This publication has been updated with additional analysis. Germany recovering but euro-zone still weak February’s Flash Composite PMI provides more evidence that, after expanding by only 0.1% in Q4, the euro-zone economy remains all but stagnant in Q1. …
24th March 2025
While Korea’s productivity growth has slowed, this has been offset by faster employment growth as more women and elderly have entered the labour market. If that trend continues and productivity growth picks up a bit in response to the AI revolution, …
Could a ‘Mar-a-Lago Accord’ fix what ails the US balance of payments? Group Chief Economist Neil Shearing is on the show this week to tackle the various ideas around what the Trump administration could do to address long-standing global imbalances. He …
21st March 2025
The dollar is ending the week broadly flat on net, continuing its stabilisation after February’s sell-off. With the latest round of central bank policy announcements in the rear view mirror (having brought no major surprises) and the Trump …
The prospect of looser fiscal policy in Germany isn’t the only significant reason MSCI’s Europe Index has outperformed its USA Index since Donald Trump returned to the White House. The ‘big-tech’ sectors’ fall from grace in the US has also been very …
Inflation at risk of takeoff On Tuesday we learned that headline inflation jumped to 2.6% in February, from 1.9%. While a rise had been expected given the resumption of GST in the middle of last month, broader price increases elsewhere in the economy …
With the Fed almost certain to leave interest rates unchanged on Wednesday, the real focus was on how FOMC participants would update their economic forecasts to fit the policy course being charted by the new Trump administration. In the end, policymakers …
Structural weakness weighs on long-run outlook While China’s treasury yields have picked up in recent weeks, we don’t think that the trend decline of the last decade is over. We expect China’s 10-year government bond yield to fall below Japan’s this year, …
A pause for thought? The Bank of England was never going to do anything but continue the cut-hold-cut-hold pattern and keep interest rates unchanged at 4.50% this week. But the Monetary Policy Committee’s (MPC) hawkish tone suggests it is preparing to …
Colombia: public finance risks back to the fore The resignation of Colombia’s finance minister Diego Guevara after just over three months in office has thrown the Andean nation into renewed disarray and raises big questions about the outlook for the …
Kenya and the IMF agree to disagree Kenya and the IMF abandoned talks over the ninth review of the country’s existing financing programs this week and, while a new deal is in the offing, public debt concerns are likely to build. It’s been clear for some …
Gilt yields should fall back this year, but with property looking somewhat overvalued we doubt that will trigger much in the way of yield compression. That means the recovery in all-property returns will be weak by past standards. Thanks to stronger …
Gold smashes through $3k In what feels a lot like déjà vu at this point, gold set yet another record high this week, this time as it smashed through the $3,000 per ounce mark. The financial press have linked the latest leg up in the price over the last …
Heightened military threat… but stronger GDP The rise in optimism about the euro-zone economy over the past few weeks has been remarkable. The ZEW index of investor sentiment in Germany saw one of the biggest increases on record in March. (See Chart 1.) …
China’s exports of the “New Three” technologies fell in early 2025 as the boost from front-running tariffs in the US appeared to fade. With tariffs only likely to climb and the adoption of clean technologies slowing in some developed markets, China will …
Consumption outlook deteriorating The sharp drop in retail sales volumes in January is not a major concern, coming off a massive GST holiday-driven surge the month before. The worry is that it could signal what's to come, with the preliminary estimate …
The latest data suggest that the world economy has made a relatively weak start to 2025. Activity in China has been soft so far this year amid a pullback in fiscal spending, while a surge in US imports due to tariff front-running appears to have caused US …
Overview – The euro-zone will get a boost from Germany’s decision to ditch its fiscal rules and ramp up defence spending, as well as the relaxation of the EU’s budget rules. But governments other than Germany won’t loosen policy very much, and the …
Erdogan alarms investors The arrest of a leading opposition politician in Turkey on Wednesday triggered a major sell-off in the country’s stock market and currency. Events are in flux at the moment, but there are three takeaways. The first is that the …
CBR sounds slightly less hawkish at it leaves rates on hold The decision by the Central Bank of Russia (CBR) to leave its policy rate on hold at 21.00% today was accompanied by somewhat less hawkish communications. While we doubt the CBR will cut interest …
Equity jump unlikely to be start of sustained rally At the time of writing, India’s benchmark Sensex stock index has risen by 4% this week, making it its best week in almost three years. The big picture, however is that the Sensex is still 11% off its …
BoK’s dovish minutes This week’s publication of the minutes from the Bank of Korea’s February meeting , at which it cut rates for a third time in four meetings, show the Bank is becoming increasingly worried about the poor growth outlook. The concern was …
This page has been updated with additional analysis since first publication. Gloomy news ahead of next week’s spring fiscal event Although it will have no impact on the fiscal update next week, the significant overshoot in borrowing in February highlights …
