Although Europe’s natural gas supply is now more diverse than before the energy crisis, the fact that most of its gas is imported means it is still exposed to geopolitical and infrastructure-related disruptions. In theory, the establishment of a strategic …
18th September 2025
If the sharp slowdown in fixed investment over the summer were to be sustained, China’s economy would suffer a hard landing. However, it appears mostly to reflect temporary weather-related factors and so should largely reverse over the coming months. …
CBC holds and in no rush to cut Taiwan’s central bank (CBC) left its main policy rate on hold today (at 2.00%) and, against the backdrop of rapid economic growth and low inflation, we expect policy settings to be left unchanged throughout our forecast …
A hawkish cut The dovish signal sent by Norges Bank’s decision to cut its policy rate by 25bp to 4.0% was accompanied by its more hawkish view on the interest rate outlook. We expect the Bank to leave interest rates on hold over the rest of this year, and …
Overview – Asia-Pacific property will endure a slow, uneven recovery. Elevated risk-free rates and soft regional growth will restrain capital appreciation, leaving income as the primary engine of returns. We forecast Australia to lead with 6% p.a. …
We think the post-FOMC rebound in long-dated Treasury yields will continue over the remainder of the easing cycle, as will the modest recovery in the US dollar. There was mixed news for the Treasury yield curve from the Fed on Wednesday. The updated FOMC …
Jobs data paint a mixed picture Despite the weak employment print for August, there appears to be limited spare capacity in the labour market. Accordingly, we’re sticking to our view that the RBA will only cut rates by another 50bp this cycle. The 5,400 …
Plunge in activity bolsters the case for RBNZ to cut aggressively The sharp decline in output last quarter puts a bumper 50bp cut in play for the RBNZ at its October meeting. Risks to our forecast for a terminal rate of 2.5% are also tilted to the …
Copom sticks to a hawkish message The Brazilian central bank’s statement accompanying the decision to leave the Selic rate unchanged at 15.00% remained hawkish – but a little less so than at the last meeting in July. And with growth slowing and inflation …
17th September 2025
The FOMC is now (sort of) on board with two further 25bp rate cuts this year but continues to anticipate less loosening in 2026 than markets have recently priced in, in part because it has become more upbeat about economic and labour market prospects for …
Fed cuts by 25bp and projects consecutive cuts in October and December The FOMC is now (sort of) on board with two further 25bp rate cuts this year but continues to anticipate less loosening in 2026 than markets have recently priced in, in part because it …
The immediate consequence for China’s economy of banning the import of Nvidia chips will be limited. But the move signals a strong commitment by China’s leadership to developing cutting-edge chip capabilities domestically and it serves as a reminder that …
Alongside the decision to cut its policy rate by 25p today, the Bank of Canada dropped its previous forward guidance hinting at more cuts to come. Nonetheless, Governor Tiff Macklem’s comments in the press conference support our view that the Bank will …
We still think the 10-year Gilt yield will fall by the end of 2026 as the Bank of England cuts interest rates by more than investors seem to anticipate. But with term premia likely to remain elevated on the back of lingering fiscal concerns, and a …
Rental growth has continued to defy gravity and there is early evidence of yield compression in some sectors such as offices. Nevertheless, a muted economic outlook and limited chance of a substantial fall in yields mean all-property returns will be …
25p cut but Bank unwilling to commit to further cuts yet The Bank of Canada’s decision to cut by 25bp today was of little surprise following the recent softer labour market data and easing of upside inflation risks, although the relatively neutral tone of …
EM GDP growth generally held up well in H1 but we think it will soften over the second half of the year as US tariffs, tighter fiscal policy and slowing wage growth bite. The inflation outlook is looking more benign and we’ve generally lowered our …
Weakness to continue The weakness in August housing starts was as expected, especially after July’s hard-to-explain strength. While homebuilders have recently become more optimistic about prospects for housing demand, as mortgage rates have eased, the …
July’s activity data showed that South Africa’s start to Q3 was a bumpy one, with retail sales and mining output surging at the same time that the manufacturing sector hit fresh difficulties. We suspect the economic recovery will continue, though, helped …
Weak inflation reading strengthens case for more repo rate cuts South Africa’s weaker-than-expected headline inflation reading of 3.3% y/y for August reinforces our belief that the Reserve Bank’s monetary easing cycle has longer to run. We expect an …
BI rate cut likely to fuel concerns about central bank independence Bank Indonesia’s decision today to cut its benchmark interest rate by 25bps to 4.75% came as a major surprise and is likely to further fuel concerns about the central bank’s independence. …
Japan will struggle to invest $550bn in foreign direct investment in the US. But we suspect that this sum also includes other forms of capital, which would make it feasible to meet the target and avoid further increases in US tariffs due to non-compliance …
We think China’s equities will make further gains. At the time of writing, China’s stock market was having a good day: the Hang Seng was up over 1% and onshore equities had made some ground too. Signs of progress in the US-China trade negotiations may …
This page has been updated with additional analysis since first publication. Pause in upward march doesn’t clear the path for more interest rate cuts The recent upward march in CPI inflation paused for breath in August, with CPI inflation staying at 3.8% …
