% target for a few more months yet, we doubt the central …
This page has been updated with additional analysis since first publication . Inflation set to rebound gradually but remain low CPI fell deeper into deflationary territory last month. But this was largely due to the usual volatility in food and tourism …
Economy rebounds strongly following war and sanctions shock Russia’s economy expanded by 3.6% over 2023 as a whole, marking a sharp rebound from a contraction of just 1.2% in 2022 (revised from 2.1%). The activity data for December suggest that the …
7th February 2024
Policy support for Chinese equities may facilitate a near-term rebound, but investors probably need to be convinced that the government's attitude towards the private sector has shifted if there is to be a more sustainable rally. Chinese equities have …
The resurgence in productivity growth is mainly a cyclical response to the tightness of the labour market rather than a sign that the AI revolution is already bearing fruit. Nevertheless, that still implies scope for productivity growth to remain …
While not our base case, continued strength in the US economy would probably be a tailwind for the US dollar over the coming months. But even in that event, we think the dollar would eventually weaken as bond yields fell in the US relative to elsewhere as …
Saudi Arabia’s economy contracted by 0.9% over the course of 2023 on the back of the Kingdom’s oil output cuts. But the recession ended in Q4 and we think that a gradual recovery will ensue over 2024 as fiscal policy is kept loose, interest rates are …
The large rise in the Brazilian government’s budget deficit, to 8.9% of GDP, over 2023 as a whole should partially reverse this year. But the key point is that the underlying sovereign debt dynamics are worsening. And unless the government pulls out all …
Are European and UK commercial real estate markets facing the same level of distress as the US? We held a Property Drop-In on Wednesday, 14th February , A recording of the session can be viewed here . Falling interest rates will not prevent a rise in …
Trade balance back in deficit Net trade appears to have contributed to the likely rebound in GDP last quarter but, with exports falling in December and the survey indicators of external demand still weak, that boost will probably go into reverse this …
Support to growth from surging exports set to fade A sharp rebound in real exports in December helps explain why net external trade supported GDP growth in the fourth quarter but, with the surveys indicating that external demand is weakening fairly …
We have argued that most of the inflation battle is already won and fears that “ the last mile will be the hardest ” are overdone. But during our online Drop-In session last week, clients asked whether inflation in the major advanced economies might …
Rates on hold, March rate cut is in the balance The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and we think that an interest rate cut at the next meeting in March looks finely balanced. Our current assumption is that …
The faster-than-expected fall in wage growth in November suggests the unexpected rebound in CPI inflation in December will be fleeting. We still think that by April CPI inflation will have fallen below the 2.0% target, and further declines in utility …
Mortgage demand continues to recover The average mortgage rate in January was unchanged from the month before, but that didn’t prevent mortgage applications for home purchase rising for a third consecutive month. And with interest rates set to resume …
Indonesia has some of the best long-term growth prospects of any economy. Key to whether it realises them is whether Indonesia maintains the progress President Joko Widodo (better known as Jokowi) has made on productivity-boosting structural reform. …
While the overall incidence of sovereign debt distress in the emerging world has fallen back since last year, sovereign debt distress in frontier markets hasn’t. And, if anything, things have taken a turn for the worse in recent weeks in some of the more …
Remittances are often an underappreciated source of foreign currency for India. While growth in remittances will slow in the next few years, they should remain an important source of external funding for the economy and help to keep the current account …
Large monthly increase confirms bumper start to 2024 The large 1.3% m/m gain in Halifax’s measure of house prices in January was the largest since June 2022, and suggests we are already almost halfway towards our forecast that house prices will rise by 3% …
On hold, cuts likely around mid-2024 The Bank of Thailand (BoT) today resisted pressure from the government to cut interest rates to support the struggling economy. But with growth set to remain weak and inflationary pressures very subdued, we think the …
This page has been updated with additional analysis since first publication. Industrial recession continues The seventh consecutive monthly fall in German industrial output in December confirms that industry remains a significant drag on growth. We expect …
This page has been updated with additional analysis since first publication. Rise in unemployment has further to run Although the unemployment rate last quarter came in below the RBNZ’s expectations, leading indicators continue to point to a rapid …
6th February 2024
What does the recent data flow and Jerome Powell’s pushback mean for the timing of the first Fed rate cut? How quickly and easily will core inflation get back to target? How far will the Fed go to cut rates this year? Chief US Economist Paul Ashworth and …
Although last week’s renewed underperformance of US regional banks and equity office REITs sparked fears of another mini banking crisis, a fairly steady decline in the option-adjusted spreads (OAS) of private label commercial mortgage backed securities …