Foreign student arrivals not a gamechanger Yesterday the ABS published data showing that Australia’s population growth slowed from 2% y/y in Q2 to 1.8% y/y in Q3. That slowdown was driven primarily by easing net overseas migration: on a 12-month basis, …
Export volumes jump the most on record While export values have surged in recent years as the weaker exchange rate lifted the yen-value of shipments and firms passed on soaring input costs, the same can’t be said for export volumes, which have tread water …
Strength in inflation suggests BoJ will hike rates again soon The strength in underlying inflation in February suggests that the Bank of Japan could hike rates at its next meeting in May but we still expect that uncertainty over the impact of US tariffs …
20th March 2025
Norges Bank signalled in January that a rate cut was likely at its meeting next week, but we now think it will leave the policy rate unchanged at 4.5%. While we still suspect that it will lower interest rates a couple of times this year, the case for much …
Turkey’s central bank responds with a rate hike The decision by Turkey’s central bank (CBRT) to hike its overnight lending rate from 44% to 46% today suggests that policymakers have been spooked by the market volatility yesterday and are keen to reassure …
Overview – Mexico is one of the most vulnerable countries to US import tariffs and, at best, the economy will just about eke out positive growth this year. More sweeping tariffs than we have embedded in our forecasts could easily tip the economy into …
Kuwait’s debt law marks a new era for fiscal policy A new public debt law is set to be passed in Kuwait in the near future allowing for the government to finance budget deficits more sustainably. In 2017, Kuwait’s authorisation to issue or refinance debt …
The South African Reserve Bank left its repo rate on hold at 7.50% today, but a minority of MPC members voted for a cut and we do not think the easing cycle is over. If inflation continues to surprise on the downside as we expect and there is clarity on …
India has long had a relatively protectionist trade policy but, driven in part by the reciprocal tariff threat from the US, there appears to be a slight shift in approach from policymakers. Import duties on certain goods are being lowered as concessions …
While leaving interest rates at 4.50% today, the Bank of England seemed less committed to continuing to cut rates by 25bps every quarter. We had already been pondering this possibility and today’s news has tipped us towards putting a pause in the rate …
Unexpected rise not a sign of strength to come The small rise in existing home sales in February is unlikely to mark the start of a period of strength for buying activity given that purchase mortgage applications, which lead transactions by a month or …
A large drag from net trade will likely tip GDP growth into negative territory this quarter but we should see a rebound in Q2. Nonetheless, we expect quarterly growth to be weaker this year on average, as President Trump’s trade and immigration policies …
The financial market sell-offs in Indonesia, Turkey and Colombia this week are, in part, a reflection of concerns about strained balance sheets. We think that vulnerabilities in some frontier markets and slow-burning fiscal problems in a handful of larger …
For an updated and more detailed version of this analysis, click here . Committee less committed to collection of rate cuts The Bank of England was always going to continue its cut-hold-cut-hold pattern by leaving interest rates at 4.50% today but, in the …
Brazil’s inflation outlook appears increasingly worrying, and the headline rate is likely to hit around 6% y/y by year-end, which is a bit higher than most expect. That’s likely to trigger a few more rate hikes in the coming months, taking the Selic rate …
Despite numerous reports of firms rowing back on remote work, the evidence in the UK, US and the EU suggests that the share of jobs being done remotely has remained constant over the past couple of years. Admittedly, that may reflect relatively tight …
The Trump administration’s efforts to end to the war in Ukraine have raised the prospect of sanctions relief for Russia. This Focus outlines the main sanctions in place and the macroeconomic impact lifting them could have. While US sanctions relief …
The Riksbank left both its policy rate and its interest rate forecasts unchanged at today’s meeting, suggesting that monetary policy will be on hold for the foreseeable future. And while policymakers largely dismissed the sharp rise in inflation so far …
In the press conference following today’s SNB meeting, Chairman Martin Schlegel emphasised that inflation risks are mainly do the downside, suggesting that a further cut in June is possible. But we think today’s rate cut, taking the policy rate from 0.5% …
Our interactive ‘Corporate Bonds” dashboard features many of the charts shown in this report and more. It will be updated on a regular basis with our latest insights and forecasts. We don’t think US high-yield (HY) spreads would fall all the way back …
This interactive dashboard allows you to explore our forecasts for investment-grade (IG) and high-yield (HY) corporate bonds in the US, UK and euro-zone. This includes our forecast for yields, option-adjusted spreads (OAS), and total returns out to …
India’s economy is emerging from its recent soft patch. Headline CPI inflation should remain close to the RBI’s 4% target over the coming months, enabling the central bank to continue easing monetary policy. We’re expecting a further 75bps of cuts to the …
We still expect Treasury yields to rise by the end of the year, despite the seemingly reassuring news for bonds from the Fed on Wednesday. There were, at face value, a few things for Treasury investors to take heart from in the latest Fed meeting. The …
