We think the recent outperformance of euro-zone equities over US ones has run its course. The eight-day winning streak in the S&P 500 may break today, after the market opened down over 1% on news that the US economy unexpectedly contracted in Q1 , on …
30th April 2025
Contraction in first-quarter GDP not a worry Core inflation yet to capture tariff impacts Fed will remain in “wait-and-see” mode for some time A contraction in GDP and near-flatlining in core PCE prices would usually be more than enough to persuade …
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. Currency vulnerabilities remain near multi-year lows, large deficits leave the public finances in poor shape Higher US …
Demand from Amazon has been a key driver of industrial fortunes over recent years, so the announcement of a new $15bn injection in the US was greeted warmly by market watchers. But, while this should help boost the sector longer term, a weak economic …
What do Trump tariffs mean for green tech? Much ink has been spilled over the macro and market impacts of various US tariff announcements over the past month. (See here .) From a climate perspective, these tariffs will only add to existing trade barriers …
Inflation slows, but worst yet to come The almost unchanged level of core PCE prices in March is welcome news but, given the data precede the implementation of broad-based tariffs, core inflation will inevitably rebound sharply in the coming months. …
This Update answers several key questions on critical minerals and the economic implications. In short, there is no quick fix to securing access to minerals given the extent of China’s advantage across the value chain. And while volatile mineral prices …
GDP dragged down by pre-tariff import surge & DOGE cuts The 0.3% annualised decline in first-quarter GDP was entirely due to a pre-tariff 41.3% annualised surge in imports, with net exports subtracting a massive 4.8% points from GDP. This surge now …
Bad but not awful Although the 0.2% m/m contraction in GDP in February was worse than expected, the preliminary estimate of a partial rebound in March should soothe fears that the economy is rapidly falling into recession. We expect GDP growth to slow …
Euro-zone inflation probably unchanged in April, but will fall further this year National data published so far suggest that euro-zone inflation remained at 2.2% in April, and that core inflation probably rose from 2.4% to 2.6%. (Euro-zone data due on …
Weak economy argues in favour of another 50bp cut The 0.2% q/q expansion in Mexico’s GDP means that the economy dodged a technical recession last quarter. But growth was driven by a rebound in agriculture and the rest of the economy – and the …
Asia Chart Pack (April 2025) …
A robust monsoon this year – as predicted by experts – wouldn’t have as big an impact on India’s economy as it would have had a couple of decades ago. But it could boost employment and energy production. What’s more, it would anchor prices of key crops …
Strong start to the year but tariff-induced slowdown ahead The acceleration in euro-zone GDP growth in Q1, to 0.4% q/q, suggests the economy started the year on a stronger footing than we expected and activity surveys suggested. Nevertheless, we still …
This Rapid Response has been amended from our original response to correct the food CPI figure. Fall in inflation paves the way for May rate cut The larger-than-expected fall in Polish inflation, to 4.2% y/y, in April, is probably enough to tip the …
Strong exports to support growth despite tariff risks Economic growth in Taiwan picked up strongly in the first quarter of the year, helped by very strong exports and robust investment. Although Trump’s tariffs pose a downside threat to the economy, we …
Hungary contracts ahead of tariff impact The Q1 GDP data released out of Hungary and Czechia showed that momentum in both economies slowed at the start of this year, with Hungary suffering a renewed contraction. The risks to our below consensus full-year …
Dovish BoT and rising downside risks prompts forecast change Thailand’s central bank (BoT) today cut interest rates by a further 25bps (to 1.75%) and the poor prospects for the economy mean more easing is likely soon. The decision was correctly …
This page has been updated with additional analysis since first publication. House price growth slows as stamp duty relief ends April’s bigger-than-expected 0.6% m/m fall in Nationwide house prices (consensus forecast 0.0% m/m, Capital Economics -0.1% …
This page has been updated with additional analysis since first publication . Impact of tariffs starting to show up in survey data The drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that …
CPI data don’t support the case for below-neutral rates Although trimmed mean CPI gained a bit of momentum in q/q terms last quarter, it probably won’t keep the RBA from cutting rates by another 25bp at its May meeting. However, given lingering price …
Japanese banks are the one sector benefitting from the BoJ’s tightening cycle as higher interest rates lift their income by more than their expenses. And although they’ve struggled more recently amid the “Liberation Day” fallout, we think their …
Manufacturing sector shrugging off trade tensions Japan’s economy approached Liberation Day with solid momentum and firms’ production forecasts suggest that the manufacturing sector won’t be affected much by higher US tariffs. The 1.1% m/m fall in …
China Chart Pack (Apr. 25) …
29th April 2025
While higher lumber tariffs will not significantly impact GDP growth in the US or Canada, they will drive up costs for US homebuilders. As affordability is already stretched, it is unlikely that homebuilders will be able to pass these costs onto buyers in …
