The Bank of Canada was already first off the mark compared to other G7 central banks and the second 25bp interest rate cut this week, to 4.50%, puts it further ahead in its loosening cycle. Governor Tiff Macklem said in his opening statement that “we are …
26th July 2024
Despite the possibility that the unwinding of the yen “carry trade” has amplified the global stock market sell-off lately, we think equity prices could rebound even if the yen continued to strengthen. The simultaneity of the yen’s recent rally and the …
At face value, the US dollar remains in something of a lull: the DXY Index is on track to end the week roughly where it ended the previous two. But that apparent stability belies the significant moves in both currency and broader asset markets this week. …
GDP growth not quite as rosy as it seemed The acceleration in GDP growth to 2.8% annualised in the second quarter, from 1.4%, was stronger than the consensus estimate of 2.0% but not a big surprise given the Atlanta Fed GDPNow was pointing to a 2.6% gain …
While many of Vice President Kamala Harris’ climate policies are likely to be similar to Biden’s, her track record suggests she could take a firmer stance on fossil fuel production. However, regardless of who wins the election, we think US crude …
Growing drumbeat of support measures Policymakers’ concerns about the near-term outlook have become much more visible over the past couple of weeks. First, they took the unusual step of discussing the current economic situation in the Third Plenum …
Ukraine reaches a deal Ukraine’s government agreed a preliminary deal on Monday with a group of private creditors to restructure $20bn of its external debt. As part of the deal, Ukraine will receive a 37% haircut on its bonds, and the average maturity …
AGOA: to extend or to not extend? The importance of the African Growth and Opportunities Act (AGOA) has waned over the past decade, which has focussed attention on efforts to improve it as it comes up for renewal in 2025. Even if it is extended (and …
This week’s news that higher shipping costs pushed up the manufacturing input prices balance of the PMI survey to an 18-month high in July (see here ) has reignited concerns that shipping costs will drive a rebound in core goods CPI inflation. (See Chart …
Venezuela at a turning point? Venezuelans head to the polls on Sunday in what could be a pivotal election – the latest opinion polls put opposition candidate Edmundo González well ahead of incumbent President Nicolás Maduro, meaning there’s the biggest …
Surveys suggest recovery is petering out Data released this week suggest that the euro-zone recovery is fizzling out and leave us comfortable with our below consensus forecasts. Data released on Wednesday showed that the Composite PMI fell in July for the …
Core PCE inflation data strengthen case for September rate cut Core PCE prices increased by 0.18% m/m in June, largely as expected and, although May's increase was revised up slightly to 0.13%, from 0.08%, that still means inflation has been running at a …
CBR delivers bumper hike, leaves door open for further tightening Russia’s central bank (CBR) stepped up to the plate with a 200bp hike to its key policy rate today, to 18.00%, in response to the overheating economy and a renewed surge in inflation. While …
Korea’s unbalanced economy Figures published earlier this week showed that GDP in Korea contracted in the second quarter of the year. While the outturn was below analyst expectations, it was exactly in line with our own estimate. The figures also …
Budget shows focus on employment for Modi 3.0 The government presented the FY24/25 Union Budget on Tuesday, in which it managed to further lower the deficit target while largely fulfilling the spending demands of the BJP’s new coalition partners. We …
We think the capital market reforms announced as part of China’s Third Plenum won’t be enough to reinvigorate China’s equities, which we still think will provide disappointing long-run returns. It’s been a tough few days for China’s equities, which had …
Weak Tokyo CPI may prompt BoJ inaction While we expect the Bank of Japan to lift its policy rate to 0.3% at next week’s meeting (see our BoJ Watch ), only one-third of analysts polled by Refinitiv expect a rate hike at that meeting. The financial markets …
Strong public investment growth alongside overall fiscal prudence have contributed to the rallies in India’s bond and stock markets over the past couple of years. However, we don’t see much in the latest budget to revise our view that gains in the coming …
Case for RBNZ to ease strengthens According to a new survey released by Retail NZ this week, things are going from bad to worse for the domestic retail industry. Indeed, more than two-thirds of retailers reported that they had failed to meet their sales …
The Monetary Authority of Singapore (MAS) kept policy unchanged today, but we think today’s marginally dovish statement raises the likelihood of monetary easing in October. The MAS conducts monetary policy by targeting the nominal effective exchange rate …
This website has been updated with additional analysis since first publication. Underlying inflation may moderate faster than we expect The sharp slowdown in inflation excluding fresh food and energy in Tokyo this month reduces the likelihood that the …
We think that, in the absence of a recession, “big tech” stocks will regain the lead before long, regardless of the pace of falling inflation. US stock markets have taken a glass half-full view of today’s key US data release , which revealed that both US …
25th July 2024
Almost ready to cut But economic resilience and sticky inflation will probably mean MPC waits until September We think rates will be cut to 3.00% next year, below current market pricing of 4.00% While it will be a very close call, the economy’s recent …
We don’t think the recent rotation in US equities sets the stage for something much bigger. In our opinion, another sustained and substantial rotation won’t begin until shortly before the bubble in the stock market bursts. And our baseline assumption is …
