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 …
2nd July 2025
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. June’s PMIs suggest that China’s economy regained some …
Despite a sluggish economic backdrop and rising vacancy rates in the wider Paris office market, we continue to believe that prime office rental growth will be stronger than the consensus expects. This reflects the importance of the continued occupier …
27th June 2025
The flow of funds data suggest that Japan’s budget deficit has continued to narrow after reaching a 30-year low in 2023. And while the recent plunge in the ratio of government debt to GDP partly reflects valuation changes caused by soaring bond yields, we …
A comparatively attractive spread over risk-free rates and solid investor sentiment mean there is scope for Swiss prime property yields to fall further than in most other European markets this year. That would allow all-property capital values to rise …
26th June 2025
Most major DMs need to shrink their primary budget deficits significantly and most will find it hard to do so. This will exacerbate growing worries about fiscal sustainability. The US and France have most to do. Government deficits in the major DMs remain …
A downbeat view on new supply underpins our overall CRE outlook. In the short term, the risks skew firmly to the downside and recent economic disruption reinforces this, while further out tight financial conditions and ongoing cost and labor pressures …
25th June 2025
If it is implemented in full and funded through borrowing, the target for NATO members to raise defence spending to 3.5% of GDP by 2035 could push debt burdens up by 10% of GDP or more over the next decade. This would add to fiscal risks in some …
The One Canadian Economy Act (Bill C-5) is a positive step towards reducing dependency on the US in the long run. But it will do little to offset the blow to trade from tariffs given that even fast-tracked infrastructure projects would still take years to …
Germany’s budget plans for 2025-29 confirm that the much anticipated big fiscal stimulus is coming and leave us comfortable with our view that GDP growth will pick up significantly from next year and the deficit will rise to as much as 4% of GDP. The …
India’s goods trade deficit with China is now at a record high. This largely reflects rising goods imports from China which, while bringing economic benefits in some areas, are also raising concerns over the threat posed to domestic industry. Given …
Despite solid take-up the industrial vacancy rate has risen to a 10-year high, which reflects occupiers shifting into new buildings at the expense of the secondhand market. We expect that dynamic to continue and a further small rise in vacancy will push …
Data from the first two months of US tariffs being in effect suggest that both Canadian and Mexican manufacturers were struggling to make their exports USMCA-compliant, which poses a downward risk to our GDP forecasts for those countries. The US first …
24th June 2025
The Israel-Iran ceasefire is likely to prove fragile. But so long as both parties show themselves unwilling to attack export-related energy infrastructure and/or disrupt shipping flows through the Strait of Hormuz, we expect bearish fundamentals in the …
Prices of public services and rents are rising at the fastest pace in years, which supports our view that inflation will remain above the Bank of Japan’s 2% target even as the impact of the post-pandemic import cost shock fades. That underpins our view …
The Gulf economies are vulnerable if Iran decides to attack oil infrastructure in the region, or block the Strait of Hormuz, in retaliation for the strikes by Israel and the US. So long as that is avoided, the Gulf economies could stand to benefit via …
23rd June 2025
This Update answers five key questions about a potential “closure” of the Strait of Hormuz and the potential impacts on global energy markets from any attempt to close the waterway. As it stands, it is arguably not in Iran’s best interests to close the …
China’s New Three export volumes edged down in May, but remained close to record highs, as the impact on trade from US tariffs was partially offset by increased shipments to the Middle East. While the US-China trade truce could help provide a small boost …
20th June 2025
As time marches on, the once distant threat of demographic pressures for many countries, especially those in Europe, is fast becoming a reality. This adds to the other pressures on the public finances, such as higher defence spending, and increases the …
Taiwan’s stock market has been a key beneficiary of the AI boom and was one of the top performers in the world in 2024. This year though, equities in fellow Asian tech heavyweight Korea have taken some of the spotlight. We expect Taiwan to be back on top …
A combination of factors, including surging energy and wage costs and an increased regulatory burden, have pushed multifamily operational costs to over 40% of rent, cutting income returns. But with energy costs set to drop and a looser labour market …
19th June 2025
We’re discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST today. (Register here .) And a t our in-person Roundtables in London on Tuesday 1 st July, clients can discuss with our economists and their …
There are signs that Japanese carmakers are reducing their prices in the US to retain market share, which seems to vindicate the Bank of Japan’s concerns that US tariffs will weigh on corporate profits. Even so, we still expect firms to grant another …
The Fed will remain on the sidelines for some time, waiting to see what impact tariffs will have on price inflation. We suspect that lingering fears of a more persistent impact will persuade the Fed to hold off cutting interest rates until the first half …
18th June 2025
Oil prices could feasibly surge to $130-150pb were hostilities between Israel and Iran to escalate in a way that resulted in major disruption to Middle Eastern energy exports and/or shipping through the Strait of Hormuz. However, so long as the conflict …
This Update outlines potential outcomes of the Iran-Israel conflict and teases out the implications for the region, the global economy and commodity and financial markets. One point that emerges is that an escalation of the conflict still leaves multiple …
April’s activity data suggest that the weakness of South Africa’s economy in the first quarter of the year – in which GDP expanded by a measly 0.1% q/q – carried over into the start of Q2. Industry continued to struggle and the retail sector lost some …
May’s steep decline in euro-zone services inflation was largely due to the timing of Easter. But looking through that effect, services inflation is on a downward trend that we expect to continue. Data published this morning confirmed that services …
Two developments in borrower and lending behaviour mean that housing activity and prices can be higher than before the pandemic for any given mortgage rate. That’s why we expect housing transactions to recover to their pre-pandemic levels and house prices …
Denmark’s exceptional growth in recent years has been driven by one sector (pharmaceuticals) and one firm within that sector (Novo Nordisk). Its output has declined this year, raising questions about how much it will support growth in future. But even if …
17th June 2025
The Bank of Japan decided to taper its bond purchases at a slower pace from next year and retained its pessimistic outlook for the economy. However, we expect that mounting upside risks to the Bank’s inflation forecasts will prompt the Bank to hike rates …
Tariff shock slowly beginning to pass The rise in home sales in May suggests a nascent recovery is underway in the housing market following a tariff-induced shock. While we see further upside for house prices this year, as lower mortgage rates boost …
16th June 2025
If escalating tensions in the Middle East drive a prolonged period of higher oil prices, that could provide enough of an incentive for US oil producers to sustain the current high level of output for now. That said, US oil output faces growing headwinds …
The Israel-Iran conflict has continued to escalate. This Update summarises how our views on the macro impact have evolved over the past few days and answers the most frequently asked client questions that we have received. What have we learnt in the past …
The Colombian government’s fiscal plans unveiled late on Friday will have dashed any lingering hopes that policymakers would try to stabilise the public debt-to-GDP ratio, at least ahead of next year’s election. This points to further downward pressure on …
While spreads in the euro-zone have narrowed further recently, nearing multi-year lows, this is mainly because underlying German Bund yields have risen. Indeed, public finances in some euro-zone countries remain concerning, and rising rates elsewhere may …
13th June 2025
The Deputy Prime Minister has urged the Chancellor to close the commercial property stamp duty ‘loophole’, which could lead to an average increase in tax on property transactions of 2.0 to 2.5%-pts. If well signposted, that is likely to lead to a surge in …
