Today, OPEC+ announced 1mn barrels per day (bpd) of voluntary cuts to supply in Q1 2024. This comes on top of around 5mn bpd in cuts already in situ, and brings the total cut in the first quarter to around 6% of global production. The group is presumably …
30th November 2023
Our View: We are more dovish than investors regarding the amount of rate cuts that the Fed – and several other DM central banks – will deliver next year. As a result, we forecast that Treasury yields will fall further over the next year or so, putting …
Our AI work has identified data centres as a clear winner from these innovations. That the sector is already in rude health is borne out by the latest real estate data. But it remains to be seen if it can ever reach the scale to displace more traditional …
Economic strength and latest jump in food prices suggest no change in policy next week RBI will be reluctant to loosen too quickly given persistent food inflation threat We now think that rate cuts won’t materialise until second half of next year We …
We expect “safe” assets to continue to rally over the next couple of years, largely informed by our belief that investors are still underestimating how quickly and/or how far many central banks will cut interest rates over the next couple of years. And …
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
COP attendance t = COP attendance t-1 ^ 2 Whatever does or does not get agreed at COP28 in Dubai over the coming weeks, one way in which the event will set records is the staggering number of people in attendance. As shown in Chart 1, the 70,000 delegates …
This page has been updated with additional analysis since first publication. A bumpy landing so far, but recession risks remain On the face of it, the upward revision to second-quarter GDP growth combined with the preliminary estimate of a strong monthly …
Falling PCE inflation suggests rate cut speculation likely to grow The muted rise in real consumption and further decline in core PCE inflation in October will reinforce the growing belief in markets that interest rate cuts are on the horizon. Real …
Office-based jobs contracted for the first time in over three years Total employment grew by 0.3% 3m/3m once seasonally-adjusted in October across our 30 metros, which is weak both by this year’s standards and of the previous decade. Meanwhile, …
All eyes on Vienna and Dubai The UN’s annual climate conference, COP28, gets underway in Dubai today with thousands of delegates set to attend. But events in Vienna could take the spotlight. OPEC+’s delayed meeting is taking place as we speak and could …
We think that long-term sovereign bond yields in New Zealand – which are currently among the highest in the developed world – will fall back to similar levels as those elsewhere over the next couple of years. Bonds in New Zealand have joined in the …
This page has been updated with additional analysis since first publication. India to remain an EM outperformer The RBI had stated that the GDP data for Q3 (Q2 of FY23/24) would “surprise everyone on the upside” and, even despite that spoiler, the data …
This page has been updated with additional analysis since first publication. Euro-zone HICP (September) Faster disinflation brings earlier rate cuts into view The larger-than-expected fall in inflation in November means it is becoming increasingly …
Disinflation process entering a slower phase The small fall in Polish inflation to 6.5% y/y in November is likely to mark the start of a slower phase for the disinflation process over the coming months. Against this backdrop, we think the central bank …
The key indicators that have usually convinced the Bank of England to cut interest rates suggest the first cut could come in Q1 2024. That said, rates have risen to a lower peak than most models suggest, which implies they need to stay higher for longer …
The Bank of Korea (BoK) today left its policy rate unchanged (at 3.5%) for a seventh consecutive meeting, and hinted that interest rates would remain elevated as it continues to clamp down on inflation. While we think interest rates will be left on hold …
GDP growth slowing, more to come The sharp slowdown in Turkish GDP growth to 0.3% q/q in Q3, together with more timely figures for Q4, suggest that the economy is rebalancing in response to the policy tightening this year. With the central bank set to …
This page was first published on Thursday 30 th November, covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Friday 1 st December , and the Caixin services and composite PMI on Tuesday 5 th December. Reality may not be as …
On hold again, rate cuts in Q2 next year The Bank of Korea (BoK) today left interest rates unchanged (at 3.5%) for a seventh consecutive meeting. The decision came as no surprise and was correctly predicted by all 36 economists polled by Reuters, …
This page has been updated with additional analysis since first publication. Slowdown in private capex has further to run Private investment growth softened in Q3 and firms’ forecasts for 2023/24 suggest that this slowdown has further to run. The 0.6% …
This page has been updated with additional analysis since first publication. Weakness in consumption raises risk of recession While industrial production kept rising in October, firms’ output forecasts for the coming months are weak and the slump in …
29th November 2023
Consensus more pessimistic in 2024, but view further out improves The latest IPF Consensus Survey shows that forecasters have downwardly revised their expectations for 2024, as a downgrade in capital value growth outweighed some improvement in rents. That …
While we think both yields will fall next year, we expect a smaller drop in the yield of 10-year Bunds than in that of 10-year Treasuries. The 10-year Bund yield fell ~7bp so far today, after inflation data from Germany and Spain released today suggested …
While global goods trade rose in September, timelier indicators suggest that it has softened so far in Q4. And with props to Chinese exports likely to prove temporary, and advanced economies set to slow, we think that the general weakness of world trade …
