Note: From oil to gas to metals, we'll be tackling the stories getting the market’s attention – and the ones that we think investors should be paying attention to as the new year unfolds in a Drop-in on Wednesday 15th January 15:00 GMT/10:00 EST . …
14th January 2025
If Donald Trump were to impose a universal 10% tariff on US imports, we wouldn’t expect widespread reshoring of manufacturing production back to the US. And if it were accompanied by a 60% tariff on Chinese imports, the main beneficiaries would be other …
We doubt that US oil & gas firms’ optimism following Donald Trump’s election victory will translate into stronger growth in output as recent productivity gains falter and oil prices fall later this year. The latest Dallas Fed Energy survey showed that oil …
Broad credit growth rebounds despite weak private demand Broad credit growth rebounded last month, but bank loan growth continued to hit record lows . We expect robust government bond issuance to continue supporting credit growth over the coming quarters. …
We think the recent falls in US equities will unwind before long, with growth and cyclical stocks leading the charge. The sharper ~3% fall in the Russell 2000 index of small-cap (SC) US stocks than the ~2% fall in the S&P 500, its large-cap (LC) …
13th January 2025
UK commercial property finally turned a corner in 2024 after a few painful years. But 2025 has started with a bruising sell-off in gilt markets that has seen yields surging to multi-year highs. Will this imperil the market’s recovery? Where will the …
Raising the federal debt ceiling this year will likely come as part of a budget reconciliation package alongside concessionary spending cuts given the razor-thin Republican majority in the House. As ever, a deal likely won’t be reached until the eleventh …
The Brazilian real plunged in 2024, due to fiscal risks. While we suspect that further piecemeal austerity measures will prevent another leg down in the currency, with investors’ fiscal fears unlikely to be fully addressed and Brazil’s terms of trade set …
While commercial real estate insurance premiums remain elevated, their growth dropped back substantially last year. But as the West and Gulf coasts still face the greatest threat from climate risks, we expect continued rapid premium growth in those …
While the economy lost all momentum at the end of last year, we still expect GDP growth to accelerate from 0.8% in 2024 to an above-consensus 1.3% in 2025. Admittedly, activity could be restrained if the increase in the government’s borrowing costs due to …
This dashboard combines the most insightful charts and key takeaways from our extensive research on demographics, offering a comprehensive overview of the data, trends and their broader implications for the long run economic outlook. Last updated on 13th …
On the face of it, the fact that the world is installing more renewable electricity generating capacity than seemed likely just a few years ago is encouraging for the green transition. That said, one must not lose sight of the fact that non-renewable …
Fall in headline inflation boosts February rate cut odds The further moderation in Indian headline consumer price inflation in December supports our view that the monetary easing cycle will kick off at the RBI’s next policy meeting in February. The …
After the market bottomed last year, where will the opportunities and risks lie in US commercial real estate in 2025? What influence will the US macro (and political) backdrop have on returns? Will distress remain a market theme? Join our US real estate …
2025 has taken little time to get going, with more evidence of the US’ relative economic strength, weakness in Chinese equity markets, and a dramatic sell-off in DM bond markets – not least gilts. And that’s all before Donald Trump is sworn in. In this …
Exports to remain strong until Trump tariffs hit Export growth rebounded last month, with both export values and volumes posting double-digit y/y gains. We expect shipments to remain strong in the coming months, as US importers continue to stockpile …
A grim week for bonds was capped by a stunningly hot US jobs report. Group Chief Economist Neil Shearing and Deputy Chief Markets Economist Jonas Goltermann joined the first episode of The Weekly Briefing from Capital Economics of the year to explain what …
10th January 2025
2025 is off to a hot start, with plenty of volatility across financial markets over the first full week of the year and the US dollar rallying on the back of a blockbuster US non-farm payrolls report today , continuing where it left off in 2024. The …
Good news has (once again) proved to be bad news for markets, with Treasuries and equities selling off in response to the strong US payrolls report. But we don’t expect this twin sell-off to persist over 2025. December’s blockbuster US employment report …
The power vacuum created by Prime Minister Justin Trudeau’s resignation comes at a bad time, with President-elect Donald Trump ratcheting up his threats against Canada, raising the risk that the next government will be parachuted onto the front lines of a …
Still waiting for clarity on the Trump agenda More than two months after Donald Trump and the Republicans completed a narrow clean sweep in last November’s election, and with only 10 days until the inauguration, there is still massive uncertainty about …
The CDU’s economic policy agenda, released today, clearly recognises the scale of Germany’s economic challenges and proposes some sensible policies to address them. But some of the measures are not ambitious enough and many will not be implemented in full …
This week’s leap in gilt yields creates more problems for the Chancellor and is an extra headwind for the economy. But it is not a crisis. Admittedly, it is always worrying when UK bond yields rise by more than yields elsewhere and the pound weakens. …
Trump softening his expectations on the war? Expectations for an imminent end to Russia’s war in Ukraine once Trump takes office as US President on 20 th January took a knock this week, following an FT report and recent comments from officials suggesting …
Even Republicans growing concerned about Trump’s policy plans The drop in the expectations index of the University of Michigan Consumer Sentiment Survey in January and the accompanying jump in inflation expectations suggest that consumers are becoming …
