The US dollar is on course for its best week in two years and looks to have found a near-term floor after its sharp fall in Q2. Today’s strong non-farm payrolls report (and robust ISM surveys earlier in the week), dovish signals from the ECB and the BoE, …
4th October 2024
Home sales struggling to keep up with listings The local real estate board data released this week showed that the housing market is still struggling despite the recent fall in mortgage rates. It was positive to see sales in Toronto grow by a stronger …
September’s blockbuster employment report and the rebound in the October ISM services index mean that any hopes of another 50bp rate cut are long gone. We continue to expect the Fed to take a more measured approach from next month’s FOMC meeting onwards – …
Fiscal risks cloud the outlook for rates in Colombia The decision by Colombia’s central bank (BanRep) this week to maintain the pace of easing with a 50bp cut, to 10.25%, rather than deliver a larger 75bp cut suggests that officials are increasingly …
Israel’s economy has frequently bounced back from conflict throughout its history, but developments over the past week have raised the risk of permanent scarring to the economy from the ongoing hostilities across the Middle East. The latest ratcheting up …
Mozambique votes amid positive gas news Mozambicans head to the polls on Wednesday (9 th ) with the ruling party, Fremilo, widely expected to hold on to power. The elections come amid growing signals that key gas projects, which are vital to the …
Oil spikes, but won’t knock the BoE off course On its own, the jump in oil prices from $72 per barrel (bp) on Monday to a one-month high of $79pb due to the conflict in the Middle East (see here and here ) isn’t enough to have a bearing on how fast the …
Labour market strength rules out another 50bp rate cut Looking at the labour market strength evident in September’s Employment Report, the real debate at the Fed should be about whether to loosen monetary policy at all. Any hopes of a 50bp cut are long …
Risk premium takes the reins There are no prizes for guessing the main event of the week in commodity markets: the stark rise in the oil price since Tuesday after it became clear that Iran was readying to launch a missile strike on Israel has dominated …
Korea – weak data point to first rate cut With inflation below target and activity data pointing to a further slowdown, we expect the Bank of Korea to kickstart its easing cycle at its scheduled monetary policy meeting next Friday. September’s inflation …
France’s prime minister, Michel Barnier, revealed his hand this week – or at least he showed some of his cards – as he set out plans to fill the hole in the country’s public finances. He has given himself a bit more time to bring the deficit down to the …
Easing cycle paused, and cuts in 2025 will be limited The decision by the National Bank of Romania (NBR) to pause its easing cycle today, leaving the policy rate at 6.50%, seems to reflect growing concern about the persistence of underlying inflationary …
After months of speculation, investors will find out how the UK Chancellor plans to balance tax, spending and investment decisions as the new government tries to fill a fiscal hole and support the economy. Our economists were online shortly after Rachel …
This could be a Budget statement that defines the UK economy’s performance through the rest of this decade. The new Labour government warns of having to clean up a fiscal mess left by its predecessors, but also speaks of investing for long-term economic …
CNY nears strong end of its trading band We regret to inform our readers that the chart and analysis in this section contained errors. We have added a corrected chart below. The original chart and analysis have also been retained for reference but should …
Economic growth in the euro-zone slowed in Q2 and timelier data suggest that it weakened further in Q3. That, together with the fall in headline inflation below 2% in September, should prompt another 25bp cut by the ECB at its October meeting. With the …
Data published today show that the euro-zone’s household saving rate rose even further in Q2 this year. The increase since late 2022 can be attributed to low consumer confidence and high interest rates, but the extent of the rise and the fact that it has …
Oil price risks still skewed to downside We learnt this week that India recorded a current account deficit equivalent to 1.5% of GDP in Q2 (Q1 of FY24/25), from a surplus of 0.5% of GDP in Q1. Of course, seasonal factors are at play; smoothed out over a …
Construction activity rebounds to 2½ year high The headline CIPS construction PMI rebounded to a 2½ year high of 57.2 in September as the prospect of lower interest rates, rising capital values and a government committed to boosting home construction …
Is the US facing a hard landing, a soft landing or no landing? Have stimulus announcements fundamentally changed the China equities story? How should investors trade risks around the US election? Raymond James CIO Larry Adam joins Group Chief Economist …
We’re cautiously optimistic that China’s equity market will hold on to its recent gains, and perhaps even extend upon them in the near term. But we still think its long-run prospects are poor. China’s stock market has made enormous gains over the past …
A potential blow to property investors The headlines continue to be dominated by reports that the Australian government is considering paring back existing housing tax concessions. On Monday, Treasurer Jim Chalmers confirmed that he did ask his department …
Tankan upbeat, BoJ cautious The August activity data were a mixed bag, with retail sales rising for the fifth consecutive month but the 3.3% m/m plunge in industrial output was much weaker than expected. What’s more, firms’ production forecasts don’t …
We continue to believe that core PCE inflation will return to the 2%target on a sustained basis early next year, as labour market conditions gradually ease. Up until recently we would also have argued that the risks to that view lay mostly on the …