The JOLTS data again showed the labour market stabilising at a healthy level in March. While there were for the first time some signs of the DOGE purge of the federal workforce in the survey, the picture still appears far rosier than that painted by …
This Update answers five key questions on Romania’s rescheduled presidential election, the first round of which takes place on Sunday 4 th May. A victory for far-right frontrunner George Simion would likely raise concerns about the country veering away …
The US stock market and the dollar have fared worse over the last hundred days than they fared during the first hundred days of all other presidential terms since 1980. What’s more, there has been an intervening rout in the Treasury market. It is hard to …
Stockholm was one of the worst performing industrial markets in western Europe last year. And despite our relatively upbeat outlook for the Swedish economy, we think the coming years will herald more of the same as high vacancy and a strong supply …
House price growth should continue to cool February’s 0.4% m/m rise in house prices is still a bit stronger than the timely leading indicators - like rising months’ supply and longer average time on market - would suggest. However, along with a small …
President Trump’s first 100 days in office have brought substantial shifts in US policy. The next 100 will start to reveal whether his presidency is causing a realignment of the global economy. There are two key questions: will most countries be able to …
Pre-tariff import boom points to sizeable Q1 GDP contraction The advance economic indicators revealed a massive surge in consumer goods imports in March, as firms raced to beat the imposition of reciprocal tariffs in early April. As a result, we now …
Our China Activity Proxy calls into question the consensus view, based on the official GDP figures, that China’s economy remained resilient at the start of this year. Despite some improvement in March, the CAP suggests that growth last quarter slipped …
MNB to stay on hold as above-target inflation persists The Hungarian central bank (MNB) left its base rate on hold today, at 6.50%, and despite downside risks to activity from US tariffs, we think its easing cycle will remain on pause throughout 2025. …
President Donald Trump’s first 100 days back in office has been characterised by radical changes to trade policy, immigration and the Federal government, all implemented by an unprecedented use of executive power. In the second 100 days, we expect the …
The UK economy is relatively well insulated from the rise in US tariffs, and property even more so. Indeed, while the overall direct impact is likely to be small, some commercial sectors may even see a benefit, such as student accommodation. That said, …
India’s economy is emerging from its recent soft patch. Headline CPI inflation should remain close to the RBI’s 4% target over the coming months, enabling the central bank to continue easing monetary policy. We’re expecting a further 50bp of cuts to the …
This publication has been updated with additional analysis ESI points to small hit from tariffs in April The ESI for April point to a small hit to the euro-zone from US tariffs in April and suggest that growth remained quite weak. With the drag from …
Sentiment holds up well in the face of Trump’s tariffs The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) provide a tentative sign that the impact of US tariffs on the region has been fairly contained so far. The …
Parts of South East Asia, notably Vietnam, as well as India are well placed to immediately gain market share in response to penal US tariffs on Chinese imports. But uncertainty over the future tariff landscape will deter investment in additional capacity …
Spain’s economy to stay strong this year, but Sweden’s may struggle Spain’s rapid economic growth (+0.6% q/q in Q1) is likely to continue for some time yet, despite trade uncertainty. While consumption and government spending were weaker than expected in …
Although the Liberals have just missed out on a majority, Prime Minister Mark Carney should still be able to implement his fiscal plans with support from the NDP or Bloc Québécois. If anything, the need to grant concessions to those parties means fiscal …
Financial markets have staged a robust recovery over the past couple of weeks, even if they are for the most part not quite back to square one after the post-2 nd April turmoil. Given the ongoing uncertainty around US trade policy and the economic outlook …
28th April 2025
Provided it was limited just to Kashmir, a period of fighting between Pakistani and Indian forces would have a small impact on the overall economy of either country. The closing of the only land trade route is also largely symbolic – bilateral trade was …
US import tariffs have largely focused on China. For some EMs (such as India and South East Asia), this creates near-term opportunities to take US market share from China. But there will be offsetting effects if confidence has been hit. And EM commodity …
The NCREIF Property Index (NPI) recorded a third consecutive quarter of positive total returns in Q1 2025, driven primarily by income. Although capital value growth turned positive, questions remain over whether appraisal-based valuations fully reflect …
The recent reduction in equity market volatility has reversed most of the tightening in our market-based narrow Financial Conditions Indices for advanced economies. Our broad FCIs, which also incorporate information on interest rates and lending criteria …
