GDP growth will continue to disappoint GDP growth was softer than most expected in Q3 and with that weakness set to continue, we think that the RBA is done tightening policy. The 0.2% q/q rise in output fell short of the analyst consensus of 0.4% as well …
6th December 2023
We held two online Drop-In sessions today to discuss the outlook for 2024 and the risks to our forecasts. (See a recording here .) This Update summarises the answers to several of the questions that we received. Are there recessions coming in advanced …
5th December 2023
Although the relative performance of the three “big-tech” sectors of the S&P 500 has underwhelmed recently, we suspect that they will be at, or near, the front of the pack again in 2024. While the three big-tech “growth-heavy” sectors that contain the …
November JOLTS data suggest that labour market slack is growing, even as payroll growth remains relatively resilient. With signs pointing to a sharper fall in wage growth ahead, the Fed can be reassured ahead of its meeting next week that that …
Hotel demand has suffered recently from the impact of high inflation and interest rates weighing on discretionary spending. But thanks to the soaring cost of foreign holidays and a revival in international tourism, we think that hotel rental growth will …
First-time buyer (FTB) loan originations have been weak for over a year now. That’s mainly down to higher mortgage rates which have made buying too expensive for many younger adults. And as we think mortgage rates are unlikely to drop much below 6.0% …
Muted ISM services consistent with GDP stagnation; job openings drop back The modest rebound in the ISM services index to 52.7 in November, from 51.8, left our weighted composite index at a level consistent with an outright stagnation in GDP. Admittedly, …
Inflows into EM bond and equity markets have picked up over the past month, particularly in Turkey where optimism around the policy U-turn seems to be building. Capital flows into EMs may be bumpy in the very near term as global growth disappoints, but …
Overview – India’s economy has grown at a healthy clip over recent quarters and, with the help of government spending, we think it will continue to hold up well ahead of next year’s general election. Given also that food inflation has picked up again, the …
Overview – With higher interest rates taking longer to percolate through the economy, we now think the recession will be shallower and GDP growth will stay weak throughout all of 2024. It’s a softer landing for the economy, but the runway is longer. And …
This page has been updated with additional analysis since first publication . Entering a period of softer growth Brazil’s economy fared better than expected in Q3, expanding by 0.1% q/q, but the bigger picture is that the strong growth seen in the first …
This report has been updated with additional analysis, including the release of the UAE's PMI on 6th December. Gulf non-oil sectors cushioning slowdown; Egypt’s economy sputtering along The batch of PMIs for November from the Middle East and North Africa …
Economy contracts, but modest recovery likely in 2024 South Africa’s economy contracted by 0.2% q/q in Q3 and more timely indicators point to a weak end to 2023, not helped by recent disruptions to the port and freight network. But there are reasons to …
PMIs show recession and fading price pressures Final PMIs published today were revised up from the flash estimates but still suggest that the economy is probably in recession and that price pressures are fading. The final Composite PMI for the euro-zone …
Given the high bar for further rate hikes, we’re more confident than ever that the Reserve Bank of Australia is done tightening policy. That said, there is a good chance that the cash rate will remain at its cyclical peak for longer than we currently …
RBA is done hiking rates Although the RBA won’t tighten policy any further, there is a good chance that the Bank will hold the cash rate at its current peak for longer than we anticipate. The RBA’s decision to leave rates unchanged at its meeting today …
This page has been updated with additional analysis since first publication. Inflation won’t reach BoJ’s target until end-2024 While inflation excluding fresh food in Tokyo wasn’t far above the Bank of Japan’s 2% target in November, we think it will take …
4th December 2023
All-property values are down by 12.5% since mid-2022, but we expect an eventual decline of above 20%. Much of the correction at the all-property level is driven by our forecast for cap rates to go above 5% for all-property. For offices, additional drivers …
Rising OPEC+ output in Q2 2024 should leave global crude supply less constrained than we had previously expected. This, together with only modest growth in global oil demand, should push the crude market into a small surplus in Q4. Accordingly, we have …
Although we expect US equity office REITs to benefit further from falling long-dated Treasury yields, we continue to think that their long-run prospects are blighted by a structural reduction in demand. Real estate was the best-performing sector of the …
We expect the Treasury yield curve to “disinvert” in 2024, as we think the Fed will cut rates by more than investors expect and term premia will remain at least as high as they are now. The spread between the yields of 10-year and 2-year Treasuries has …
Although the spread between the 10-year German and Swiss government bond yields has widened significantly over the past couple of years, we think it will stay close to this level for a long while yet. The soft Swiss CPI data released today has added to …
Brazil’s first sovereign ESG bond arrived last month amid much fanfare, but the reality is that any “ESG premium” looked fairly limited to us. And we think ESG bond premia, in general, will likely remain low. Brazil’s government issued its 7-year US …
Our view about relative economic and interest rate prospects in Sweden and the euro-zone suggests that the Swedish krona’s recent rebound may prove durable. In fact, given how far below “fair value” it appears to us, we think that the krona will rise …
With the budget deficit rebounding over the last year and Congress characterised by partisan dysfunction, the odds of a full-blown fiscal crisis developing over the next decade are rising. The US faced a similarly bleak fiscal outlook in the early 1990s …
The latest batch of state election results suggests that support for Prime Minister Modi’s BJP remains firmly intact and that it is clearly in the driving seat to secure another victory in next year’s general election. That reduces the risk of big fiscal …
While there have been growing concerns about public finances in some euro-zone countries recently, prospects for Greece’s debt are quite bright. Steady economic growth, large primary surpluses and low interest expenditure should keep the debt ratio on a …
The COP28 jamboree in Dubai will produce a long list of climate promises from governments and corporate leaders, but these will be of little practical help to market participants attempting to track progress on the green transition in a systematic way. …
This publication has been updated with additonal analysis and charts. Falling inflation means rate cuts are near The unexpected fall in Swiss inflation to 1.4% in November ensures that the SNB will not be at all tempted to raise interest rates in …
This publication has been updated due to an error in the previous version. Further evidence of easing price pressures The small rise in Turkish inflation to 62.0% y/y in November adds to evidence that inflation pressures in the economy continue to cool. …
Overview – Following a strong 2023, GDP growth is set to slow towards potential next year and the labour market will tread water for now. However, with the virtuous cycle between consumer prices and inflation set to gain momentum, we expect the Bank …
Group Chief Economist Neil Shearing warns the potential threat to fiscal positions from higher rates is “perhaps the most important question hanging over the outlook for the next couple of years”. In this episode, he speaks to Head of Research Vicky …
3rd December 2023
The greenback’s grind lower has continued this week amid falling US Treasury yields and strong appetite for risk. While comments from numerous Fed speakers (including Chair Powell today) continued to point to an extended pause, PCE data and November’s …
1st December 2023
The voluntary production cuts announced by OPEC+ this week will support oil prices in the first quarter of next year, but there is clearly dissent among the ranks. We think OPEC+’s next move will be to increase production. After much wrangling, some …
Despite strong growth, core inflation normalising Q3 growth up, Q4 down This week’s modest upward revision to third-quarter GDP growth, which is now estimated to have been as strong as 5.2% annualised, rather than 4.9%, was certainly eye-catching. It …
The revisions to the national accounts leave the post-pandemic recovery looking stronger than we thought. But that is partly due to intense inventory building, which leaves the economy vulnerable to a period of destocking now that demand is weakening. …
Despite how far it has come this year, we think the S&P 500 can make further big gains over time. The S&P 500 has made little ground this week, on net, despite the further big fall in Treasury yields. But it has come a long way lately, thanks both to a …