3rd October 2024
It’s too soon to say whether the Iranian missile strikes on Israel are the start of a conflict that will eventually result in oil supply being affected or if oil prices will drop back as the heightened risk premium in prices gradually unwinds. For now, we …
The 2025 draft budget recently outlined by Russia’s finance ministry shows that, rather than falling next year as initially planned, defence spending will rise by more than 20% to hit 6.2% of GDP. While personal income and corporate tax hikes will help to …
The British pound fell sharply today, and we suspect that it will weaken more over the next year or so given our dovish view of Bank of England policy, the currency’s still-high valuation, and stretched speculative positioning. Sterling has dropped by …
After falling to 1.8% in September, headline inflation in the euro-zone is almost certain to rise in the final few months of 2024. But we think that falling oil and natural gas prices will cause it to drop back again next year and average about 1.5% in …
The Nigerian naira has fallen by more than 70% against the dollar since President Tinubu came to office, which has contributed to a surge in inflation that has weighed on economic growth. There are signs that some of the benefits from a weaker …
While we have been talking up the prospects for retail, malls remain the underperforming subsector in our forecasts. But that covers a wide range of likely performance. Indeed, as luxury retailers expand to class A malls while anchors shutter stores in …
Since mid-2022, the average stock in the industrials sector has returned more than the average stock in all other sectors of the S&P 500. This raises the question of whether investors have a rose-tinted view of the economy’s future, since industrials has …
Service sector on fire; but price pressures could be rebounding The surge in the ISM services index to a 17-month high of 54.9 in September, from 51.5, is a good reminder that the contrasting weakness in manufacturing is not a systemic threat to the …
Drought conditions across parts of Brazil are not yet at the stage where there is a threat of major disruptions to electricity supply, but it has already prompted electricity prices to be hiked and there may be upward pressure on food inflation if …
While some drivers of the US stock market’s recent underperformance are likely in our view to persist, we think that they will soon be outweighed by renewed enthusiasm about AI. And only when the associated bubble bursts do we expect US equities to lag …
Non-high street retail subsectors have seen a stronger rental recovery from post-pandemic lows than high street shops. And we think this outperformance will continue given tighter availability and slightly more favourable demand drivers. That said, there …
Global headlines this week have been dominated by the escalating conflict in the Middle East and attention is now focussed on Israel and the scale and nature of its response to Iran’s retaliatory attack on Tuesday. From a macro perspective, the key risk …
China’s recent stimulus announcements are still at the top of many investors’ minds, at least judging by the high level of client interest in the online briefing we ran on the topic yesterday. We’ve wrapped up our answers to the most common questions we …
Access to commodities – particularly critical minerals – is a growing area of competition between China and the West. And those EMs with deposits of the minerals used in new and low-carbon technologies are likely to see higher investment and, ultimately, …
This page has been updated since publication with additional analysis. Sharp drop in inflation will encourage further cuts by SNB The unexpectedly sharp fall in Switzerland’s headline and core inflation in September will cement the SNB’s dovish stance and …
Stronger-than-expected inflation rules out rate cuts this year The smaller-than-expected decline in Turkey’s headline rate to 49.4% y/y in September will be a disappointment to policymakers at the central bank (CBRT), and supports our view that a …
The federal budget foresees an unusually large jump in cash outflows that don’t feed into the underlying cash balance in 2024/25. However, the actual boost to activity will be much smaller than the budget suggests and it will have run its course in …
While the latest escalation of the conflict between Israel and Iran is worrying, our view remains that it would take a significant further widening of the war, including actual disruption to energy supply chains, to make a material difference to the …
2nd October 2024
Until the geopolitical situation in the Middle East deescalates, oil prices will clearly remain at risk of spiking higher. But against a backdrop of faltering demand and greater supply in the wider oil market, the risks to oil prices over the next year …
MPC shake-up has, on balance, given the panel a more hawkish bias We expect no change in the repo rate next week, a view shared by the consensus But conditions will be in place for policy loosening to start in December Little is known about the monetary …
The euro-zone has stalled, the US labour market is cooling and China has only belatedly announced stimulus measures. The world economy is entering what our latest Global Economic Outlook describes as “a soft patch” – but for how long and how soft? And …
Planned austerity would dampen growth The new French government’s plans to tighten fiscal policy by as much 2% of GDP next year would help to put the public finances on a sounder footing but also risk pushing the economy towards recession. It would also …
NBP on hold, monetary easing in 2025 will be limited The decision by the National Bank of Poland (NBP) to leave its policy rate on hold again today, at 5.75%, was never in doubt, and we continue to think that the easing cycle won’t resume until mid-2025. …
