Despite solid take-up the industrial vacancy rate has risen to a 10-year high, which reflects occupiers shifting into new buildings at the expense of the secondhand market. We expect that dynamic to continue and a further small rise in vacancy will push …
25th June 2025
Today’s hold does not mark the end of the easing cycle Thailand’s central bank (BoT) today left interest rates unchanged at 1.75%, but the dovish commentary from the press conference supports our view that further easing is likely over the coming months. …
Sharp fall in inflation likely to reinforce RBA’s dovish pivot With price pressures easing markedly in May, the RBA may well front-load monetary easing to a greater degree than we’re predicting. According to the monthly CPI indicator, headline inflation …
The overnight announcement of a ceasefire between Israel/US and Iran has brought commodity and financial markets largely back to their pre-conflict square one. While tensions remain high and could easily re-ignite, our sense is that attention will now …
24th June 2025
Our China Activity Proxy suggests growth slowed further in May, with US tariffs weighing on industrial activity. While services growth did pick up, that seems to have been driven by a temporary boost from the consumer goods trade-in scheme. We expect …
After Israel and Iran agreed to stop fighting, Group Chief Economist Neil Shearing and Chief Climate and Commodities Economist David Oxley are on this special episode of the Weekly Briefing to discuss what follows, including why oil prices are set to …
Overview – We think the short-term outlook for capital values is poor, with valuations looking stretched across all measures. This does not appear to be reflected in other forecasts, meaning our forecasts for the next two years remain significantly below …
The latest data suggest that the boost to industry and trade from businesses front-running US tariffs is over. Manufacturing activity softened in April and May, and new orders have weakened. While consumer confidence has partially rebounded from …
Data from the first two months of US tariffs being in effect suggest that both Canadian and Mexican manufacturers were struggling to make their exports USMCA-compliant, which poses a downward risk to our GDP forecasts for those countries. The US first …
Consecutive house price declines raise risk of deeper correction After falling in March, the further 0.3% m/m decline in house prices in April raises the risk that prices are entering a sustained downturn, as the market finally buckles under the weight of …
Fed’s Powell offers no hint of near-term rate cut Fed Chair Jerome Powell’s prepared semi-annual testimony to the House today offered no hint that a rate cut is coming any time soon. Despite the recent dovish comments from Trump-appointed Governors …
Core inflation easing, but probably still too high for imminent rate cuts The Bank’s preferred CPI-trim and CPI-median core measures rose by a smaller 0.21% m/m on average in May, with the three-month annualised rate declining to 3.0%, but that is …
Rise in inflation won’t stop 50bp cut on Thursday The jump in Mexican inflation to 4.5% in the middle of this month won’t be enough to prevent Banxico from proceeding with a (clearly-signalled) 50bp interest rate cut at its meeting later this week. But …
Hawkish MNB won’t rush to restart easing cycle The Hungarian central bank (MNB) left its base rate on hold today at 6.50% and, in contrast to the consensus view that the easing cycle will resume this year, we think rates will remain unchanged throughout …
The Israel-Iran ceasefire is likely to prove fragile. But so long as both parties show themselves unwilling to attack export-related energy infrastructure and/or disrupt shipping flows through the Strait of Hormuz, we expect bearish fundamentals in the …
German economy resilient to tariffs so far, but activity still weak The rise in the Ifo BCI in June suggests that activity in Germany has not yet been meaningfully hit by US tariffs. But output remains weak and we think a proper recovery will only …
Prices of public services and rents are rising at the fastest pace in years, which supports our view that inflation will remain above the Bank of Japan’s 2% target even as the impact of the post-pandemic import cost shock fades. That underpins our view …
Overview – Although instability in the Middle East could easily push oil prices into triple-digit territory, as things stand, the oil market looks set to remain well-supplied and so we expect bearish fundamentals to reassert themselves on prices before …
23rd June 2025
Overview – The threat posed by US trade protectionism to the region, for now, appears muted. An improvement in the terms of trade for most countries should mean less downward pressure on currencies and, alongside low inflation, set the stage for more …
The Gulf economies are vulnerable if Iran decides to attack oil infrastructure in the region, or block the Strait of Hormuz, in retaliation for the strikes by Israel and the US. So long as that is avoided, the Gulf economies could stand to benefit via …
We assume that the 90-day pause on reciprocal tariffs is mostly extended, keeping tariffs at 10% for countries except China, which will face a steeper 40% levy. Tariffs will not cause a recession – provided Congress can quickly redirect the tariff revenue …
Home sales rebound slightly, but rates still a limiting factor The small rebound in existing home sales in May could be a sign of things to come, if more supply and the recent rebound in consumer sentiment draw would-be buyers back into the market. …
This Update answers five key questions about a potential “closure” of the Strait of Hormuz and the potential impacts on global energy markets from any attempt to close the waterway. As it stands, it is arguably not in Iran’s best interests to close the …
Overview – The euro-zone’s strong first-quarter growth rate was a result of tariff front-running and will be reversed in Q2 and be followed by weak growth in the second half of the year. Further ahead, we think the euro-zone will grow more slowly than …
