The latest low-profile data suggest that Saudi Arabia’s non-oil economy has started to lose momentum. And with the shift to a more aggressive oil output policy causing oil prices to fall, further fiscal consolidation is in the pipeline, which will weigh …
28th May 2025
As was widely expected, the RBNZ cut its Official Cash rate by 25bp, to 3.25%, today. The revelation that the decision to cut was not a unanimous one has been interpreted as a hawkish signal by financial markets. However, we would put more emphasis on the …
Despite all of the debt and deficit news out of the US, the spotlight in ultra-long bond markets has increasingly been focused on Japan. The surge in yields there last week seems to have sparked a global sell-off, and the subsequent plan from Japan’s …
RBNZ cuts by 25bp, signals further easing is likely With the RBNZ clearly concerned about the health of the economy, we continue to believe that its easing cycle has much further to run. The RBNZ’s decision to cut rates by 25bp, to 3.25%, at its meeting …
Hot CPI print will give the RBA pause for thought With underlying price pressures proving somewhat persistent, we're sticking to our view that the RBA won't cut rates as far as markets are anticipating. According to the monthly CPI indicator, headline …
The 10-year Treasury term premium, as estimated by ACM , rose to a more-than-decade high of ~0.9% last week amid renewed concerns about US fiscal policy. But while the premium remains far below the ~4% it topped in the early 1990s, for example, we doubt …
27th May 2025
For most of the time since the euro was established, the ECB’s “one size fits all” interest rate policy was a major problem for the single currency area. It contributed to imbalances between countries in the 2000s and to a prolonged downturn in peripheral …
We doubt that the region’s strong start to the year will be sustained given the backdrop of lower commodity prices, tight policy and, in Mexico’s case in particular, uncertainty around US trade policy. Despite the recent dovish shift by many of the …
Resilience of core orders likely to be temporary The rebound in core durable goods orders in April wraps up a month of solid activity data, underscoring that tariffs have yet to inflict the severe damage on the economy some had feared. Nonetheless, the …
Easing inflation increases chances of a hold at Copom’s June meeting The fall in Brazil’s headline inflation rate to 5.4% y/y in the first half of May means that the risks to our forecast for a final hike in June are skewed to the downside. But if the Q1 …
Easing cycle to remain on pause, but tariff risks grow larger The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think it is likely that above-target inflation will prevent interest rate cuts being delivered this …
Less favourable conditions for global goods production and trade will be yet another factor weighing on demand for industrial metals and supports our view that prices will fall by more than the consensus expects. While we expect price declines across …
Regional growth resilient (for now) despite tariffs The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that pockets of the region are starting to feel the bite from US tariffs, but that overall regional …
Economy weak, inflation expectations eased May’s euro-zone business and consumer survey from the European Commission shows a small improvement in sentiment, but the data are still consistent with the economy struggling. And the price expectations indices …
Russia’s invasion of Ukraine caused grain prices to surge to record levels in 2022, but a peace deal won’t lead to large falls in prices. This is mainly because Ukrainian grain production has already largely recovered from the war-related disruption. …
The well-known quality issues with the UK’s labour market data might well extend to some of the other UK economic data. This matters as it could have a critical bearing on policy decisions and lead to economic growth and inflation that is either too high …
European residential property outperformed all-property for the third consecutive year in 2024 and our updated forecasts suggest that this will continue over the coming five years. Returns were especially strong in the Netherlands, but going forward we …
The bulk of the evidence suggests that the recent sharp slowdown in regular earnings growth is a statistical anomaly rather than genuine. With this year’s spring wage negotiations resulting in the fastest pay hikes in decades, we still expect the Bank of …
Although the détente in the trade war may provide some respite to the Chinese economy in the near term, we remain pessimistic about its longer run prospects. The slowdown in China will undoubtedly have negative spillovers for Australia’s mining sector, …
BoI leaves rates on hold, timeline for easing slipping back The Bank of Israel (BoI) left its policy rate unchanged as expected at 4.50% again today, but the accompanying communications took a slightly more hawkish tone on inflation. We think the easing …
26th May 2025
Over to the Senate The House passed its “One Big Beautiful Bill” budget reconciliation on Thursday, which extends the 2018 Trump tax cuts beyond this year, raises the personal exemption for retirees, and eliminates taxes on tips and overtime pay. To …
23rd May 2025
President Trump’s recommendation of a 50% tariff on the EU gave the dollar only a short-lived boost and the DXY index is still on track to snap a four-week ‘winning’ streak. This looks likely to be the largest weekly decline since early April and, as was …
How concerning is underlying inflation? The removal of the carbon tax pushed headline inflation down to 1.7% in April, comfortably in the bottom half of the Bank of Canada’s 1% to 3% target range. Nonetheless, the acceleration of the Bank’s preferred …
Still some bright areas of the housing market Despite various headwinds and weakness elsewhere in the housing market, new home sales grew strongly in April. We do not expect that this strength will be maintained throughout the year, though, as recovering …