Softer external demand will weigh on exports While overall exports are still holding up despite US tariffs, those to the US are plunging and we think that slower external demand will result in falling export volumes next year. The 0.1% annual decline in …
Another set of robust US activity data suggest that the US economy remains in decent shape despite the recent slowdown in employment growth. This suggests to us that the FOMC will stick to a more gradual pace of policy easing than currently discounted and …
16th September 2025
We no longer expect much of a rebound in the US dollar this year as the FOMC is about to resume rate cuts. But given the extent of Fed easing already discounted, our base case remains that the dollar will stabilise from here rather than fall much further. …
Housing market remains tepid The rise in home sales in August was a little better than expected and, while house prices did edge down, there was little in the latest housing data to make us doubt our view that house prices are stabilising. There are …
Growing public concerns about high crime levels and the apparent success of El Salvador in reducing levels of violence are making law and order a key issue in Latin America’s busy electoral calendar. High crime rates exert a heavy social and economic cost …
Manufacturing still mired in mediocrity Manufacturing output continued its long trend of underwhelming growth in August, bucking claims that tariffs would either trigger a downturn or a reshoring renaissance. Instead, the factory sector just appears to be …
Third-quarter GDP still tracking solidly after robust retail numbers The solid 0.6% m/m rise in retail sales in August and similar-sized gains in core (ex. autos) and control group sales indicate that consumers are not pulling back despite the labour …
Nothing to stand in the way of a 25bp cut tomorrow Core goods prices fell in August for the first time this year, which supports our view that the upside risks to inflation have eased considerably in recent months. That suggests the Bank of Canada will …
Low OECD commercial oil inventories have so far provided OPEC+ some cover to raise output, but we suspect that a softening in global demand and increases in OPEC+ supply will lead to commercial oil inventories rising strongly. In the absence of China …
Our updated estimates suggest that trade rerouting is so far doing less to insulate Chinese exports from US tariffs than in the past. That’s largely because rerouting via Mexico hasn’t picked up since US tariffs were first imposed in February. But …
The Riksbank will keep its policy rate at 2% next week as recent economic data has been stronger than expected, reducing the need for further loosening. While the risks are towards are a further cut later this year, we think the Riksbank is most likely to …
Korea’s economy has rebounded strongly in recent months. However, we don’t expect this to last. Weaker exports, fading fiscal support and the continued downturn in the property market are likely to weigh heavily on growth over the coming months. With …
This page has been updated with additional analysis since first publication. Labour market still loosening, but wage growth remains sticky While the further, albeit modest, falls in payroll employment and our seasonally adjusted measure of single-month …
The share of equities in the financial assets of US households and nonprofit institutions serving them (NPISH) hit its highest level in at least 75 years in the second quarter of this year. That should ring alarm bells, even if the buoyant stock market …
15th September 2025
Tentative signs of a recovery in manufacturing The increases in manufacturing and wholesale sales in July suggest tentative signs of a recovery in two of the sectors hardest hit by US tariffs. Less encouragingly, new orders fell by 2.2%, while the S&P …
Another squall in the bond market appears to have blown itself out. The summer lull had been interrupted by a jump in long bond yields, triggering warnings about surging government borrowing costs and fiscal crises across the advanced economies. But roll …
Data published today show that euro-zone exports were little changed in July and that, after a surge due to front-running earlier in the year, they have settled around their average level over the past two years. The latest surveys suggest that exports …
The rebasing of Saudi Arabia’s inflation data, which came alongside August’s data release, has resulted in only minor changes to the headline inflation readings, but it underlines the shifts in consumer spending pattern towards services since the launch …
The recent protests in Indonesia underscore deep-seated economic frustrations. Despite solid headline GDP growth in recent years, wages have been stagnant and the middle class has been shrinking. President Prabowo’s expensive populist policies, including …
Investment slump continues to weigh on growth The activity data point to a further loss of momentum last month. While some of this reflects temporary weather-related disruptions, underlying growth is clearly sliding, raising pressure on policymakers to …
The dollar has weakened a little further this week after US inflation and jobs data again came out on the soft side. This probably cements a 25bp rate cut next week’s FOMC meeting. But we continue to think that money markets are over-estimating the pace …
12th September 2025
The August CPI was the last hurdle to the Fed lowering interest rates next week, and without any marked pickup in inflation, a cut looks certain. Admittedly, consumer prices were a bit hotter. The all-items CPI rose by 0.38% m/m, while core CPI was up by …
TSX glittering The record high for the TSX, which was near 29,400 at the time of writing, has little to do with the AI boom that has sent US stocks soaring. Of the 18% gain in the TSX so far this year (compared to the 12% rise in the S&P 500), the …
