Up to now there has been only limited passthrough from tariffs into final consumer prices, but we still expect the impact to gradually mount in the second half of this year. Many retailers appear to have been willing to absorb the initial hit via lower …
25th July 2025
The start of construction on the vast Motuo Hydropower Station in China has understandably got its fair share of media attention this week. When completed, the set of dams along the Yarlung Tsangpo river are expected to generate three times as much …
Signs of resilience underneath the headline weakness Ignore the large 9.3% m/m drop in durable goods orders in June, which reflects a reversal of May’s surge of aircraft orders from the Qatar Airways Boeing deal announced during President Trump's visit to …
SA: subdued inflation, weak economy = rate cut The weak June inflation figure out of South Africa strengthens the case for the SARB to cut interest rates next week. And further out we think that rates will be lowered by more than the consensus and …
Copom to hold next week The stable Brazilian mid-month inflation reading for July (of 5.3% y/y), signs that underlying core inflation is easing, and the resilience of the real all but confirm that Copom won’t hike rates again at its meeting next week. The …
Reports this week suggest that the EU and US are on the brink of agreeing a trade deal with a 15% baseline tariff on US imports. ( See here. ) It’s hard to spin it as a good deal, but it would at least avoid much higher US tariffs and retaliation from the …
CBR steps up easing as economy slows The decision by the Central Bank of Russia (CBR) to accelerate it is monetary easing cycle today with a 200bp cut to its policy rate, to 18.00%, signals that policymakers are becoming more concerned about the slowing …
We will be holding an online Drop-In next week to discuss the implications of recent US trade deals for regional supply chains, global fracturing, economic growth, and financial markets across Asia. To register click here . Limited impact from …
We will be holding an online Drop-In next week to discuss the implications of recent US trade deals for regional supply chains, global fracturing, economic growth, and financial markets across Asia. To register click here . China’s hydropower project a …
German economy resilient to tariffs, but activity still weak The Ifo survey for July confirms that the German economy has been resilient to tariffs so far but that underlying growth remains weak. With tariffs likely to weigh on activity even if a EU-US …
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST on Thursday 31 st July. (Register here .) Disappointing end to Q2 …
Slow and steady The minutes of the RBA’s July meeting shed more light on the Bank’s surprise decision to leave rates on hold earlier this month. A majority of the Board believed it would be premature to lower the cash rate for a third time within the span …
Japan plays its hand well in US trade negotiations A turbulent week started with the loss of the ruling LDP/Komeito coalition’s majority in the House of Councillors in Sunday’s election . PM Ishiba pledged to stay on and with the Upper House election out …
History shows that there are no debt or deficit thresholds beyond which a fiscal crisis is inevitable. Rather, crises stem from a mix of high debt, poor debt dynamics, and weak fiscal credibility, which erode investor confidence and raise vulnerability to …
24th July 2025
The ECB has left rates unchanged and, with inflation at target, we now suspect its monetary easing cycle is over. So bond yields are unlikely in our view to fall much, particularly at the short end. We still expect the euro to fall, but that reflects our …
Changes to clean energy tax credits in the One Big Beautiful Bill Act will slow the renewable rollout in the US and make it more challenging to meet the renewed upward trend in electricity demand. However, there are some silver linings that will keep …
We expect the recent boost from state & local government hiring to fade, resulting in a smaller 130,000 gain in non-farm payrolls in July. The immigration crackdown likely kept the unemployment rate at 4.1%, while average hourly earnings growth likely …
With the euro-zone economy holding up relatively well in the face of tariff uncertainty, inflation likely to stay close to the target and President Lagarde adopting a slightly more hawkish stance at today’s press conference, we think the ECB will leave …
Although a forecast global real estate return of sub-6% p.a. over the next decade appears disappointing, compared to other assets it stacks up well. We expect sub-4% total returns for both global government bonds and equities over our 10-year forecast. …
We think Colombia’s fragile fiscal position – which could get even worse ahead of next year’s election – and a likely deterioration in the current account deficit will cause the peso to fall by more than most currently anticipate, to 4,600/$ by end-2026 …
Drop in sales reflects end of tariff front-running rather than marked downturn The flash estimate showing a solid rise in retail sales in June, paired with the recent rebound in consumer confidence, suggests the decline in sales in May was more a …
Our China Activity Proxy shows that China’s activity growth remains well below what official figures suggest. While industrial activity has held up surprisingly well in the face of US tariffs, the services sector has weakened substantially since the start …
Chances of further rate cut diminishing The ECB’s decision to leave its deposit rate unchanged at 2.0% today and offer no guidance on future rate decisions was in line with expectations. While we are currently forecasting one more 25bp rate cut in this …
Sharp fall in inflation paves the way for further easing The drop in Mexican inflation to 3.5% y/y in the first half of July means that Banxico is all but certain to deliver the clearly-signalled 25bp cut next month. It also lends support to our …
