Stronger yen reducing upside risks to inflation Developments over the past week seem to support the consensus view that the Bank of Japan will wait at least until December before hiking interest rates again. After all, the yen reached a fresh high against …
13th September 2024
We now think the RBNZ will be one of the few central banks to cut rates below neutral this cycle, which would be bad news for the New Zealand dollar. New Zealand markets have so far shrugged off the RBNZ’s dovish tilt – and rate cut – last month. While …
Overview – There are tentative signs of improvement in the investment market, but we continue to think refinancing requirements will weigh on transactions. We still think appraisal-based valuations need to adjust further and that cap rates will increase …
12th September 2024
All of the historical data supporting this publication can be found on our new Rate Cuts & Asset Returns dashboard. All of the forecasts in this publication can be found on our US Macro or Financial Markets dashboards. This Focus explores the key lessons …
This dashboard has been launched as an accompaniment to this Asset Allocation Focus , which looks at patterns in financial markets around previous Fed easing cycles. If you would like subscriber access to this dashboard contact …
A second Trump term would bring greater uncertainty to US-China relations, challenges to a global economic order that has helped China prosper, higher tariffs (probably) on Chinese goods, and (possibly) a global retreat from free trade. All of this would …
Today’s decision by the ECB to cut the deposit rate by 25bp was widely anticipated, and even the press conference provided little new information. We stand by our view that too much easing is now discounted in money markets, which is why we think …
Inflation keeps falling more quickly than Norges Bank’s forecasts but policymakers will be uneasy about the renewed weakening of the krone. We expect them to repeat that the policy rate will be unchanged “for some time ahead”, but we think they will opt …
There was never any doubt that the ECB would cut its deposit rate by 25bp today, to 3.5%. Meanwhile, the policy statement and press conference were largely as expected and do not change our view that the next rate cut is most likely to be in December – …
The structural deterioration in the fiscal situation suggests that a tight grip on the public finances in the Budget on 30 th October will be necessary. That’s why we think the government will maintain existing plans for fiscal policy to be tightened, but …
OPEC+ roll over doesn’t stop the oil price slide After we published our last Weekly , OPEC+ released a statement confirming that the group would roll over current oil production cuts until 1 st December. It also included previous phrasing that it has the …
PPI also points to another muted gain in core PCE The August PPI data provide more encouragement for the Fed that inflation has been tamed. Together the CPI and PPI data point to a muted 0.14% m/m increase in the core PCE deflator last month, with the …
Slight rise in headline rate tips balance in favour of October rate hold The slight rise in India’s headline CPI inflation in August reinforces our view that the Reserve Bank will proceed with a bit of caution and keep rates unchanged in its next meeting …
ECB likely to ease policy only gradually There was never any doubt that the ECB would cut its deposit rate by 25bp today, to 3.5%. Otherwise, the policy statement is largely as expected and does not change our view that the ECB will probably leave rates …
Global Economics Chart Pack (September 2024) …
New data released in the past week show that global greenhouse gas emissions rose by almost 2% y/y in 2023. Most of this increase was driven by growth in China’s emissions as its economy recovered from pandemic-related disruptions. Looking ahead, we …
The Fed’s upcoming monetary easing cycle will probably provide less of a tailwind to EMs than is widely thought. While it’s likely to give some central banks (such as in the Gulf, Mexico and Indonesia) a green light to lower interest rates, EM rate …
Rising demand points to faster house price growth August’s RICS survey provided further evidence that housing demand is picking up in response to the recent falls in mortgage rates. What’s more, our view that Bank Rate will be lowered by more than …
Stronger yen has reduced upside risks to inflation, but labour shortages persist Recent data should have enhanced Bank’s confidence in its central scenario Bank will hike rates in October, but refrain from tightening any further in 2025 The Bank of …
Inflation stabilises, rates to be left on hold Russia’s headline inflation rate held steady at 9.1% y/y in August which, while slightly stronger than expected, won’t tip the balance towards another interest rate hike at the central bank’s meeting on …
11th September 2024
There was little impact on GDP from the completion of the Trans Mountain pipeline expansion because the jump in exports was supported by a drawdown of inventories from elevated levels, rather than higher production. There is scope for production to rise …
The adverse reaction in the stock market to today’s report on US consumer prices suggests inflation still matters to investors in equities, even if it has become a less important concern for them than economic growth over the past two months. Recall that …
