Interest rates on hold, but BoK to resume easing cycle soon The Bank of Korea today left its main policy rate unchanged at 3.00%, but we doubt it will be long before the central bank resumes its easing cycle. The decision was correctly predicted by just …
16th January 2025
This page has been updated with additional analysis since first publication. Tight labour market bolsters case for RBA to stay put Although we expect the labour market to cool in earnest over the course of this year, risks to our forecast that the …
Today’s release of US CPI data for December did not change our view that the Fed will cut its policy rate by a bit more than investors anticipate, and in turn that Treasury yields will edge down further. Although the data were broadly in line with …
15th January 2025
The ceasefire reportedly agreed between Israel and Hamas is likely to have significant consequences for some countries in the region, notably Israel itself as well as Jordan and Egypt. But the possible disinflationary impact for the rest of the world via …
Donald Trump’s election win two months ago has already contributed to a rally in the US dollar, and we think there is a bit more to come this year. More broadly, the second Trump administration will probably be a key driver of volatility in currency …
If sustained, rising bond yields add to downside risks to economic growth. The potential direct effects on real activity are greatest in the US. But higher yields in other DMs could limit how far borrowing costs in the private sector fall and force the …
Inflation continues to accelerate The rise in Russian inflation to 9.5% y/y in December is likely to be followed by an increase to more than 10% early this year. The central bank has set a high bar for further tightening but we think the balance remains …
Middle East & North Africa Chart Pack (Jan. '25) …
Mexico is arguably the most vulnerable economy to US trade protectionism. This in-depth analysis maps out economic and financial linkages between Mexico and its northern neighbour to provide a clearer sense of how tariffs would affect the economy and how …
Donald Trump has made no bones about the fact that his return to office will bring with it a renewed protectionist shift, with Mexico likely to be firmly in the president’s firing line. As he returns to the White House, our Latin America and Markets teams …
Core CPI consistent with soft gain in core PCE The 0.23% m/m increase in core CPI in December appears consistent with a below-target 0.14% m/m increase in the Fed’s preferred core PCE deflator measure. Although that would leave core PCE inflation …
Manufacturing recovery stalls The rise in manufacturing sales in November was entirely due to higher prices, with sales volumes unchanged. While the recovery in activity took a breather, the 1.8% m/m rise in new orders and increase in the S&P Global …
There’s a case for the Bank of Japan to raise interest rates again at its January meeting. Either way, we think this year will see more aggressive tightening by the Bank than most anticipate. Economists from our Macro and Markets teams explained why in …
Easing cycle to stay on pause amid inflation and fiscal risks The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, amid continued concerns about the inflation outlook and the direction of fiscal policy post-election. We …
Increase in inflation may push CBN to deliver one last 25bp hike The further rise in Nigeria’s headline inflation rate, to 34.8% y/y in December, raises the risk that the central bank pushes ahead with one last interest rate hike at their next meeting in …
Slowing economic growth and rising availability will hold back French industrial rental growth this year, with affordability concerns likely to be an additional drag in Paris. This will leave the region underperforming other euro-zone markets, with …
For so long the darling of global investors, India’s economy and financial markets have hit a sticky patch of late. What can policymakers do to get the economy out of its funk? And can markets make a roaring comeback? Just ahead of the all-important 1 st …
There is already some evidence of US importers increasing orders, at least for goods from China, before Trump’s proposed tariffs come into effect. We think this may continue in the next few months, and could broaden out to imports from other countries …
This page has been updated with additional analysis since first publication. Outlook weak despite rise in production The small uptick in euro-zone industrial production in November will be of little relief to the beleaguered sector. Surveys suggest that …
A flurry of elections are due across Central and Eastern Europe (CEE) over the next year or so, which will provide a gauge of support for Ukraine and, in some cases, will shape countries’ future relationship with the EU. Fiscal risks will also be in the …
Germany still in the doldrums Preliminary GDP data for Germany suggest there is still no sign of the country exiting stagnation, with GDP down slightly in both Q4 and in 2024 as a whole. We forecast a very small cyclical recovery in 2025, but even that …
Inflation eases and to remain low over 2025 This response has been updated with additional analysis of wholesale prices. Saudi Arabia’s headline inflation rate eased a touch from 2.0% y/y in November to 1.9% y/y in December and it is likely to hover …
The debt swap that kicked off in November and extends to 2028 reduces the risk of near-term defaults by local government financing vehicles, which would be destabilising for financial markets. But it is not a lasting solution for China given it only …
In a major surprise, Bank Indonesia today cut interest rates by 25bps (taking its main policy rate to 5.75%), citing the need to support economic growth. Given the central bank’s renewed focus on supporting the economy we are making adjustments to our …
This page has been updated with additional analysis since first publication. Soft surprise boosts February rate cut odds While a lot of the surprisingly large fall in services inflation from 5.0% in November to 4.4% in December (CE forecast 4.8%, BoE …
It’s possible that prolonged weakness in economic activity and a jump in unemployment force the RBA to cut rates more aggressively than we’re anticipating. However, a more likely scenario resulting in below-neutral rates is that a sharper-than-expected …
Mexico is once again bracing for trade protectionism in the US. And while it staved off tariffs in the first round of the trade war, on balance we don’t think it’s in as strong a negotiating position this time round. We’ve written extensively on what a …
14th January 2025
It’s easy to forget the importance of earnings in influencing the S&P 500 when its performance is driven instead, as has been the case recently, by gyrations in the Treasury market. Earnings will be front of mind again tomorrow, though, when reporting …
EM sovereign FX debt issuance surged over the past year and at the start of 2025, albeit with many sovereigns returning to global markets and issuing at high interest rates. Borrowing does not look excessive and there’s unlikely to be a further sharp rise …
Poland’s public debt dynamics are more favourable than many of its peers. But the sharp widening of the budget deficit, coupled with the decision to leave austerity measures until next year and beyond, suggests that it will be challenging to get the debt …
At first glance the 24% y/y drop in sponsored study visas in Q3 2024 spells bad news for PBSA rents. But the cause of that drop - new rules banning international students from bringing dependents - means the decline will have been concentrated in students …
Madrid has seen some of the region’s strongest prime office rental growth in the recent past. While the factors supporting this surge may weaken slightly over time, we think that rent and returns performance will remain close to the top of the euro-zone …
Our base case is that a stabilisation and eventual fall back in gilt yields will allow the government to muddle through and wait until the next fiscal event on 26 th March before making any decisions on taxes and spending. However, a significant worsening …
Jump in airfare prices bad news for core PCE On the surface, the weaker than expected 0.2% m/m increase in final demand PPI and unchanged level of core final demand PPI in December seems encouraging, but they mask some price jumps in a few of the key …
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 …
The recent ramp-up in US sanctions on Russia’s oil supply chain has tightened the global oil market and may keep prices higher in the near term. But we still expect greater OPEC+ supply and weak demand growth to drive prices lower towards $70pb by the end …
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 …
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 …
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 …
This interactive dashboard combines the key takeaways and most insightful charts from our extensive research into demographic trends and their economic and fiscal consequences. The central theme is that ageing populations are an acute challenge for many …
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 …
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 …
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 …
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? Our US real estate and …
