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 …
9th May 2025
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 …
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 …
$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 …
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 …
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 …
8th May 2025
The dollar is ending the week on the backfoot, despite the ongoing normalisation and returning risk appetite across financial markets, as well as a generally decent set of US economic data. Somewhat surprisingly, the greenback remains well below its pre-2 …
2nd May 2025
SA 2025 Budget: fiscal slippage is coming South Africa’s 2025 Budget will be tabled for a third time later this month and, to be approved, we think the ANC and DA will need to agree on some spending cuts, although it probably won’t be enough to avoid some …
Hold in Chile, BanRep turns dovish Andean central banks sent very different signals this week. In Chile, the central bank left its policy rate unchanged at 5.00% as expected. And policymakers still sounded somewhat concerned about inflation, highlighting …
The 0.3% annualised contraction in first-quarter GDP generated a lot of headlines this week. In contrast, final sales to private domestic purchasers rose by a solid 3.0%, implying there was plenty of strength in the underlying economy. Nevertheless, the …
Additional fiscal easing may be needed before long Our China Activity Proxy published earlier this week showed that China’s economy slowed in Q1, growing by just 3.9% y/y. That’s despite the fact that the trade war with the US was only just getting …
Magic Carney The Liberals won 169 seats in the election this week, just missing out on the 172 required for a majority. Nonetheless, that was still a momentous result for the Liberals considering they were, at one point earlier this year, projected to …
The larger-than-expected fall in the Nationwide measure of house prices in April has raised concerns about how quickly the housing market is losing momentum. After price gains of 1.1% m/m and 0.7% m/m in November and December last year, prices are down …
Riyadh ups the ante ahead of OPEC+ meeting Developments in the oil market once again took centre stage this week, with Brent crude prices set for their second consecutive weekly fall. The biggest news event of the week came courtesy of reports that Saudi …
We think there are two key takeaways from the flurry of activity figures released this week. First, the euro-zone economy held up better than we expected in Q1. GDP expanded by 0.4% q/q. That was partly due to a very strong outturn in Ireland, where data …
A cut more likely than a hold Malaysia is one of the few countries in the region not to have cut interest rates this cycle. Concerns about the inflation outlook and healthy economic growth have meant the central bank has been in no hurry to loosen. …
Russia’s economy may be starting to break ... The latest economic data released out of Russia have given clear signals that growth has slowed sharply, with GDP having potentially contracted outright in q/q terms in Q1. We had expected a slowdown to …
Exporters relatively well-placed to benefit US Treasury Scott Bessent said this week that “India would be one of the first trade deals we [the US] would sign”, brightening the prospects of India avoiding large tariffs once the 90-day reprieve comes to an …
RBA still on track to deliver shallow easing cycle This week we learnt that Australia’s trimmed mean inflation fell from 3.2% in Q4 to 2.9% in Q1, returning it to the RBA’s 2-3% target band for the first time in over three years. While that outturn was …
Few signs of sharp slowdown in activity With trade tensions clouding prospects for Japan’s economy, the Bank of Japan revised down its GDP growth forecasts sharply at its meeting on Thursday and sounded more dovish than it did in January. One channel …
Saudi pushing for a more aggressive OPEC oil hike It already looked like next week’s OPEC+ meeting could see another plan outlined to hike to oil output from the group in June. But if anything, supply could be raised further given signals from Saudi …
1st May 2025
What do Trump tariffs mean for green tech? Much ink has been spilled over the macro and market impacts of various US tariff announcements over the past month. (See here .) From a climate perspective, these tariffs will only add to existing trade barriers …
30th April 2025
Financial markets have continued to stabilise and the dollar has finally rebounded a little over the past few days. More than anything, that appears to reflect relief after the Trump administration has suggested it may dial back tariffs a bit further and …
25th April 2025
Both major political parties unveiled their election platforms over the past week, featuring their fiscal projections for the next four years. As expected, the Liberals have made little attempt to balance the budget. Incumbent Prime Minister Mark Carney …
SA 2025 budget closer, but fiscal slippage coming South Africa’s 2025 budget took a vital step forward after the Treasury scrapped its proposed VAT hike this week. With the DA also recommitting to the GNU, this will provide some of the certainty that the …
The US steps up its peace deal efforts The US has been pushing harder over the past week to achieve a peace deal that Russia is willing to accept. But the more concessions that are offered to Putin, the less willing Ukraine is likely to be on board with a …
The negative reaction in financial markets undoubtedly played a key role in making President Trump reconsider his eye-wateringly high tariffs on China and his ill-advised plans to fire Fed Chair Jerome Powell. But we suspect the dawning reality of what …
Mexico: growth worries points to another 50bp cut Hard and soft activity data out of Mexico over the past few weeks paint a picture of a struggling economy. Admittedly, the IGAE index rebounded by 1.0% m/m in February. But that came after contractions in …
Note: we will be discussing the future of OPEC+, oil prices, and the Gulf in an online briefing on Wednesday 7 th May at 1pm BST. You can register here . Oil relief rally hits wall of supply uncertainty The various tariff-related row-backs and carveouts …
Business surveys for April suggest that US tariffs have not done much damage in the euro-zone so far. The euro-zone Composite PMI edged down rather than collapsing and the Ifo Business Climate Index for Germany, which is the most vulnerable of the larger …
The fall in market interest rate expectations since ‘Liberation Day’ is striking. On 31 st March, investors were pricing in just two more 25 basis points (bps) interest rate cuts this year from 4.50% now to 4.00%. Now they are fully pricing in three more …
China continues to rebuff Trump Earlier this week, President Trump gave the clearest indication yet that he is keen to row back tariffs on China, which he said would “come down substantially”. But, for now at least, the White House has ruled out doing so …
Slump in Korean construction not over GDP figures published this week show that Korea’s economy remains in deep trouble. GDP contracted by 0.2% in q/q terms in the first three months of the year and was 0.3% smaller than a year ago. The outturn was much …
Trump policies may be levering India towards US US Vice President JD Vance hailed “very good progress” on a potential trade deal between Washington and New Delhi during his visit to India this week, and prospects do appear to have brightened with the two …
Case for aggressive easing remains weak Flash PMI data released this Wednesday suggest that ongoing global tensions are doing little to dent business confidence in Australia. Although firms reported a second successive decline in new export business as a …
Underlying inflation set to surpass 3% Inflation excluding fresh food and energy picked up from 2.6% to 2.9% in March. And the big jump in inflation in Tokyo in April at first glance would suggest that the Bank of Japan is starting to fall behind the …
Egypt’s draft budget points to more tightening Egypt’s Finance Minister Ahmed Kouchouk presented the draft FY2025/26 Budget to parliament this week and reaffirmed the turn to austerity, including efforts to raise taxation and cut subsidies, all of which …
24th April 2025
While the turmoil across financial markets has eased a bit this week, the dollar has continued to weaken across the board. The gap between actual exchange rates and what short-term interest rate differentials point to has widened a bit further, suggesting …
17th April 2025
Markets were almost evenly split on what the Bank of Canada would do yesterday, right up until the last minute. In the end, the Bank opted to keep interest rates unchanged at 2.75%, rather than loosen policy by an additional 25bp. In his opening …
More cuts to come from the ECB This week’s decision by the ECB to cut interest rates came as no surprise, and the Bank’s overall messaging reinforces our view – which is shared by investors – that the Bank will keep cutting. (You can read our response …
Recession looking even less likely For all the recent anguish about tariff-induced equity selloffs and plunging sentiment, this week served as a valuable reminder that the only true measure of the health of the US economy remains the hard data. On …
