We think the outperformance of Mexican assets and the peso since “Liberation Day”, owing to large tariff exemptions for exports to the US, has largely run its course. Instead, we think the weak economic backdrop in Mexico and the risk of renewed …
11th July 2025
The turmoil in Turkey’s financial markets earlier this year proved to be a blip, and we think the conditions are in place for the central bank to resume its easing cycle this month. But bringing inflation back to single digits and reining in the current …
10th July 2025
Aggregate EM inflation is now at its lowest level in four years, with notable declines this year across Asia. We still think the outlook will be characterised by higher inflation in Latin America and Central Europe than in Asia, but we’ve become less …
Auto exporters in China have adapted to the EU’s tariffs on EVs by lowering export prices and focusing on vehicles that are not subject to tariffs. Even if trade restrictions were to remain in place, the extent of China’s cost advantage means that …
Poor performance in the US and APAC property markets is set to drag on the global recovery over the next few years. While strong economic fundamentals argue for a material improvement in total returns in the US in the longer term, APAC won’t be as …
President Trump’s threat to put a 50% tariff on imports from Brazil is less about trade disputes and more about political and policy disagreements, and so it’s harder to see an off-ramp for Brazil compared with other countries that received tariff …
The Bank of Korea left interest rates unchanged at its meeting today (at 2.50%), but gave strong hints that the easing cycle still had further to run. With growth set to struggle and inflation contained, we are expecting a further 50bps of cuts before the …
Big rebound in demand, but housing market unlikely to recovery quickly While June’s RICS survey suggests most of the recent weakness in the housing market was due to the temporary influence of the change in stamp duty, it doesn’t yet point to a marked …
We anticipate further yield falls for prime Portugal retail assets over the rest of the year. And with robust economic fundamentals and a solid rental outlook, we forecast Portugal to be one of the best retail performers in the euro-zone over 2025-29, …
9th July 2025
Chile’s economy is the most exposed globally to US copper import tariffs. But while the impact would probably be small, it would add to deep-seated problems facing the copper sector. Our commodities covered the implications of a 50% tariff on the copper …
The looming imposition of tariffs on copper by the US will continue to support prices in the US. But for all the attention on the surge in prices there, it won’t be long before fundamentals snap back into focus in markets outside of the US, which in our …
The combination of exposure to retaliatory tariffs, upward pressure on input costs, and heavy reliance on “unauthorised” labour means that the outlook for the US farming sector is highly uncertain. But to the extent to which pain is offset by higher …
After stemming the inflow of unauthorised immigration over the Southwest border, the Trump administration now appears to be gradually ramping up the number of detentions and removals. This crackdown is beginning to have a more marked impact on labour …
Outside of China, there is no immediate threat of any other country in Asia falling into a prolonged period of deflation. That said, persistently weak price pressures are likely to remain a worry for central banks and will tip the balance towards more …
In this Update, we answer the key questions about what stablecoins are, whether they will become more widely used and what implications they have for the US Treasury market. What are stablecoins? Stablecoins are a type of cryptocurrency, whose value is …
8th July 2025
The continued weakness in the housing market over the first six months of this year and the cracking labour market means we now expect the recovery in house prices to start later and be slower. But bigger falls in mortgage rates than we previously thought …
While the Reserve Bank of Australia’s today defied widespread expectations of a rate cut, we still expect the Bank to resume its easing cycle at its August meeting. And with GDP growth still sluggish and inflation back at target, we expect the Bank to …
Trump has confirmed that punitive tariffs on Asian countries will take effect on 1 st August unless trade deals are agreed by the end of the month. Despite the urgency, negotiations could prove difficult if, as some reports are indicating, the US is …
The Chinese authorities are seemingly on the cusp of roll ing out nationwide childbirth subsidies . While the proposed scale of the program is too small to have much near-term impact on the birth rate or consumption, it would mark a shift in mindset and …
Our base case remains that Japan will reach a deal with the US to fend off the threatened 25% US tariff. If that deal is reached soon and includes no or only a modest increase in the US tariff rate, the case for another BoJ rate hike in October remains …
A weaker dollar should not compound the upward pressure on goods prices from tariffs too greatly given that the greenback remains strong by historical standards and, in any case, the pass-through of exchange rate moves to final consumer prices tends to be …
7th July 2025
The UAE’s non-oil sector has seen a strong run of growth recently and we think that robust activity in tourism and retail sectors as well as solid credit growth means that non-oil GDP growth will accelerate this year. Coming alongside rising oil output …
Taiwan and Korea face some of the world’s worst demographic headwinds with working-age populations set to shrink by 1% a year over the next decade. Efforts to boost fertility have largely failed, and immigration on the scale needed to stabilise the size …
Vietnam’s US-bound exports have surged since the US imposed very high tariffs on imports from China. While the export figures are overstating the benefits to Vietnam’s economy due to a surge in rerouting, the country is set to remain a key beneficiary …
With the House of Representatives today passing the Senate’s bigger version of the budget reconciliation, the Republicans appear to have met President Trump’s timeline – to have the bill reach his desk for signing by the July 4 th Independence Day …