Surprise hike, tightening cycle may not be finished yet The Central Bank of Kenya delivered a surprise 50bp interest rate hike today, to 13.0%, suggesting that the MPC’s inflation fears are outweighing signs that exchange rate pressures are easing. With …
Oil prices are likely to remain buffeted by supply fears as long as the conflict in the Middle East continues. However, we think there will be support on the demand side later in the year as monetary policy in most major economies is loosened. By …
Chile is frequently identified as one of the main beneficiaries of global efforts to put economies on a greener footing, but we doubt that the country will reap the full benefits of this trend. Chile is likely to struggle to substantially raise copper and …
Distress in the US commercial property market is once again in the news, but the risk of that spreading to the UK is low. The rise in aggregate loan-to-value ratios to date looks manageable and with interest rates also trending down we doubt there will be …
Western metros again at risk from announced layoffs Although December’s average job growth rate of 0.3% 3m/3m across our 30 metros signalled a tepid end to 2023, it brings to a close a surprisingly solid year for total employment. The same can’t be said …
With the Reserve Bank of Australia still striking a hawkish tone at its meeting today, we’re pushing back our forecast for the Bank’s first rate cut from May. But we still think that incoming data will show enough of a drop in inflation alongside …
This page has been updated with additional analysis since first publication. Construction PMIs start 2024 in contractionary territory The rise in the headline CIPS construction PMI from 46.8 in December to 48.8 in January was driven by improvements in …
RBA pours cold water on the prospect of early rate cuts Although we're sticking with our view that the RBA is done tightening policy, rate cuts may not be in play until the second half of this year. The RBA’s decision to leave its cash rate on hold at …
This page has been updated with additional analysis since first publication. Further regular wage increases incoming While winter bonus payments increments disappointed in December, regular wage growth accelerated substantially. Looking ahead, we think …
5th February 2024
Credit conditions normalising The Fed’s latest Senior Loan Officer Opinion Survey suggests that banks have put last year’s SVB regional bank crisis firmly behind them and, with long-term interest rates markedly lower than the peaks reached last October, …
Recent headlines have drawn attention to the immediate risks facing multifamily investors and lenders. While we think this concern is appropriate, we think the biggest risks face assets financed at historically low fixed rates in 2020-21. Problems are …
Oil prices have had only limited impact on US Treasury yields recently, and we suspect that this will remain the case in the next couple of years. So far this month, oil prices have fallen back quite sharply. At around $72 per barrel (pb) at the time of …
Energy prices have so far shrugged off disruptions to shipping in the Red Sea and the risk of wider conflict in the Middle East. If energy production continues to be largely unaffected, we expect most prices to fall further by the end of the year. Greater …
The news this morning that the unemployment rate is lower than previously thought increases the chances that interest rate cuts start a little later and are slower. After publishing experimental labour market data for the five months to November due to a …
Given the rise in rents and the recent decline in mortgage rates, the financial benefit of buying over renting is increasing. This will boost buyer demand and cause tenant demand to soften this year. As housing is a necessity, households must either rent …
To mark the addition of Canada to our Regional Climate Databank , this Update takes a closer look at the sub-national climate-related data in the country. Our Global Climate Databank and Green Transition Scores are the places to go to compare climate …
Services activity apparently gaining momentum Following on the heels of the strong labour market data, the rebound in the ISM services index to a four-month high of 53.4 in January, from 50.5, is another signal that the US economy remains impervious to …
January’s batch of PMIs showed that activity across non-hydrocarbon sectors in the Gulf eased a touch at the start of the year, but activity remains robust and will support the broader economic recovery in 2024. In contrast, the disruption in the Red Sea …
Euro-zone investment improved a little in Q4, but that did not prevent it experiencing its worst year in a decade. While we have raised our forecast for through-year growth, we still expect a weak start to 2024 and think that by historic standards it will …
… Tracking Turkey's Economic Policy Shift …
The big takeaway from the first Federal Reserve, European Central Bank and Bank of England meetings of 2024 is that policymakers will not be pushed into cutting rates any time soon. Policymakers in China appear to be in a similarly cautious mood. The …
Headline inflation picks up, all eyes on new governor Headline inflation edged up slightly in Turkey to 64.9% y/y in January, and the m/m figure – a 6.7% increase on the back of a large minimum wage hike – looked even worse. The figures highlight the …
The national accounts data released today suggest that economic growth remained broadly stable last quarter, but we don’t have much faith in the official data. With economic activity likely to remain weak in the coming quarters, and concerns about …
