Fears that single-family housing starts are on the verge of collapse because of the large buildup of new homes for sale are overblown. The accumulation largely reflects smaller private builders struggling to shift inventory, unlike their publicly-listed …
12th May 2025
Commercial real estate investment climbed on a y/y basis in Q1, but recent surveys revealed that the unpredictability of policy changes and tariffs have dampened investor confidence. We expect this to weigh on Q2 activity, before continued improvement …
The shift in sentiment toward Europe has been striking. Just a day after Donald Trump’s inauguration, Ursula von der Leyen took the stage in Davos to declare, “Europe is back”. At a time of widespread pessimism about the region’s economic prospects, the …
The US and China have each suspended for 90 days all but 10% of their Liberation Day tariffs and cancelled other retaliatory tariffs. This is a substantial de-escalation. However, the US still has much higher tariffs on China than on other countries and …
Factories are slashing prices of consumer goods Core inflation has recovered somewhat in recent months, even as headline inflation has slipped back into negative territory. But the outlook for underlying inflation is still deteriorating, with the producer …
11th May 2025
One deal down. Many, many more to go. Except there was less to that much-touted US-UK trade deal than either government is suggesting and far tougher US talks with China and the EU are still to come. In this week’s episode of The Weekly Briefing from …
9th May 2025
The dollar has edged higher against most major currencies over the week as a whole, supported by the FOMC’s pushback against expectations of policy easing in the near term. The turmoil in some Asian currency markets at the end of last week also appears to …
Thanks to continued optimism over prospective trade deals to reduce US tariff rates, asset markets have generally recouped most of their losses after the 2 nd April tariff announcement. That said, we think that the boost from further trade negotiation …
Next week’s election in Portugal is likely to have little impact on the country’s economic prospects, not least because it looks like it will be a repeat of last year’s election results. Regardless of the outcome, we expect the public debt ratio to fall …
Fiscal slippage appears more likely across SSA Leaders across Sub-Saharan Africa faced with fiscal strains are increasingly embracing tax reform rather than rises. Banking on the former to quickly raise revenue is ambitious and we think this risks further …
Euro-zone GDP expanded at a decent pace in Q1 but that was partly due to temporary tariff front-running effects. And while higher defence and infrastructure spending will support euro-zone GDP growth late this year and in 2026, the boost will be smaller …
The strong showing for far-right nationalist, George Simion, in the first round of Romania’s Presidential election on Sunday has deepened the country’s political crisis, and the fallout in Romania’s financial markets could get more messy in the coming …
Diversifying away from the US? This week’s data releases showed a sharp fall in trade flows between Canada and the US in March, following the imposition of some tariffs by the US and retaliatory tariffs by Canada. Canada’s exports to the US fell by 6.6% …
UK-US trade announcement is no big deal The “full and comprehensive” trade deal between the US and the UK announced this week by President Donald Trump was none of those things. This rush to demonstrate progress on “deals” reveals a rising desperation …
Lower oil prices a mixed blessing The announcement from OPEC+ over the weekend that it will increase oil supply further in June briefly caused the price of Brent crude to drop below $60pb. It has since recovered to c.$63pb at the time of writing, but that …
Five months ago, we incorporated a 10% tariff on all UK goods exports to the US in our forecast. That has turned out to be a good call. Despite this week’s UK-US trade deal, the 10% “baseline” tariff remains. (See here for our response to the US-UK trade …
Tariffs aren't the only headwind facing exporters The US-China trade talks taking place in Geneva this weekend could pave the way for a partial rollback in tariffs. Trump has continued to rule out doing so without anything in return. And China’s …
Tariff damage likely to be limited This week brought further evidence that the impact of US tariffs on activity in the euro-zone has been limited so far, and may even have been positive. March’s industrial production data from Germany and Ireland showed …
Tariffs weigh hard on manufacturing employment Employment would have fallen again in April were it not for the boost from the federal election, which supports our view that the Bank of Canada will resume its loosening cycle next month and ultimately cut …
$50 oil is not a pipe dream Plenty of oil market analysts, including ourselves, have slashed their price forecasts this week following the OPEC+ decision to raise output in June by more than the group had originally outlined for the second month in a row. …
Asian exporters benefit from front-loading Asia publishes trade data much sooner than other regions which allows us to get an early indication of how Trump tariffs are affecting global trade. While the April data for Korea showed exports to the US …
Market jitters, but limited economic impact News this week has been dominated by the fallout from India’s strikes on suspected terrorist camps in Pakistan in retaliation to the 22 nd April attacks in Pahalgam. This has sent a few jitters through financial …
This page has been updated with additional analysis since first publication. Exports holding up, for now Export growth slowed by less than most had anticipated in April, as the drop in export orders from the US is taking time to feed through to actual …
No signs of progress in US-Japan trade talks Preliminary data for the first twenty days of April point to export values rising by 0.7% m/m, according to our seasonal adjustment. However, that follows big swings across the first quarter, including a 5.7% …
Data flashing mixed signals On the face of it, developments this week strengthen the case for the RBA to err on the side of looser policy, rather than simply withdraw monetary restraint. For starters, the ABS’ Household Spending Indicator suggests that …