3rd July 2025
High income growth and immigration are likely to continue to drive increases in house prices in Spain over the coming years. Demand will be further boosted by the recent fall in mortgage interest rates. Meanwhile, investment in dwellings is likely to grow …
Protests have erupted again in Kenya recently, bringing violence and instability, and highlighting that the government lacks the political capital to repair the fragile fiscal position. With international borrowing costs prohibitively high, financing …
Whatever transpires in EU-US trade talks next week – deal, no-deal or an extension – tensions over transatlantic trade relations are likely to persist throughout President Trump’s second administration. What will happen to the baseline tariff? With the …
We still think gilts will rally over the rest of this year even if fiscal concerns don’t entirely abate, as the Bank of England cuts interest rates by more than investors seem to expect. But concerns about debt levels and a dovish central bank could be a …
The fact that the RBA isn’t cutting interest rates during a housing downturn won’t limit the rebound in house prices, but the extremely stretched level of affordability will do so. Even though we expect interest rates to fall by more than most expect, the …
Vietnam has had one of the weakest hands to play in its trade negotiations with the US. If it is confirmed that it has agreed to a 20% tariff, this isn’t a template that other countries will feel they have to follow. Instead, the key lesson for other …
2nd July 2025
We are forecasting a slower recovery in APAC real estate markets than in any other cycle, the extent of which would also make the region a global laggard. Within the region, we also expect a further rise in Australian office yields and a huge 20% …
Real household disposable income growth is now slowing, but we still expect household consumption will accelerate to around 1.8% y/y on average over 2025-27 as households start to run down the savings they have built up. That will help all-retail rents …
The Taiwan dollar has appreciated sharply against the US dollar in recent months but, for a host of reasons, the central bank seems now to be less tolerant of further currency strength. Even without intervention, we think that the currency will give up …
Given the limited progress in concluding trade negotiations since Liberation Day, there is a risk that huge tariffs will be imposed on 9 th July after the 90-day pause expires. We suspect that further last-minute concessions will be made to permit …
Our views on the outlook for monetary policy in Latin America have been on the hawkish side for some time, but we now think that there’s scope for interest rates in many countries in the region to come down by more than most expect. The key exception to …
The latest batch of monthly activity and inflation data for Korea support the case for further monetary policy easing by the central bank. We are expecting another 50bps of cuts before the end of the year. The monthly activity data for May, which were …
PBOC turns less dovish despite deflation concerns One might have thought that fading concern about the exchange rate and growing concern about deflation would provide the perfect moment for the PBOC to step up monetary easing. But the Bank’s latest …
The JOLTS data suggest the labour market remained healthy in May, with job openings and private sector hiring rising, and layoffs low. However, the sharp rise in accommodation and food services job openings, despite a fall in tourism, is a little …
1st July 2025
The EM manufacturing PMI recovered in June, led by China, which regained some momentum, and India, which continued to outperform. That said, the surveys remained at subdued levels in most EMs. And the second half of the year will prove difficult for EM …
The latest PMIs suggest that while global industrial activity gained some momentum at the end of Q2, this will probably prove short lived. Meanwhile, the surveys continue to suggest that tariffs are contributing to strong price pressures in the US, while …
Somewhat paradoxically, climate-driven shifts in tourist patterns could help to smooth the seasonal peaks seen in summer destinations, and some countries – particularly in northern Europe – will become more attractive places to visit. However, there is a …
Thailand faces renewed political uncertainty after Prime Minister Paetongtarn Shinawatra was today suspended. This will undermine consumer and business sentiment and complicate efforts to agree a free-trade deal with the US. Thailand’s Constitutional …
China is moving toward ending its decades-old system of “presales” for newly-built residential property. This would reduce risks for homebuyers. But hopes that the change would provide a material boost to home prices are likely to prove misplaced. …
The June PMI readings for most countries in Asia were subdued. With worries about growth having taken precedence over those about inflation, we think most central banks in the region will continue to loosen monetary policy and by more than most analyst …
House prices rose the most since last year in June and with the RBA set to cut interest rates much further, the housing market will continue to gain momentum. However, affordability will remain quite stretched by historical standards so we doubt that …
Capital inflows into EMs held up well in June despite the escalation of conflict in the Middle East. Were higher US tariffs to come into force after President Trump’s 90-day reciprocal tariff reprieve ends, that could spur a bigger move in outflows. But …
30th June 2025
Recent house price declines suggest a shift toward a more buyer-friendly market, as rising home listings increase choice and temper seller expectations. Nonetheless, leading indicators and solid market fundamentals indicate that any decline in prices will …
A number of AI-linked redundancies have hit the headlines recently, reigniting fears that the adoption of AI will lead to a surge in unemployment. We continue to think that fears of a big long-term rise in “technological unemployment” are misplaced. While …
Momentum rebounds, but headwinds persist This report was first published on Monday 30th June, covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Tuesday 1st July and Caixin services and composite PMIs on Thursday 3 rd …