We think that a second term for President Trump would probably worsen the outlook for sustainable energy equities at the margin, and also add to the pessimism around stocks in the beleaguered electric vehicle (EV) sector. We expect that both supply and …
The start of the Paris Olympic Games today suggests that there will be renewed interest in gold, silver and bronze. We suspect that athletes will be disappointed by the fact that the Olympic medals are not worth their weight in gold. What’s more, with …
Continuing blackouts in Egypt show need for a fix Egypt’s electricity blackouts have persisted this week and, while there is light at the end of the tunnel, the government needs to boost energy investments to avoid a repeat of power cuts in the coming …
While headline balances saw little movement, digging deeper the Q2 RICS survey shows a reversal of last quarter’s more positive outlook. Indeed, respondents seem more downbeat, with almost half now believing we are still in the downturn phase of the …
We expect a softer 170,000 rise in non-farm payrolls in July, alongside a more substantial easing in wage growth. The 206,000 rise in non-farm payrolls in June beat expectations, but the accompanying details were disappointing. April and May’s figures …
Our team have recorded a special podcast episode all about the big themes in commercial real estate. The 12-minute episode showcases our enhanced coverage which provides a more global, comparative view of how the key markets we forecast are performing, …
The Q2 RICS commercial survey added to the growing body of evidence that capital values at the all-property level have now bottomed out. But, in line with our forecasts, it also implied that the recovery will be modest by past standards with values only …
Stronger-than-expected growth unlikely to prevent September rate cut The sharper-than-expected pick-up in second-quarter GDP growth to 2.8% annualised should make the Fed a bit more comfortable about keeping policy unchanged next week, but the recent …
Inflation rises, no more cuts this year The stronger-than-expected rise in Brazil’s headline inflation rate, 4.45% y/y in the first half of July, was mainly driven by a pick-up in underlying core services inflation. This, coming alongside fiscal concerns …
Net immigration to euro-zone countries will probably be higher than the UN assumes in its latest population forecasts. But we still think the working age population will decline over the coming decade and that is a key reason to expect GDP growth to be …
Overview – Inflation still looks set to be in line with central banks’ targets next year (see Chart 1), but upside risks have increased outside the US. With the sharp falls in energy and food inflation behind us, disinflation has slowed amid …
This page has been updated with additional analysis since first publication. German recovery petering out The large fall in the German Ifo BCI in July, which follows a similar drop in the Composite PMI published yesterday, adds to the impression that the …
Surprise cut points to mounting policymaker concern The PBOC’s decision to cut the 1-year interest rate on its medium-term lending facility (MLF) earlier today is unusual for two reasons. First, the 20bp reduction is double the size of the PBOC’s usual …
Following a wobbly period around the turn of the year, the economy is on the mend and should gather further momentum as real wage growth turns positive in the second half of the year. With goods inflation still having strong momentum, we now expect the …
The latest GDP figures suggest that the central bank’s concerns about the weakness of domestic demand will only rise. With concerns about the health of the economy set to overtake those about inflation, we continue to expect the Bank of Korea to start …
Regional growth appears to have slowed in Q2 and we think it will be sluggish in the next few quarters. At a country level, we expect the Andean economies to outperform Brazil and Mexico in the next couple of years. With inflation set to rise further in …
24th July 2024
While the pound has outperformed all major G10 currencies so far this year, we still expect it to depreciate against the greenback later in the year as the Bank of England (BoE) eases monetary policy more than money markets currently discount. While it …
Alongside its decision to cut interest rates today, the Bank of Canada struck a more dovish tone than in June, supporting our forecast that another cut is coming at the next meeting in September. The Bank’s second 25 bp cut, taking the policy rate to …
Business surveys released this morning add to evidence that the Olympics will lift activity in France slightly in Q3. However, activity is likely to drop back again in Q4 and we still think annual GDP growth will only be around 1%. Meanwhile, we don’t …
The latest flash PMIs suggest that while GDP growth probably slowed in Europe at the start of Q3, it continued to recover in Japan. Although the rise in shipping costs has caused manufacturers’ input prices to rise, central banks may take comfort from the …
Today’s sell-off in the US stock market in the wake of a poor reception to yesterday’s results from the first two members of the ‘Magnificent 7’ to report during this earnings season is likely to have reassured those arguing we are in the early stages of …
Supermarkets struggled in 2023, as falling food sales volumes hit profits and rental growth. But the future looks brighter. As food price inflation has fallen supermarket profits have recovered and the past surge in food sales values points to stronger …
New home sales remain weak New home sales were essentially unchanged in June after their 15% slump the month before, not helped by mortgage rates which remained stubbornly high at around 7%. So far in July, borrowing costs have declined and currently sit …
Gradual loosening cycle continues and another cut in September looks likely Following its interest rate cut today, the Bank of Canada reiterated that further cuts are likely if inflation continues to ease in line with its expectations. Our forecast for …
Disinflationary trend broadening out Fed officials growing more concerned about labour market downside risks Interest rate cut likely in September With the disinflationary trend broadening out and the unemployment rate rising, recent comments from Fed …
