Monday briefing - 17th March 2025

US

Retail Sales (Feb): We expect a decline of 0.4%, while consensus forecasts a 0.6% increase. If consensus is wrong, markets could react negatively, reviving growth concerns.
Fed Meeting (Wed): We expect rates to remain on hold. The Summary of Economic Projections (SEP) could signal two rate cuts instead of the three currently priced in by markets.

German Debt Brake Reform: With Greens on boards, parliament is set to approve key changes this week, allowing exemptions for defense spending and an infrastructure fund. This would remove uncertainty and clear the path for the big fiscal stimulus that we expect.
Central Bank Decisions (Thurs):
- We think the Swiss National Bank (SNB) is likely to cut rates by 25bps.
- Riksbank (Sweden) is expected to keep rates unchanged.
Inflation Data: Revisions to Germany’s inflation figures could lead to a downward revision in the euro-zone’s February headline CPI.

Bank of England (Thurs): We think a rate cut is unlikely (markets assign just a 10% chance of a 25 basis point cut).
Labour Market Data (Thurs): We think it is likely to show falling vacancies and slower job growth, but still high wage growth.

Bank of Japan (Wed): We expect rates to remain on hold, with the next hike likely in May. Inflation data due on Friday.
New Zealand GDP (Thurs): Key data point - stronger-than-expected growth could challenge our strongly non-consensus expectations of RBNZ rate cuts to 2.25% by year-end.
Canada CPI (Tues): Expected to rise from 1.9% to 2.3%, as a temporary GST holiday ends.

Activity Data (Jan-Feb):
- Headline readings appeared strong, but a deeper look suggests a more downbeat picture:
  - Retail sales improved, but the services index weakened to a four-month low.
  - Unemployment rose, hours worked declined, and industrial production growth declined.
  - Fixed asset investment slowed in real terms and property sales declined, reversing recent improvements.
Government Policy: A press conference on boosting consumption doesn't mark a major policy shift as the newly announced measures largely reiterated pledges made at the recent National People's Congress.
PBoC (Thurs): LPR expected to remain on hold.

Chile GDP (Q4): Expected to confirm a slowdown in economic growth.
Rate Decisions:
- Indonesia, Morocco: Expecting rate cuts.
- South Africa: A close call, but we expect a cut, while consensus expects a hold.
- Russia, Taiwan: Rates likely unchanged.
- Brazil: A 100bps rate hike is expected.
Korea: Constitutional court ruling expected on the President’s impeachment.
Geopolitics: US airstrikes in Yemen continue as efforts to protect shipping lanes intensify.
Trump and Putin expected to talk on Tuesday to discuss a Ukraine peace plan, including territorial division.

Commodity prices are generally up with the aggregate index rising around 0.5% after the China data releases.
Oil: Brent crude +<1%, despite U.S. strikes on Houthi-controlled areas in Yemen over the weekend.
Climate Policy: Canada’s new PM Mark Carney scrapped consumer carbon taxes immediately upon taking office, underscoring political challenges in enforcing carbon pricing. Europe faces similar struggles.
Critical Minerals: Trump expected to sign an executive order to boost US domestic mineral production.
Gold Prices: A hawkish Fed could marginally slow the upward trajectory in gold prices.

European Commercial Property Outlook (publishing this week):
- Short-term downgrade expected due to higher Bund yield forecasts.
Remote Work: Research underway on whether a weaker labour market could push employees back to offices.

S&P 500 rebounded +2% on Friday while US 'risky' assets generally improved, with credit spreads tightening and bond yields rising slightly.
The mood soured at the weekend following a warning from Treasury Secretary Scott Bessent of "no guarantees" of a US recession.
The US is still struggling versus global peers - was the worst-performing market in local and common currency terms last week in the MSCI indices.