Trump has his eyes on the Canal When Donald Trump won the US election back in November, the last thing we thought we’d be writing about in this Weekly – just 10 days before his inauguration – was the Panama Canal. But the big news in the region this week …
We expect the euro-zone economy to grow at only a sluggish pace this year, with southern economies outperforming the core. Germany’s election will lead to only a modest loosening of its restrictive “debt brake”. France’s budget deficit will remain very …
Strong across the board The larger-than-expected 256,000 gain in non-farm payrolls in December and drop back in the unemployment rate to 4.1% supports the Fed’s decision to slow the pace of rate cuts and has heightened speculation that the loosening cycle …
Oil market rally on shaky foundations The recent rise in oil prices has dominated proceedings so far this year; at the time of writing, Brent crude is currently at $79.8pb – up more than 3.5% on the day and more than 11% higher than its December low. For …
ECB to keep cutting rates gradually With data this week revealing that services inflation remained stuck at 4% in December, ECB policymakers will feel in no hurry to slash interest rates. (See here .) We have taken out the 50bp rate reduction that we had …
PBOC will retreat if tariffs are imposed Shortly after Trump’s election victory, the PBOC began to hold the daily fixing rate steady at 7.19/$, thereby keeping the weak edge of the currency’s trading band at 7.33/$ and suggesting to us that it was …
Mozambique and the return of Mondlane Post-election unrest in Mozambique threatens to re-escalate with Daniel Chapo set to be inaugurated as the country’s next president on Wednesday and opposition leader Venâncio Mondlane returned to the country this …
Copom to press ahead with more hikes despite fall in inflation The fall in Brazil’s headline inflation rate in December, to 4.8% y/y, coupled with the rebound in the real over the past couple of weeks, won’t be enough to stop Copom following through with …
In this Focus , we explain why we expect the S&P 500 to continue to thrive in 2025, after correctly predicting that it would soar in 2024 . We are sticking to our forecast that it will end this year at 7,000. One reason we expect the S&P 500 to rally this …
This page has been updated with additional analysis since first publication. Jump in employment raises chance of Bank pause The huge gain in employment in December supports our view that labour market conditions are strengthening, despite the recent …
Greater rupee volatility hints at shift in FX strategy The Indian rupee was one of the most stable EM currencies against the US dollar in 2024. (See Chart 1.) That is in large part by design – the Reserve Bank of India (RBI) has a policy of intervening …
Signs that political crisis is weighing on growth With inflation under control and signs the political crisis is weighing on the already-weak economy, we expect the Bank of Korea to cut interest rates by a further 25bps at its meeting on Thursday. …
Tight labour market muddies the waters Financial markets are becoming increasingly optimistic that the RBA’s next easing cycle is right around the corner. They are now pricing in a 70% chance that the Bank will hand down a 25bp cut at its meeting in …
Bank will probably wait until March While the Bank of Japan refrained from hiking interest rates at its December meeting, the case for further policy tightening remains intact. For a start, the “Summary of Opinions” of that meeting showed that at least …
With long-dated gilt yields hitting multi-decade highs, we held an online Drop-In session on Wednesday to discuss the outlook for the gilt market and the implications for government policy and the UK macro and housing market outlook. (See a recording here …
9th January 2025
While upside risks to energy prices have garnered plenty of attention in recent months, there are several downside risks that are worth noting. Although we would characterise the downside risks – Saudi Arabia performing a major pivot in oil policy and …
UK Gilts have not only been embroiled in a global government bond sell-off, but they have fared worse than others. However, we think that bonds will recover before long, with yields in the UK falling particularly sharply by the end of this year. The …
Saudi’s bumper debt sale now a regular event Saudi Arabia’s National Debt Management Centre (NDMC) outlined its 2025 Borrowing Plan this week and the government has already got its debt issuance in motion. With budget deficits likely over the coming …
We originally published an Update ahead of the general election on 4 th July on what taxes the next government could raise. In light of the recent rise in gilt yields putting the Chancellor on course to break her fiscal rule, we have refreshed this …
Whilst Donald Trump is threatening to slam the brakes on the green transition in the US, state-level officials have the tools to continue making progress on the climate front. This Update uses our Regional Climate Databank to highlight the extreme …
Sweeping tariffs? Millions deported? Billions in unfunded tax cuts? The massive uncertainties around what of Donald Trump’s campaign rhetoric will become reality should soon begin clearing as inauguration day arrives. As the president-elect again prepares …
US President-elect Donald Trump’s increasingly aggressive rhetoric against Canada suggests we should take his tariff threats seriously. We already assume that Trump includes Canada in a likely 10% universal import tariff, but we remain relatively sanguine …
2024 likely marked the bottom in all-property values in Europe, but we expect further falls in the US in 2025. That said, US performance should improve further ahead, outpacing the euro-zone over the 2025-29 period. By sector, stronger rental growth will …
2025 has started with a bang as bonds have sold off amid growth and inflation fears – and the operating environment may only get more tricky from here. With Donald Trump just days away from returning to the White House, our Macro and Markets teams held …
The troubling start to 2025 is casting doubt over our key non-consensus forecasts for 2025. But we still think other forecasters are underestimating how fast the economy will grow, how far inflation will fall and how many times the Bank of England will …