Weakness in regular earnings very difficult to explain We still believe that the labour cash earnings figures are understating the strength of wage growth but taken at face value they reduce chances of further tightening by the Bank of Japan. According to …
The UK-US trade deal announced by President Trump and Prime Minister Starmer today won’t make a big difference to the UK economy as a whole, although it is more significant for certain sectors such as cars and steel. The upcoming UK-EU reset won’t be a …
8th May 2025
The “full and comprehensive” trade deal between the US and the UK announced in a rush today by President Donald Trump and PM Keir Starmer is no such thing. As Trump admitted in his press conference, the “final details” still need to be “written up in the …
OPEC+ shifts tack to recapture market share The decision by OPEC+ to deliver another punchy oil output hike in June was not too much of a surprise, but it confirms that the group are shifting tack to a more aggressive policy in order to recapture market …
Downside risks from OPEC+ and Trump crystalise OPEC+’s announcement that it will pick up the pace of oil output increases for the second consecutive month in June helped to push oil prices to four-year lows. This represents a marked shift in policy from …
Saudi Arabia has shifted back towards an oil policy of aggressively raising oil output to recapture market share and the Kingdom’s strong balance sheet means that it can “live with a prolonged period of low oil prices” as officials have suggested. Oil …
The trade data available for March and April suggest that a large number of EMs have benefitted from a front-running of tariffs in recent months, particularly those across Asia (Taiwan, Vietnam and India). That said, business surveys have weakened, …
Brazil’s current account deficit has widened sharply over the past twelve months and we think it could reach 4.0-4.5% of GDP over the next couple of years. This leaves the real vulnerable to renewed falls, especially if concerns about the health of the …
The latest data from the Census Bureau show that regional and metro-level migration trends seen in the post-pandemic years persisted up to mid-2024. But the six major markets, along with other large metros like Miami, San Jose and Seattle, remained …
Student loan default rates are set to soar and the government will soon begin collections against defaulted loans for the first time since the pandemic. This is unlikely to be a big drag on households’ finances but, at the margin, it is another reason to …
More UK rate cuts coming, but not as quickly as investors expected The Bank of England predictably cut interest rates from 4.50% to 4.25% today and gave the impression that it will continue to cut rates at the current pace of 25 basis points (bps) every …
Inflation rises, but Banxico still on course for a 50bp cut next week Mexico’s headline inflation rate edged up to 3.9% y/y in April, but we think that the challenging growth outlook and the relative resilience in the peso leave the door open for another …
For an updated and more detailed version of this analysis, click here . More rate cuts coming, but not as quickly as the markets expect While cutting interest rates from 4.50% to 4.25% today, the Bank of England poured some cold water on the markets’ …
Q1 GDP data showed that most of the world’s economies were still growing at a decent pace ahead of the main tariff hikes and several were boosted by front-running. Consumer and business confidence have deteriorated since then, but there is limited …
Riksbank leave rates unchanged, but signals cuts may be coming While the Riksbank left its policy rate unchanged at 2.25% today, policymakers indicated that a rate cut is likely this year given the weakness of the economy. We now think that they are …
Rates on hold (again), but rate cuts are coming Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, but sounded more downbeat on the economic outlook, suggesting scope for rate cuts later in the year. The decision was correctly …
This page has been updated with additional analysis since first publication. Tentative evidence that house price falls are over The 0.3% m/m rise in Halifax house prices (consensus forecast -0.1% m/m, CE 0.0% m/m) provides tentative evidence that the …
Rebound in German industry unlikely to last The big rise in German industrial output and orders in March confirms that conditions in the sector have stabilised in recent months. However, some of the strength might be due to tariff front running. And with …
Housing market left with no momentum The housing market should pull out of its current funk in the coming months even if the Bank of England were to suggest later today that interest rates won’t fall as fast as the financial markets expect. Meanwhile, a …
Lower interest rates to support growth in 2025 GDP growth in the Philippines accelerated slightly in the first quarter of last year, and we expect steady growth in 2025 as interest rate cuts and low inflation help offset the drag from weaker exports and …
Even though the 10-year Treasury yield is close to where it was before “Liberation Day”, measures of term premia remain elevated. At face value, that suggests that the yield could fall quite a bit further, but we suspect any unwind of the recent increase …
We still think investors are expecting too many Fed cuts over the remainder of this year, and our base case remains that Treasury yields will rise and the US dollar will strengthen. The Fed struck a very cautious tone in Wednesday’s policy statement, and …
Around half of the recent surge in gold exports reflects soaring prices. While the latter may encourage mining firms to expand output, it will probably take years for gold production to return to its 2019 peak. Accordingly, gold exports won’t fill the gap …
Copom hikes again, but tightening cycle near an end (if not already over) Brazil’s central bank hiked the Selic rate by a further 50bp, to 14.75%, today and officials made clear in the accompanying statement that the tightening cycle is near an end. We …
7th May 2025
The minimalist statement issued by the Fed at the conclusion of the FOMC meeting gave no hint that it was considering a further cut to the fed funds rate, at least not any time soon. As was almost universally expected, officials voted unanimously to leave …
