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
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 …
9th May 2025
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
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 …
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 …
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 …
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 …
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 …
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 …
7th May 2025
If limited just to Kashmir, a period of fighting between Pakistani and Indian forces would have a small impact on the economy of either country. Pakistan would have more to lose than India from a broader conflict, though that would also risk reversing the …
Single-family homes have outperformed other residential sectors over the past four years as a race for space and stretched homebuyer affordability have supported demand, at the same time as developers have offered bulk discounts in the face of waning home …
The gradual recovery in European investment continued in Q1 but going forward transaction totals are likely to be weak as a result of uncertainty around tariffs and the potential downside to property values. As a result, we now think euro-zone investment …
Chinese policymakers will probably find ways to keep the published unemployment rate close to their “around 5.5%” target for this year. But this may mask broader weakness in the labour market as a downturn in exports reduces new hiring, increases …
Chinese policymakers have announced a raft of new monetary easing measures. These will help to shore up growth at the margin. But any boost to credit demand will be modest and today’s moves are no substitute for an expansion in fiscal support. China’s …
Early signs are that Vietnam is doing well as US buyers look to find alternative suppliers outside China. Asia publishes export data much faster than other regions, providing some of the most timely evidence of how trade is being affected by Trump’s …
6th May 2025
Given the shift in OPEC+ policy over the weekend, the global oil market will, all else equal, be better supplied over the coming years than previously looked likely. Accordingly, having consistently flagged the downside risks to oil prices over the past …
In current circumstances it would take a large strengthening of the yen to push inflation below the Bank of Japan’s 2% target. And with profit margins close to record highs, the hit from a stronger yen to corporate profitability probably won’t result in a …
We pay little attention to the official Indonesia GDP figures, which once again showed growth was unchanged at around 5% last quarter. While the official figures are likely to show growth remaining stable over the coming quarters, we expect activity to …
5th May 2025
The manufacturing PMIs show that US trade policy weighed on sentiment across the emerging world, although the falls in the surveys arguably weren’t as bad as might have been feared. In India’s case, there may also be some tentative signs of a pickup in …
2nd May 2025
Paul Samuelson famously quipped in 1966 that the stock market had predicted nine of the last five recessions in the US. We suspect it just sent another false signal about an economic downturn. We can quibble over whether we just had a bear market. On a …
The April PMIs for Asia fell sharply, providing the first sign that Trump tariffs are weighing on sentiment in the region. With concerns about growth mounting and inflation worries continuing to ease, we think most central banks in the region will …
It’s possible that the recent blackout on the Iberian peninsula goes down in history as a catalyst for widescale electricity grid upgrades which ultimately help to bolster the pace of the renewable rollout. But at least in developed economies, it’s …
1st May 2025
Headwinds are gathering for the Swedish economy, and we expect the Riksbank to strike a dovish tone in its statement next week. But it will probably stop short of cutting the policy rate as it waits for some of the economic uncertainty to fade. Meanwhile, …
Oil prices have now fallen by about 18% since ‘Liberation Day’, and one could make the case for them being in oversold territory – particularly if US tariffs are rowed back further, as we expect. But further signs that Saudi Arabia is willing to push oil …
The prospect of a flood of low-cost Chinese exports to African shores may help those economies suffering from high inflation but it risks undermining the growth of domestic industry. Governments in the likes of Nigeria, with a history of employing …
This Update answers some key questions on the recently agreed US-Ukraine minerals deal. In short, estimates of Ukraine’s mineral wealth seem to be overblown. The deal may provide more US support for Ukraine in peace talks, but Russia and Ukraine remain …
The Bank of Japan revised down its growth forecasts and sounded more dovish when it left policy settings unchanged today. However, we believe that the Bank has become far too downbeat about the outlook for inflation and we’re sticking to our forecast of …
Data published for Korea from the past few days suggests the economy remains weak, but that the trade war so far appears to be having a minimal impact. While exports to the US fell in April, the declines were relatively small and were more than made up …
Stretched housing affordability continues to keep a lid on house price growth. And if we’re right that the RBA will only lower rates by another 50bp, it will remain a headwind. But with the housing market no longer creating upside risks to inflation, …
This is a revamped version of our quarterly Financial Risk Monitor to include commentary and analysis of our latest EM risk indicators. Currency vulnerabilities remain near multi-year lows, large deficits leave the public finances in poor shape Higher US …
30th April 2025
Demand from Amazon has been a key driver of industrial fortunes over recent years, so the announcement of a new $15bn injection in the US was greeted warmly by market watchers. But, while this should help boost the sector longer term, a weak economic …
This Update answers several key questions on critical minerals and the economic implications. In short, there is no quick fix to securing access to minerals given the extent of China’s advantage across the value chain. And while volatile mineral prices …
A robust monsoon this year – as predicted by experts – wouldn’t have as big an impact on India’s economy as it would have had a couple of decades ago. But it could boost employment and energy production. What’s more, it would anchor prices of key crops …
This report was first published on Wednesday 30 th April, covering the official PMIs and Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Tuesday 6 th May. Impact of tariffs starting to show up in survey data The …
While higher lumber tariffs will not significantly impact GDP growth in the US or Canada, they will drive up costs for US homebuilders. As affordability is already stretched, it is unlikely that homebuilders will be able to pass these costs onto buyers in …
29th April 2025
The JOLTS data again showed the labour market stabilising at a healthy level in March. While there were for the first time some signs of the DOGE purge of the federal workforce in the survey, the picture still appears far rosier than that painted by …
This Update answers five key questions on Romania’s rescheduled presidential election, the first round of which takes place on Sunday 4 th May. A victory for far-right frontrunner George Simion would likely raise concerns about the country veering away …
Stockholm was one of the worst performing industrial markets in western Europe last year. And despite our relatively upbeat outlook for the Swedish economy, we think the coming years will herald more of the same as high vacancy and a strong supply …
President Trump’s first 100 days in office have brought substantial shifts in US policy. The next 100 will start to reveal whether his presidency is causing a realignment of the global economy. There are two key questions: will most countries be able to …
President Donald Trump’s first 100 days back in office has been characterised by radical changes to trade policy, immigration and the Federal government, all implemented by an unprecedented use of executive power. In the second 100 days, we expect the …
The UK economy is relatively well insulated from the rise in US tariffs, and property even more so. Indeed, while the overall direct impact is likely to be small, some commercial sectors may even see a benefit, such as student accommodation. That said, …
Although the Liberals have just missed out on a majority, Prime Minister Mark Carney should still be able to implement his fiscal plans with support from the NDP or Bloc Québécois. If anything, the need to grant concessions to those parties means fiscal …
Provided it was limited just to Kashmir, a period of fighting between Pakistani and Indian forces would have a small impact on the overall economy of either country. The closing of the only land trade route is also largely symbolic – bilateral trade was …
28th April 2025
The NCREIF Property Index (NPI) recorded a third consecutive quarter of positive total returns in Q1 2025, driven primarily by income. Although capital value growth turned positive, questions remain over whether appraisal-based valuations fully reflect …
The recent reduction in equity market volatility has reversed most of the tightening in our market-based narrow Financial Conditions Indices for advanced economies. Our broad FCIs, which also incorporate information on interest rates and lending criteria …