Economic growth and inflation both weaker than Bank expected Bank likely to tone down, or even drop, its tightening bias Policy rate to be cut by much more than markets expect in 2024 The second consecutive month of muted core inflation pressures in …
The usually strong relationship between NAHB homebuilder confidence and housing starts has broken down recently. That can be explained by the composition of the NAHB’s builder members, which are largely smaller private homebuilders. Unlike their larger …
With the post-pandemic global monetary tightening cycle now drawing to a close, this Update takes stock of where interest rate expectations in the G10 economies stand and what that implies for the currency outlook over the coming quarter as more and more …
Economy showing further signs of overheating Russia’s economy looks to have started Q4 on fairly solid footing and we think GDP growth of 3.0-3.3% this year is now highly likely. Support from loose fiscal policy and a strong labour market should keep GDP …
With COP-season upon us once again, this Update offers a brief guide to this year’s spectacle. In short, with the incentives for countries to act in their self-interests as strong as ever, the prospect of an effective global agreement to tackle the …
Next year is one of the busiest ever in the EM electoral calendar, with votes taking place in countries accounting for over a third of EM GDP. The upcoming votes will have important implications for geopolitics and, potentially, global supply chains …
Even though we expect the Fed to go into cutting mode within the next six months and the 10-year Treasury yield to fall below 4% in 2024, we don’t expect this to provide any respite for real estate. Indeed, given we think the 10-year yield will range …
The falls in the Egyptian pound over the past year have increased the size of commercial banks’ net FX assets, but what has flown under the radar is banks’ growing exposure to the government’s FX debt. So long as the authorities get the IMF deal back on …
This page has been updated with additional analysis since first publication. CEE recovery continuing in Q4 The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally rose in November, and suggest that activity …
This page has been updated with additional analysis since first publication. Euro-zone sentiment remains weak Despite the rise in the EC Economic Sentiment Indicator (ESI) in November, it remained consistent with the economy at best stagnating in Q4. (See …
Strong October lending, but anaemic investment volumes While net lending to commercial property increased for the eighth consecutive month in October, this hasn’t translated into higher investment volumes – which fell back again in October. But further …
Trough in mortgage approvals behind us With mortgage rates easing, the rise in mortgage approvals in October confirms that the trough in mortgage approvals is behind us. But with mortgage rates unlikely to fall much below 5% until the second half of 2024, …
This page has been updated with additional analysis since first publication. Higher interest rates will continue to percolate through the economy October’s money and credit data suggest that higher interest rates are continuing to percolate through the …
The Bank of Thailand (BoT) today left interest rates unchanged (at 2.50%) and hinted that rates are likely to be left on hold for the foreseeable future. With inflation below target and the recovery likely to disappoint, we expect interest rates to remain …
Bullock has continued to sound hawkish, leaving the door open for another rate hike Trimmed mean inflation still stubbornly high, but set to slow further Bank’s next move will be a rate cut, perhaps as early as Q2 next year We expect the Reserve Bank …
In much of the world, interest rates are likely to settle at higher levels than was the case prior to the pandemic. But China is a key exception, with its shrinking population, slowing productivity gains, low inflation rate and increasingly-heavy debt …
This page has been updated with additional analysis since first publication. RBNZ will cut rates in the second half of next year While the RBNZ signaled that it could hike rates further, we still think that the tightening cycle is now over and that the …
This page has been updated with additional analysis since first publication. Trimmed mean inflation set to fall in earnest before long With trimmed mean inflation only moderating slowly, the RBA may well decide to hike interest rates further next year, …
Economic growth across Sub-Saharan Africa is likely to pick up in 2024, but a challenging external environment means that balance of payments positions will remain under strain and fiscal and monetary policy will need to stay tight. Our GDP growth …
28th November 2023
Given how far below “fair value” the Swedish krona appears to us, we suspect that its decade-long fall may be coming to an end. The Swedish krona has been the best performing G10 currency so far this month, having risen by nearly 6% against the US dollar. …
The rebound in the activity data in November has convinced investors that the first interest rate cut will happen later, in August next year instead of June. Our view that core inflation will ease only slowly explains why we think interest rates won’t be …
After a sharp slowdown this year, GDP growth across the Middle East and North Africa will improve in 2024 as OPEC+ starts to reverse recent oil output cuts, while fiscal policy in the Gulf remains supportive. Outside of the Gulf, balance of payments …
House prices continue to defy gravity Another large monthly gain in house prices in September suggests that the extremely limited supply of existing homes for sale continued to outstrip the drag on demand from high mortgage rates. This was a stronger …
We expect 10-year Treasuries to outperform 2-year Treasuries between now and the end of 2024, even though we forecast the 2-year Treasury yield to fall by more than the 10-year Treasury yield in that period. The Treasury yield curve went through a period …
