The latest Trans Mountain regulatory hearing will determine whether the pipeline expansion is once again delayed. That would weigh further on the outlook for exports, with external demand already very weak. Another year, another year’s delay? Admittedly, …
12th January 2024
Inflation data surprise to the downside The softer-than-expected December inflation data released across Central and Eastern Europe (CEE) this week suggest that further interest rate cuts will be delivered across the region over the coming months and, in …
Trump faces first test in Iowa Iowa marks the start of the primary race Donald Trump is still the prohibitive favourite to win the Republican presidential nomination. But the Iowa caucuses, which kick off the primary season this coming Monday, should …
After a strong start to the year, the US dollar seems set to end the week broadly unchanged against most currencies, as inflation data releases out of the US this week failed to generate much of a reaction. This stalemate in currency markets has been a …
Ecuador erupts The dramatic escalation of violence in Ecuador this week after President Noboa announced plans to crack down on organised crime has shone the spotlight onto the country’s growing problem with drug trade related crime. Ecuador has …
The rebounds in CPI inflation in both the US and the euro-zone in December (from 3.1% to 3.4% and from 2.4% to 2.9% respectively) raise the question of whether the downward trend in the UK will also stall. After all, inflation in the UK has been following …
Rise in female participation rate is encouraging Korea’s December labour market report published earlier this week show the country is making welcome progress in bringing more women into the formal labour force – the female participation rate has risen to …
We doubt that the modest fall in mortgage rates we anticipate this year will bring a great deal more stock onto the market. Because of that, the supply of existing homes will remain very tight, so we’re now forecasting a more subdued recovery in existing …
Household consumption in the euro-zone looks set for another bad year. We think that it will be broadly flat in the first half of 2024, keeping overall GDP growth close to zero for the next few quarters. It might start to pick up in Q3 and beyond, but a …
NBR won’t cut rates as far as most expect in 2024 The National Bank of Romania (NBR) left its policy rate unchanged at 7.00% today and, although a monetary easing cycle seems to be drawing nearer, we think that interest rates are unlikely to be cut as far …
The Middle East continued to be the focus of commodity markets although most prices ended the week either relatively unchanged or lower. The escalation of Houthi attacks on shipping and subsequent retaliatory military strikes by the US and UK did support …
At the ECB’s last meeting in December, President Christine Lagarde insisted that it was too early to discuss rate cuts. But the first comments of 2024 from policymakers, including Ms Lagarde herself, suggest that policy loosening may not be too far away. …
This page has been updated with additional analysis since first publication. Elevated headline inflation suggests no imminent rate cuts The rise in headline consumer price inflation to a four-month high in December supports our view that the central bank …
Growth pick-up to extend into Q1, fade by year-end The Q4 GDP data due on Wednesday are likely to show that China’s economy ended 2023 on a more positive note. Our GDP tracker points to y/y growth of 5.5%, up from 4.9% in Q3. That partly reflects a weaker …
We think that most major currencies in Latin American will fall against the US dollar this year. As a result, the relatively poor returns that we expect from equities in the region in local-currency terms are likely to be even worse in US dollar terms. …
This page has been updated with additional analysis since first publication . Broad credit growth hits 7-month high, but bank lending still weak The rebound in broad credit growth remained on track thanks to a step up in government borrowing. But growth …
China’s commodity imports were generally strong in 2023 and while growth rates will probably slow this year, we expect volumes to remain high in the coming months. China’s export volumes edged up in December and remained close to a record high fuelled …
This page has been updated with additional analysis since first publication. Stagnation in Q4, but recovery in sight The 0.3% m/m rebound in real GDP in November (consensus and CE forecast 0.2%) increases the chances that the economy escaped a recession …
This page has been updated with additional analysis since first publication . Export volumes still due for a pullback China’s export values rose y/y at the fastest rate since April. And while export volumes only ticked up slightly, they remain near a …
Inflation could start with a 3 in December We explained last week why we expect the RBA to cut interest rates earlier than most anticipate and the sharp fall in inflation in November supports our view. The available data suggest that the Q4 inflation …
Air pollution a modest headwind Air pollution in India has been a growing problem for several decades – on some measures air pollution has almost doubled from the levels at the start of the century. (See Chart 1.) Chart 1: India Annual Average PM 2.5 …
Inflationary pressures moderating The economic data released this week all suggest that the case for tighter monetary policy is diminishing. For a start, the Tokyo CPI showed that inflation excluding fresh food fell to just 2.1% in December, within …
This page has been updated with additional analysis and charts since first publication. Deflation set to ease gradually Smaller y/y declines in food and energy prices meant that both CPI and PPI deflation eased last month, a trend that we think will …
This Update discusses how we think Taiwan’s election this weekend – which could be another flashpoint in Taiwan-China relations – might affect global equity markets, in aggregate and across some key sectors that look particularly exposed. Saturday’s …
Consumer spending continued to tumble in Q4 The continued slowdown in household spending in November further cements our view that the RBA won’t lift rates any higher. The ABS’ monthly indicator suggests that household spending rose by 3.1% y/y in …
