Although pull-backs in credit spreads and in the yields of Treasuries have contributed to a strong performance from US corporate bonds in November, they have underperformed US equities regardless so far this month. We suspect that will generally stay the …
27th November 2023
Our recent r* work reinforces the view that property yields will stay relatively high longer term. That implies global returns in low single digits over the next decade or so, well below pre-pandemic averages. Our recent Global Economics Focus summarises …
Temporary pause in strength of new home sales New home sales reversed most of their rise in the previous month as mortgage rates spiked to 8%. However, we don’t think this marks an end to the strength in new homes sales. That’s because the supply of …
Central bank in “wait and see” mode Israel’s central bank left interest rates on hold at 4.75% again today and the communications continued to emphasise risks to the inflation outlook. But policymakers provided the first hint that an easing cycle could be …
Guyana’s oil production looks set to grow quickly over the next few years even if the total volume can only play a small role in raising global supply. That said, substantial reserves and low break-even costs should mean that it can continue to produce …
Following a temporary reversal in Q3, EM inflation has started to fall again in the last few months. While this is set to continue, we think it marks the start of a second phase in the EM disinflation process – one that will be characterised by a much …
A close look at the data suggests that the boom in investment in Mexico this year is due to a surge in transport infrastructure construction on the Yucatán Peninsula rather than a boom in nearshoring-related investment. With these projects nearing …
Soft growth, falling inflation, lower interest rates, bond market rallies, and an election bonanza – here are the key themes that will shape 2024. Growth will undershoot the consensus. Economic growth is likely to be weaker than the consensus expects …
The recent period of high inflation in Japan has kick-started a virtuous cycle between wages and prices. If inflation expectations remain elevated and structural forces push up the neutral rate of interest over the coming years, monetary policy will …
Group Chief Economist Neil Shearing tackles what we think will be the key themes for the global economy in 2024, including why the consensus for growth is too optimistic, how quickly the Fed could cut rates and how to think about the macro and market …
24th November 2023
We think that yield curves across Europe and the US will “disinvert” next year, as central banks shift towards easing monetary policy. Although Gilt yields have risen across the curve since the UK budget announcement , the shape of the sovereign bond …
Zambia and Angola hikes, Nigeria resists High inflation is pushing some African economies to return to monetary tightening but Nigeria has resisted so far. We doubt this will last. Inflation rose again in Nigeria, Angola and Zambia last month as currency …
The S&P Global PMIs have provided misleading signals about the strength of activity in the US and Europe this year. But, for what it’s worth, the flash surveys for November suggest that DMs are ending 2023 on a weak note, with activity stagnating or …
Currencies were no exception to the calm across markets, and the US dollar seems set the end the week a bit lower against most currencies. While “more of the same” downbeat data out of the euro-zone weighed on the euro, most other G10 currencies …
Moves in commodity prices have been fairly muted on the week, but this masks a dramatic mid-week plunge and recovery in oil prices. The big news was that OPEC+ announced a four-day delay to its policy meeting, apparently because of disagreements among …
Overview – Property yields rose further in Q3, but with risk-free rates now falling back, we think they will peak by the end of 2023. That will help stabilize capital values, but, given historically narrow yield spreads, we doubt we will see much yield …
It would be a stretch to say the government showed fiscal restraint in the Fall Economic Statement , but the announcement of only a few billion dollars in extra spending measures means that Finance Minister Chrystia Freeland did not pour much more fuel on …
Markets welcome Milei’s win From a political angle, it’s hard to see Javier Milei’s victory in Argentina’s presidential election last Sunday as anything other than a rejection of the political establishment, in a similar vein to the surge in support seen …
Retail sales perk up after weak Q3 The renewed rise in retail sales volumes in September was not enough to prevent a large contraction in sales volumes over the third quarter. The balance of risks is probably now skewed to the downside surrounding our …
CBRT bringing tightening cycle to a close Turkey’s central bank (CBRT) delivered another chunky 500bp rate hike to 40% this week but it also signalled that its tightening cycle was very close to an end. The local elections in March may be playing a part …
We continue to think the euro-zone economy will fall into recession in the second half of this year and roughly flatline in the first half of next year. This is mostly due to the impact of squeezed household incomes and the tightening of monetary policy, …
It’s true that the Chancellor’s pre-election splurge unveiled in this week’s Autumn Statement was the largest discretionary fiscal loosening (outside of the Covid period) since 2010. And at £20.3bn (0.6% of GDP) in 2028/29, it was the biggest tax-cutting …
Growth pick up is likely to be short-lived Nigeria’s economic growth was unchanged at 2.5% y/y in Q3 as a smaller drag from the oil sector offset a slowdown in the rest of the economy. Growth is likely to slow over the coming quarters, as the naira’s …