Recent data favour a 25bp vs a 50bp interest rate cut in September New SEP to show more cuts this year We expect 200bp of cumulative rate cuts vs 250bp priced into markets With the labour market data more consistent with an economic slowdown rather than …
Saudi Arabia has cut oil output aggressively in the past two years but this has failed to prevent a slide in the Kingdom’s oil revenues. Officials are facing a tough choice over what to do next and, for now, we think that they will follow through with …
A pullback in buyer demand paired with rising supply has cooled the market, causing house price inflation to ease in the first half of the year. With the spring selling season now over, though, and buyers poised to re-enter the market following the recent …
Inflation tamed rather than vanquished The 0.28% m/m increase in core CPI in August appears to be consistent with a slightly below-target 0.15% m/m increase in the Fed’s preferred core PCE deflator measure. But we doubt that modest undershoot would be …
The sell-off in oil markets so far in September, which gathered pace on Tuesday, has largely been driven by market concerns over demand. Although investors are correct to be worried about the structural headwinds facing China’s oil demand, they seem to …
The swearing in of a new congress next month gives Mexico’s outgoing president, Amlo, a one month window to re-start plans to pass controversial planned constitutional amendments. At the very least, some form of judicial reform seems quite likely which …
Milan office take-up has held up well in recent quarters, but this has not translated into stronger prime rental growth. With the outlook for jobs growth pointing to a slowdown in take-up while downsizing and affordability concerns are rising, we think …
This page has been updated with additional analysis since first publication. July’s stagnation unlikely to mark the start of a renewed downturn GDP stagnated in July (consensus and CE forecast 0.2%), but that doesn’t mean the UK is on the cusp of another …
The Reserve Bank of New Zealand has always ended up cutting interest rates by more than it anticipated at the start of previous easing cycles. We think this time won’t be any different and expect the Bank to cut rates to 2.25% at the end of its easing …
10th September 2024
Although softening global demand for oil has pushed the Brent Crude price to a near three year low, we don’t think the global economic outlook will prevent strong equity gains. While they have often tended to move together in the past, equity and oil …
Our rental growth forecasts for the industrial and retail sectors are notably above the consensus, particularly over the next couple of years. That primarily reflects our relatively optimistic forecasts for GDP growth, where a recovery in consumer …
Granular data showed that mortgage lending continued to recover in Q2, supported by a decline in the average mortgage rate on new lending. Our view that mortgage rates will fall further next year suggests demand will continue to pick up and housing …
For proponents of the idea that the global economy is tipping into recession, the evidence provided by recent manufacturing surveys is front and centre. Those surveys have fed market worries that the surge in interest rates of recent years will end with …
Further rise in services inflation seals the deal on a rate hike Brazil’s headline inflation dropped back to 4.2% y/y in August, but there was yet another increase in underlying services inflation which sets the stage for an interest rate hike at next …
Note: we will be hosting an online Drop-in on Wednesday 11th September at 3pm BST to discuss the outlook for gold prices. Sign up here . With a long and varied list of supportive drivers to choose from, we have raised our end-2025 gold price forecast to …
With a large and growing population and a bright long-term economic outlook, the stage is set for India’s commodity demand to boom. However, there are several reasons why India won’t have the same profound impact on global commodity markets as China has …
Inflation picks up, CBE will wait until 2025 before cutting rates Egypt’s headline inflation strengthened from 25.7% y/y in July to 26.2% y/y in August, breaking a five month streak of decelerating inflation, after electricity and fuel price hikes. We …
This page has been updated with additional analysis since first publication. Encouraging, but not enough for interest rates to be cut again in September The further easing in wage growth will be welcomed by the Bank of England as a sign that labour market …
Exports set to remain a near-term bright spot Export values grew y/y at the fastest pace in 17 months, with export volumes hitting record highs. We expect exports to remain robust in the near term, supported by the decline in China’s real effective …
The new US controls on exports of semiconductor manufacturing equipment will slow China’s ability to expand its advanced chip-making capacity. While the immediate economic impact will be small, it will leave China’s hi-tech industry reliant on foreign …
9th September 2024
Further mixed-to-weak US economic data and sharp falls in the equity markets last week means that, rightly or wrongly, the so-called “Fed put” is now back in the spotlight. Our sense is that it would still take a significant further deterioration in the …
