In theory, there is plenty of scope for those countries set to age most rapidly over the coming few decades to cushion the impact on their workforces via migration and a rise in both female and older participation rates. However, in many cases, this will …
4th May 2023
We forecast small further falls in the yields of long-dated US Treasuries and euro-zone sovereign bonds between now and the end of next year, as disinflation picks up steam and central banks turn more dovish. Investors largely shrugged off this week’s …
Today’s 25bp decision was in line with market expectations and the views of most forecasters polled by Reuters – though we had been in the minority forecasting 50bp. The move marks a slowing in the pace of policy tightening and suggests at face value that …
While food CPI inflation remains very high in all major advanced economies – and especially so in Europe – we expect it to fall sharply in the coming year. Energy and labour costs have been key in keeping consumer food inflation so high, but these props …
We’ve been surprised that the rise in Bank Rate from 0.10% in November 2021 to 4.25% hasn’t triggered a contraction in GDP at the start of this year. Indeed, while higher interest rates were a further drag on net mortgage lending in March, the …
Strength of exports and unit labour cost growth unlikely to last A rebound in exports drove a sharp narrowing of the international trade deficit to a four-month low of $64.2bn in March, from $70.6bn in February, but the surveys continue to suggest that …
Downside risks to first-quarter GDP growth despite export outperformance The small rise in export volumes and slump in imports in March confirms that net trade improved last quarter. However, the weakness of imports means there is a risk that the …
The underperformance of the US stock market seen last year has generally paused so far in 2023, as returns have been propped up by mega-cap “growth” stocks. That may continue over the rest of the year, especially if advanced economies enter recessions. …
Downside risks to Q1 GDP growth The small rise in export volumes and slump in import volumes in March confirms that net trade boosted GDP growth last quarter. However, as lower imports are likely to be reflected in slower inventory building – which the …
Strength of exports and unit labour cost growth unlikely to last The sharp fall in the international trade deficit to $64.2bn in March, from $70.6bn in February, was driven by a rebound in exports, but the surveys continue to suggest that renewed declines …
The idea of a new BRICS currency to settle trade or hold in reserves instead of the dollar has been doing the rounds recently. This could be modelled on the IMF’s Special Drawing Rights. But getting India on board with China would be difficult. And if the …
ECB slows the pace and signals peak is close The decision to raise the deposit rate by 25bp to 3.25% today was in line with market expectations and was predicted by 57 of the 69 forecasters polled by Reuters. (We had forecast 50bp.) This marks a slowing …
The key message from the latest China PMIs is that whilst China’s economy is likely to grow strongly this quarter, momentum is fading. This will be one factor weighing on commodity prices in the near term. China’s Caixin manufacturing PMI fell from 50.0 …
Note: We’re holding a special 20-minute online briefing all about EM debt risks this Thursday at 10:00 EDT/15:00 BST . Register now . Oil prices: “Don’t get cocky OPEC+” The price of oil has dropped sharply this week on fears about the health of the …
The latest RICS Construction Survey showed an improvement in construction workloads and surveyors’ expectations also brightened. That is in line with other data showing the economy is proving more resilient than expected. That said, we still expect a mild …
Decline in bank deposits doesn’t look like a bank run March’s money and credit data showed that the collapse of the US bank SVB and the takeover of Credit Suisse in early March triggered a small withdrawal of funds from the overall UK banking system. …
Net lending stable as investors wait for the bottom Even as commercial property investment has collapsed, net lending to property has been stable at close to zero since the start of the year. That suggests investors are building up war chests to snap up …
Recovery unlikely to continue The rise in mortgage approvals in March was stronger than consensus expectations, reflecting the reversal of the spike in mortgage rates since the autumn. However, we don’t think that mortgage rates can fall any further …
The Norges Bank raised its policy rate by 25bp today, to 3.25%, but unlike the Fed we think the tightening cycle in Norway has further to run. That said, we think that inflation will fall more quickly than the central bank anticipates next year, allowing …
Over the past year, Spanish households have seen a bigger increase in their cost of borrowing than those of any other large euro-zone economy, but the increase in the interest paid on deposits has been tiny. This is squeezing households’ disposable …
Brazilian policymakers gave a firm push back against any expectations for imminent monetary easing at yesterday’s central bank meeting, supporting our view that interest rates will be lowered a bit more slowly over the next 6-12 months than most expect. …
The market has finally come round to our long-standing view that Bank Rate will rise to 4.5%, with the Bank of England to likely to deliver another 25 basis point hike when it meets on 11 th May. But what will follow? Resilient activity data and …
The slowdown in regular earnings at the start of the year largely reflects sampling changes, with an unchanged sample of firms reporting continued strong wage growth. However, with inflation set to come off the boil before long and the labour market …
This page has been updated with additional analysis and charts since first publication. Growth still strong but slowing The latest survey data add to wider evidence that while China’s recovery remains robust, it is losing some momentum. In particular, the …
Net exports won’t have boosted GDP in Q1 The widening of the trade surplus in recent months belies the negligible contribution that net exports will have made to Q1 GDP. Indeed, we think the weakness in import values last quarter primary reflected …