Donald Trump jolted markets on Friday with a threat to slap steep tariffs on the EU. Group Chief Economist Neil Shearing jumped back on the podcast to join David Wilder and unpack whether this is classic brinkmanship – or something more serious. In the …
Copom: one final hike? Brazil’s Q1 GDP data due next Friday should show that the economy recorded strong growth in Q1, supporting the case for the central bank to deliver one final hike in this cycle. Having slowed sharply at the end of last year, …
RBI to transfer record dividend The RBI today announced a dividend transfer of INR2.7trn (US$34bn, 0.8% of GDP) to the Finance Ministry for FY24/25 (which ended in March). This is a record amount in both INR terms and relative to GDP, and exceeds the …
Assessing the fallout after a busy election weekend Last Sunday was a busy day of voting in CEE and threw out some surprises. Pro-EU centrist Nicusor Dan won the second round of Romania’s presidential election, even though he’d lagged in the polls. …
ECB account reveals disagreement The account of last month’s ECB meeting, published on Thursday, showed diverging views on the risks to inflation and the appropriate monetary policy stance. It noted that “a few” members of the Governing Council “could …
US-EU brinkmanship highlights risks President Trump’s threat of a 50% tariff from 1 st June may well turn out to be a negotiating tactic and seems very unlikely to be where tariffs settle over the long run. But if it were implemented it could result in a …
Tariff front-running supports retail sales The jump in motor vehicle sales in March suggests that tariff front-running has supported consumption, although the big picture is that retail sales were strong in most of the key sectors. Likewise, the …
The headline news this week was the bigger-than-expected leap in CPI inflation from 2.6% in March to 3.5% in April. (See here .) It would be easy to conclude that most of the increase was due to one-off price rises that will stay in the inflation rate for …
SA budget merely presses pause on fiscal debate South Africa’s finance minister appears to have succeeded – at the third time of asking – at delivering a 2025 Budget that will make it through parliament. But it seems almost certain that tensions within …
Fewer exports to US but more to other markets Chinese exports have so far held up much better than many had feared in response to US tariffs. In dollar terms they expanded a robust 8.1% in April . And there are few signs of weakness this month. Growth in …
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Germany’s historic shift to looser fiscal policy will give the …
Note: we will be discussing oil, gold, industrial metals, and more in an online briefing on Wednesday 4th June at 3pm BST. You can register here . Not a literal Golden Dome… Gold bugs’ hearts will have skipped a beat when President Trump announced the …
MAS to loosen policy further GDP in Singapore contracted by 0.6% q/q last quarter according to the second estimate of national accounts figures published on Thursday. While this marked a slight improvement from the initial estimate (a 1.0% decline), it …
This page has been updated with additional analysis since first publication. The sun won’t shine on the retail sector forever Although for the first time since 2015, excluding the pandemic, retail sales volumes have risen for four months in a row, April’s …
We think the yields of Japanese government bonds will continue to rise, but because of BoJ hikes rather than concerns about fiscal sustainability. Fragile bond market sentiment hasn’t been limited to the US lately: a sharp rise in yields in Japan has …
Deficit shrinking, debt ratio falling While the cabinet’s approval rating has declined since PM Ishiba came to power in October, it hasn’t yet reached levels that in the past triggered electoral defeats or prompted other Prime Ministers to resign. That …
Inflation fight isn't over yet While the RBA’s decision to cut rates by 25bp at its meeting on Tuesday was widely expected, the Board’s overtly dovish messaging still caught most observers off guard. Indeed, Governor Bullock made news in her post-meeting …
Strong inflation will prompt rate hikes later this year Underlying inflation remained strong in April despite the slashing of public high school fees and we still expect the Bank of Japan to tighten policy further this year. Headline inflation was …
CBE delivers smaller cut as disinflation (temporarily) stalls The Central Bank of Egypt (CBE) cut its overnight deposit rate by a smaller-than-expected 100bp today, to 24.00%. But as inflation continues to ease over the coming months, we still think …
22nd May 2025
The passage of Donald Trump’s ‘one, big beautiful bill’ through the House of Representatives today has done little to calm nerves in the bond market, which had already been frayed by Moody’s recent decision to downgrade the US’ sovereign credit rating and …
The latest flash PMIs point to weak activity and a softening of price pressures in advanced economies outside the US. But the surveys suggest that tariffs are already having an inflationary impact in the US. Our estimate of the weighted average of the …
Transaction activity weakens again The further decline in existing home sales in April suggests that elevated mortgage rates and economic uncertainty are keeping buyers on the sidelines. Things could go from bad to worse over the next few months, with the …
Overview – Inflation has fallen further towards central banks’ targets and we expect it to remain subdued across most of the world. Tariffs will cause a temporary uplift in the US. But elsewhere, their economic drag will add to the disinflationary effects …
Israel readying strikes on Iran’s nuclear facilities? Rumours that Israel could strike Iran’s nuclear facilities suggest that conflict in the region could escalate. But there are reasons to think that the fallout for the oil market, and therefore the Gulf …