CBRT delivers dovish surprise, but easing likely to slow down from here The decision by Turkish central bank to cut its one-week repo rate by 300bp today, to 43.00%, was a slight dovish surprise, but the accompanying communications remained hawkish and we …
India’s economy has had a strong first half of the year and is poised to grow by 7% in both 2025 and 2026, making it a global outperformer. While inflation has continued to fall sharply, we expect it will rise steadily towards the RBI’s 4% target over the …
Rise in Saudi public debt ratio has further to run Saudi government debt has risen sharply over the past decade and, while officials are already taking steps to tighten fiscal policy, we doubt that they will do enough to prevent it climbing further. A …
Yields for the main commercial property sectors have been remarkably stable over past 18 months, and we expect that stability will continue. That means capital value growth will average under 3% p.a. over 2025-29. Thanks to stronger rental growth the …
This page has been updated with additional analysis since first publication. Upside risks to inflation continue to fade July’s flash PMIs paint a picture of the economy struggling to recover from a spring lull, a labour market that is still weakening and …
Economy growing slowly, services price pressures easing July’s Composite PMI for the euro-zone was consistent with the economy doing little more than stagnate. But policymakers at the ECB will be encouraged by the evidence that services price pressures …
What has Donald Trump’s return to office meant for the ongoing fracturing of the global economic order? In this special edition of The Weekly Briefing, Neil Shearing and Mark Williams explore the question of fracturing, how Trump’s second term is …
22nd July 2025
Australia’s economy is struggling to gain momentum, while the recent rebound in activity in New Zealand increasingly looks like a false start. As the lull in activity lifts spare capacity, underlying price pressures should continue to ease in both …
We held an online Drop-In session yesterday (see here for a recording) to discuss the latest developments in Japan’s economy and financial markets. This Update answers several of the questions that we received . What has the economic impact of higher US …
Recent US-Japan trade deal has removed a key downside risk What’s more, inflation set to keep surpassing Board’s pessimistic forecasts We expect the Bank to hike again in October The trade deal agreed upon between the US and Japan has removed a key …
Korea’s economy rebounded in Q2, averting a technical recession, and while the worst is probably over we expect a broad-based slowdown in growth over the near term. Data released today show that GDP rose by 0.6% q/q in Q2 (following a contraction of 0.2% …
Reported trade deal suggests escalation will be avoided Media reports suggest that the EU and US are approaching an agreement which would see a baseline tariff of 15% covering most products including vehicles. If confirmed (and of course President Trump …
23rd July 2025
Uncertain trade outlook will discourage policy tweak Rebound in core inflation and economic resilience provide more scope to wait Bank to resume easing later this year but second rate cut may be pushed into 2026 The recent rebound in core inflation and …
While China’s June trade data showed a pick-up in exports of rare earth elements (REEs), shipments remain well below pre-Liberation Day levels. A further warming of relations with the US could lead to more approvals being granted in the near-term, but …
While higher tariffs will cause some Asian economies to pursue slightly looser monetary policy than otherwise, domestic factors will be the key driving force behind rate decisions in most economies in the coming months. And we think that the risk of …
Despite some question marks being cast over whether the eight OPEC+ producers unwinding voluntary are keeping pace with the increases in quotas, our assessment is that they have added supply to the market at a decent pace so far. Rather than proceeding …
Sales down despite rebound in confidence The fall in existing home sales in June comes despite the recent rebound in consumer confidence, suggesting affordability is still the main driver of homebuyer activity. With house price declines likely to soon …
US tariffs have hit South Africa’s auto sector hard, but the sector also faces deeper structural challenges, including weaker demand growth in key export markets and competition from Chinese producers. All of this reinforces the idea that structural …
Recent surveys of real estate lenders point to a continued improvement in the European commercial real estate lending environment. However, with refinancing still dominating lending activity, this is unlikely to provide a material boost to investment this …
Early signs tariffs are pushing core inflation higher Economy remains solid notwithstanding housing weakness Fed to remain cautious, unmoved by political calls for cuts Despite calls within the FOMC for a rate cut at next week’s policy meeting, we expect …
Core inflation slowdown sets the stage for more rate cuts South Africa’s headline inflation rate may have edged up to 3.0% y/y in June, but the further easing of core inflation suggests the SARB should remain unworried about underlying price pressures. …
Japan’s economy has largely shrugged off global trade tensions and the trade deal reached between the US and Japan has removed a key downside risk. With inflation set to keep overshooting the Bank of Japan’s forecasts, we expect the Bank to resume its …
The US has set a 19% tariff on Philippine imports, aligning it with rates for other Asian nations that have already agreed deals with the US. While the economic hit to the Philippines will be modest, the deal does at least help shield it from losing …
We think Japan’s equities will do well over the rest of this year, even accounting for their big rally today, and that the yen will recover in time. But, the trade announcement looks like worse news for JGBs, especially at the front end. US President …