Net exports won’t have boosted GDP in Q1 The wide trade surplus belies the negligible contribution made by net exports to Q1 GDP. The widening of the trade surplus to $15.3bn in March, from an upwards-revised $14.2bn in February, was in contrast to what …
The Fed’s new policy statement provides the clearest hint yet that the 25bp rate hike today is likely to be the last. We expect economic weakness and a sharper-than-expected drop back in core inflation to convince officials to start cutting rates again …
3rd May 2023
Fed’s focus will turn to policy loosening before long The Fed’s new policy statement provides the clearest hint yet that the 25bp rate hike today is likely to be the last. We expect economic weakness and a sharper-than-expected drop back in core inflation …
Economy posts strong growth in activity in Q1 Industrial production and retail sales continued to recover strongly in Russia in March and suggest that GDP growth may have accelerated in Q1. The economy appears to be receiving a boost from the recent surge …
Click here to read the full report. We think the economic recovery in China will support further gains in the country’s equity market. Despite some renewed evidence that China’s economy has been recovering more strongly than most anticipated in the first …
Tentative signs of weaker demand Commercial stocks continued to fall last week despite lower refinery runs and higher net imports. On the products side, total demand eased back. Of course, one week's data are not sufficient to mark a turning point, but we …
The surge in exports from Latin America's major economies in March suggests that the upside risks to our GDP growth and currency forecasts are building. But with advanced economies poised to fall into recession over the coming quarters, China's demand for …
We expect a final 25bp rate hike from the Fed today, to 5.00-5.25%... (19.00 BST) ...and a 50bp hike from the ECB tomorrow, to 3.50% (13.15 BST) The US trade deficit probably narrowed sharply in March (13.30 BST) Key Market Themes The FOMC looks set to …
Metro employment growth remained resilient in March The rate of job growth in March remained virtually unchanged from the previous month, signalling resilience across our covered metros despite a slowdown in non-farm payrolls. Within the tech sector the …
The Czech central bank (CNB) left its main policy rate on hold at 7.00% as expected today, but it looks like policymakers set out to strengthen their hawkish rhetoric and downplay expectations of an imminent cut in interest rates. The message was loud and …
A bipartisan deal to raise the debt ceiling alongside modest cuts to government spending still appears to be the most likely way out of the current impasse. It's possible that moderate Republicans will step in to help the Democrats push through a …
Although the unemployment rate remains near a record low, the decline in vacancies suggests that labour market conditions have nevertheless eased, supporting our view that wage growth is close to a peak. While the unemployment rate has been unchanged at …
ISM suggests activity weak in second quarter The slight rebound in the ISM services index to 51.9 in April from 51.2 in March was broadly in line with the small gain in the ISM manufacturing index. Nevertheless, that still leaves the composite index at a …
Concerns about Kenya's public finances have intensified with the government recently delaying the payment of public employees' salaries. Policymakers appear willing to honour public debt obligations, but with plenty of pitfalls along the way, officials …
It's crunch time for Turkey, with parliamentary and presidential elections on 14th May offering voters a clear choice between a way back from the unorthodox policies of Recep Tayyip Erdogan or a continuation of the president's rule - and heightened risk …
Note: We'll be discussing Turkey's election in an online briefing at 09:00 EDT/14:00 BST on 10th May . Register here . Parliamentary and presidential elections on 14 th May will make or break macroeconomic stability in Turkey. As things stand it looks …
A combination of the falls in global agricultural commodity prices, energy prices and wage growth will soon drag down food CPI inflation from a 46-year high of 19.6% in March perhaps to around 4.5% by the end of the year. Food inflation will soon become a …
Policy tightening over the past year has pushed up euro-zone households’ interest costs substantially and is a key explanation for household consumption falling. With interest costs set to rise a lot further in the coming months, we expect consumption, …
ADP surge another sign that in April the sweetest showers fall The ADP report – suggesting that private sector employment increased by a stronger 296,000 in April, more than double the 142,000 gain the month before – is another signal that the economy …
CNB still on pause, but cuts not far away The Czech National Bank (CNB) left its main policy rate on hold again today, at 7.00%, but we think that interest rate cuts are not far away, with policymakers likely to kickstart the loosening cycle in September. …
Demand in line with post-GFC lows The slight rise in mortgage applications in April left them little changed from their recent lows, pointing to further near-term weakness in sales. While we expect affordability will gradually improve, growing economic …
Unemployment falls as the labour market remains tight The euro-zone unemployment rate fell slightly in March and looks set to stay low in the coming months amid evidence that hiring intentions have increased. Even if the labour market softens further …
This webpage has been updated with additional analysis and a chart of key data. Non-hydrocarbon sectors in the Gulf continue to enjoy a strong start to 2023 April’s PMIs for the region showed that activity in private non-hydrocarbon sectors in the Gulf …
Note: We’re holding a special 20-minute online briefing all about EM debt risks this Thursday at 10:00 EDT/15:00 BST . Register now . Malaysia’s central bank (BNM) unexpectedly raised its main policy rate (OPR) today by 25bps (to 3.0%), citing the …