The rapid escalation of the conflict between Iran and Israel, which has now pulled in the US, has – for the time being at least – displaced trade, tariffs and fiscal vulnerabilities at the top of a lengthening list of investor concerns. We’re covering the …
US involvement in the Israel/Iran conflict has so far prompted just some volatility in global financial markets, with most major asset classes ultimately not far away from where they were on Friday. It’s easy, though, to see growing downside risks. …
At our in-person Roundtables in London on Tuesday 1 st July, clients can discuss with our economists and their peers how the government has influenced the UK economy in its first year in office. (Register here .) This page has been updated with additional …
Economy stagnating, no sign yet of higher energy costs raising prices June’s flash PMI survey for the euro-zone was consistent with the economy flat-lining. The recent jump in energy costs has not yet fed through to output prices, but the uncertainty …
Overview – The Bank of Japan will stay on the sidelines for a few more months as GDP growth softens and trade tensions cloud the outlook. But with the labour market set to remain very tight, wages rising strongly and inflation on track to overshoot the …
PMIs bolster the case for BoJ to resume hiking before long With output expanding at a healthy pace and price pressures set to remain relatively firm, we continue to believe the Bank of Japan will deliver its next rate hike sooner than most anticipate. …
The dollar has made some further gains this week, on net, but remains not far off its weakest level in three years. It has mainly benefitted on the back of a somewhat hawkish FOMC announcement, which contrasts with dovish policy signals from some other …
20th June 2025
The Summary of Deliberations from the Bank of Canada’s June policy meeting, released on Tuesday, revealed it held rates for three reasons: the economy had slowed but not significantly, uncertainty remained high, and recent inflation data had firmed. …
Israel-Iran and what it means for Africa The Israel-Iran conflict has caused a jump in oil prices over the past week and there’s a clear risk of further escalation that pushes prices up even higher. That would spell bad news for most African economies, …
Fed remains firmly on the sidelines The Fed’s new interest rate projections still just about show a median of 50bp of cuts to its policy rate for this year, but it was a very close run thing. Back in March, 11 of 19 officials anticipated two 25bp cuts …
What’s going to happen in this Middle East crisis? The fact that no one knows is the key point for investors grappling with an exceptionally fluid situation. In this week’s podcast, Group Chief Economist Neil Shearing explores the scenarios we've outlined …
Copom & BCCh: hawks & doves This week's rate decisions in Chile and Brazil showed a stark contrast in messaging. While Chile’s central bank (BCCh) left its policy rate unchanged at 5.00%, its communications were relatively dovish. It sounded less …
Consumers remain resilient to tariffs for now The rise in retail sales in April showed consumer spending remained resilient to tariffs at the start of the second quarter. That said, the grisly flash estimate for May suggests the economy will slow over the …
Risk of further escalation continues to mount The continued Israel-Iran military strikes are likely to have a limited direct impact on Israel’s economy – so long as the conflict remains confined to a matter of weeks. But the risk of escalation is high, …
Europe is taking Trump’s side on China When President Trump returned to office, his aggressive treatment of traditional allies raised the possibility that the EU and China would come together in defence of free trade. But the opposite is happening: US …
At our in-person Roundtables in London on Tuesday 1st July, clients can discuss with our economists and their peers how the government has influenced the economy in its first year in office. (Register here .) Upside risk to inflation from Middle East …
Given the further escalation of the Israel-Iran conflict in the past few days, this Weekly considers its possible implications for euro-zone inflation and monetary policy. These will depend mainly on how the conflict will affect energy prices , which we …
Mapping out conflict scenarios Much of the focus this week has understandably been on oil markets. Oil prices continued to climb as the Israel-Iran conflict escalated, reaching $76pb from $73 at the start of the week. In particular, the potential for US …
China’s New Three export volumes edged down in May, but remained close to record highs, as the impact on trade from US tariffs was partially offset by increased shipments to the Middle East. While the US-China trade truce could help provide a small boost …
As time marches on, the once distant threat of demographic pressures for many countries, especially those in Europe, is fast becoming a reality. This adds to the other pressures on the public finances, such as higher defence spending, and increases the …
In general, stock markets tend to be less affected by energy markets today than in the past. But the Israel-Iran conflict has already produced some interesting patterns in stock markets around the world amid a rise in energy prices. Much has been made of …
Growth boost for Korea More policy support in Korea looks to be on its way soon. According to the minutes of the Bank of Korea’s May meeting (when rates were cut a further 25bps) which were released earlier this week, Board members were united on the need …
Front-running fades but exports to US still strong We learnt this week that the goods trade deficit narrowed in May to c.$22bn, from c.$26bn in April. The breakdown shows that the front-running of exports to the US - evident prior to President Trump’s …
The early evidence suggests that EM exports have held up well, despite higher US tariffs. That’s partly because exporters have front-loaded shipments to the US or (in China's case) have avoided high tariffs by shipping via third countries. So long as this …
We’re hosting in-person Roundtables in London on Tuesday 1st July, where clients can discuss with our economists and their peers how the government has influenced the economy in its first year in office. (Register here .) This page has been updated with …