Revising up our GDP forecasts India’s economy recorded solid growth in the first half of this year and continues to do so in the second half. Household consumption appears to have been robust in recent months. The RBI’s latest consumer confidence survey …
Strong Q3 growth Most countries in Emerging Asia have now published GDP figures for the third quarter. Growth slowed in China, was unchanged in Korea, but rebounded strongly everywhere else. (See Chart 1.) To view our various responses click here . …
More credit support for developers in the works Policymakers have been trying, and largely failing, to stabilise the property sector for some time. There was a major step-up in support in September, when downpayment requirements and purchase controls …
This page has been updated with additional analysis since first publication. German economy still very weak The rise in the Ifo Business Climate Index (BCI) in November mirrors the increase in the Composite PMI released yesterday but leaves the index deep …
Disapproval rating highest since Suga resignation The Cabinet Office’s disapproval rating has surpassed 50% for the first time since Fumio Kishida became Prime Minister two years ago. Surely one reason is the 5% plunge in real household disposable …
Surveys point to renewed slowdown in inflation Following a rather hawkish speech by Reserve Bank of Australia Michele Bullock, the financial markets now price in a 60% chance of another 25bp rate hike at the Bank’s February’s meeting, up from 40% before …
This page has been updated with additional analysis since first publication Decreases all across the board suggests another weak quarter The further slowdown in the composite PMI in November suggests that GDP growth remained sluggish this quarter. The …
This page has been updated with additional analysis since first publication. Inflation will only reach 2% by the end of next year The jump in headline inflation in October isn’t as bad as it looks as underlying inflation kept falling. Nonetheless, it …
23rd November 2023
We think the yields of long-dated local-currency government bonds in Asia will generally fall further by the end of next year, and that most regional currencies will continue to make ground against the US dollar. But we suspect some of the intra-regional …
Tensions within OPEC+ rise as threat of cut looms OPEC+ was meant to be in the spotlight this weekend but, in a surprise move, the meeting has been delayed until Thursday. The slide in oil prices and the Israel-Hamas conflict suggest that output quotas …
While the Freedom Party’s victory in the Dutch parliamentary election was a big surprise, there is in our view only a very small probability that it will have a substantial impact on financial markets. Instead, we suspect that the economic outlook will …
Our latest monthly Drop-In on the big macro and market stories in Asia focused on new analysis making the case for Japanese inflation and the Bank of Japan policy rate both to hit 2% by 2030. We also discussed the outlook for China in 2024 and previewed …
India’s economy continues to show resilience this year and annual GDP growth is likely to come in stronger than the 6.3% we had been forecasting. While inflation is well within the RBI’s tolerance range, the renewed surge in food prices in November is a …
A year of the most aggressive monetary tightening in a generation is expected to end with the major DM banks leaving rates on hold at their December meetings. Following our briefings on the world in 2024 , our senior economists will be held a special …
Our Emerging Europe Chart Pack has been updated with the latest data and our analysis of recent developments. Russia and Turkey had a strong first half to the year, but large policy tightening is likely to result in slower growth in 2024. Inflation will …
The South African Reserve Bank opted against responding to last month’s larger-than-expected rise in inflation with an interest rate hike, leaving the repo rate unchanged at 8.25% today. But officials continued to strike a hawkish tone and it looks like …
Europe Commercial Property Valuation Monitor (Q4 2023) …
This page has been updated with additional analysis since first publication . High services inflation will stop Banxico from cutting for now Mexico’s mid-month inflation reading of 4.3% y/y in November provides signs that the disinflation process is …
Despite the Riksbank Executive Board insisting that it might raise interest rates again in the coming months, we would be very surprised if it does so. Instead, we think the next move will be a rate cut next May, and expect the Bank to then cut rates …
CBRT delivers another large hike, end of tightening in sight Turkey’s central bank (CBRT) delivered another 500bp interest rate hike, to 40.0%, at today’s meeting and suggested that it is very close to the end of the tightening cycle. A final 250bp hike …
This page has been updated with additional analysis since first publication. Something for everyone, but bigger point is labour supply is too low The net migration figures for the year to June 2023 give some ammunition to both sides of the political …
This page has been updated with additional analysis since first publication. Sticky price pressures will add to the Bank of England’s unease The rise in the flash composite activity PMI, from 48.7 in October to 50.1 in November, is still consistent with a …
This page has been updated with additional analysis since first publication. PMIs consistent with continued recession Despite the rise in the euro-zone Composite PMI in November, it remained consistent with the economy contracting 0.2% in Q4. (See Chart …
Riksbank peaks at 4% The Riksbank’s decision to leave interest rates on hold at 4.0% today was not a major surprise given that financial markets were pricing in only a 10% chance of a hike while economists were evenly split between a hike and a hold. (We …