Egypt’s policy shift and IMF deal edging closer Meetings this week between Egypt, the IMF, and the US took place following the release of a draft economic plan, which points to the expansion of the current IMF deal and a renewed shift towards economic …
11th January 2024
Note: This is an updated version of an Update first published on 11 January following the belated release of government statistics on housebuilding for Q3 2023. Barring Q2 2020, when lockdown caused construction activity to cease temporarily, housing …
We wouldn’t be surprised if US bonds and equities fell a bit further in the near term. But, in our view, the Fed remains on track to start easing in March, pointing to renewed gains in US asset prices. December core CPI data out of the US, released …
In contrast to most of the past 20 years, RoUK industrial rental growth has almost matched the South East over the past couple of quarters. But that is unlikely to last. The boost to demand for big sheds in the Golden Triangle thanks to the surge in …
We think that global growth will undershoot consensus expectations in 2024 as various props to growth from 2023 fade and as the lagged effects of past rate hikes continue to feed through. Among the advanced economies, the US will continue to outperform …
Much has been talked about a ‘flight to quality’ in the office sector given the structural shift to hybrid working. However, while there is evidence of this in relative rental performance, a look at the yield data suggests that the opposite has been true …
Core prices boosted by used vehicles & shelter The slightly bigger 0.3% m/m increases in both headline and core CPI would seem to justify the stance of Fed officials that the road back to target could be a little bumpy, but we’re not convinced. The annual …
This page has been updated with additional analysis since first publication . The renewed fall in Brazil’s headline inflation rate in December, to 4.6% y/y, paves the way for another 50bp cut to the Selic rate (to 11.25%) at the central bank’s next …
The IMF’s approval of the next disbursement of Argentina’s current deal will provide the government with the necessary funds to make upcoming repayments (due to the Fund itself). And the fact that the Fund endorsed the new administration’s policies marks …
Economic growth in Jordan has been sluggish for the best part of a decade and the outlook doesn't look much brighter. While the renewed IMF programme will help to contain external strains, the Israel-Hamas conflict will weigh on the crucial tourism sector …
The Bank of Korea left its policy rate on hold today (at 3.5%), but struck a more dovish tone than after previous meetings. With inflation on the way down and growth likely to struggle over the coming months, we expect the central bank to start cutting …
On hold again, rate cuts in Q2 The Bank of Korea (BoK) left its main policy rate on hold today (at 3.5%), but with inflation cooling and growth set to struggle, we think the central bank will cut interest rates sooner than most expect. The decision was …
Communications from the governor of the National Bank of Poland (NBP) today suggest to us that policymakers could cut interest rates again at the central bank’s March meeting. But we think core inflation will remain above the central bank’s target until …
10th January 2024
The lagged effects of the weak economy and high interest rates may mean that loan default rates rise in the coming months. But the prospect of interest rate cuts later this year will mean they won’t rise much. Higher interest rates and the weak economy …
We still think that China’s equities could fare well relative to others in the near term, but also that their longer-run prognosis is fairly bleak. The challenging times for China’s stock market have continued today, with the country’s major indices …
Note: W e held a client briefing straight after the election weekend to discuss what the vote means for Taiwan and the global economy. View the on-demand recording here . China may respond to a victory for Tsai Ing-wen’s chosen successor in Saturday’s …
The surge in Italian prime retail rents over the past year is likely to give way in 2024, as inflation falls back and consumer spending stagnates. But the strong fundamentals that have supported this outperformance are still in place and will help rent …
The surge in Chapter 11 business bankruptcy filings last quarter is not as bad as it looks, as many of them related to the WeWork failure. Excluding those, bankruptcies trended lower at the end of 2023 and, with corporate bond yields falling sharply in …
Some ECB Governing Council Members have called for an increase in reserves requirements, primarily in order to reduce the Eurosystem’s interest expenditure. If implemented – which we think is likely – this would have the effect of tightening monetary …
The surge in US exports of energy over the coming five years will ensure that the US remains a major supplier of fossil fuels to the rest of the world. A large proportion of these exports will be LNG, as new export terminals come online. But exports of …
ECB policymakers still insist that monetary policy will remain tight throughout the first half of the year, if not longer. But we think that weakness in economic activity and lower inflation will prompt them to start cutting in April. And in contrast to …
Inflation slowing, but will remain above target until mid-2025 Egypt’s headline inflation rate eased for a third consecutive from 34.6% y/y in November to 33.6% y/y in December. Comments last night suggest that an enhanced IMF deal is near, which is …
This page has been updated with additional analysis since first publication. Fall in core inflation confirms Norges Bank is finished with rate hikes The fact that core inflation fell and the headline rate was unchanged in December confirms that Norges …
This page has been updated with additional analysis since first publication. Disinflation will pave the way for policy loosening before long With price pressures cooling in earnest, we’re growing increasingly confident in our call that the RBA will start …
9th January 2024
