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Another strong batch of activity data for May suggest that Russia’s economy may have returned to just shy of its pre-pandemic level in Q2. The foundations are in place for the recovery to continue in Q3, but the latest virus wave and the possibility of a …
1st July 2021
Revisions to the historic data following the recent census show that China’s population barely grew last year and that employment is already contracting faster than previously understood, having peaked in 2014 rather than 2017. The silver-lining, however, …
The Riksbank was always likely to maintain the status quo this morning, but against the backdrop of recent hawkish shifts by other central banks, notably the Fed, the focus was on how its thinking had shifted. The short answer is: not a lot. You did not …
Lingering restrictions on travel mean that weakness in foreign tourist spending will continue to weigh on retailers’ incomes in tourist-dependent retail markets this year. This supports our view that prime retail rents will fall, even as the domestic …
While the drop back in oil prices which we forecast would probably mean an end to the recent outperformance of the energy sector, we doubt it would halt several other features of the rotation trade. Notwithstanding their wobble over the past week or so, …
30th June 2021
Canadian firms are not currently suffering from labour shortages to the same extent as those in the US but, with immigration still muted, the issue is likely to get worse as the economy continues to recover. The clearest sign that labour shortages are not …
The EU’s digital Covid certificate, which is being launched tomorrow, will have very little impact on European tourism this year. Non-essential travel is already possible, but most adults are not fully vaccinated and the Delta variant is making people and …
After rallying from April onwards, the price of gold has dropped back in recent weeks. We expect the price of gold to fall further over the next couple of years as long-dated US real yields climb . The price of gold rallied from $1,700 to $1,900 per ounce …
Tighter supply conditions and the expected smaller hit from the shift to remote working mean that we think Paris office rents will continue to outperform Lyon over the next five years. Prior to the pandemic, Lyon prime office rental growth had outpaced …
Exchange stocks of base metals have risen this year, which usually suggests that markets are well supplied. But much of the recent build in stocks has been opportunistic and driven by financial considerations rather than a surplus in the market. …
29th June 2021
The recent softening in some indicators of activity is probably mostly a result of shifts in spending patterns within the economy rather than a sign that the recovery has already stalled. As such, we still expect monthly GDP to rise back to its …
Saudi Arabia’s economic recovery seems to have got back on track in Q2 and, as virus restrictions are eased further and oil production cuts are scaled back, a strong second half of the year lies in store. The final Q1 GDP figures confirmed that the Saudi …
The further tightening of virus containment measures in South Africa for at least the next two weeks is unlikely to inflict severe damage on the economy. But it reinforces our view that the Reserve Bank will be in little rush to follow other EM central …
28th June 2021
The next EM central banks likely to raise interest rates are those whose economic recoveries are relatively advanced and can focus on inflation and/or financial risks. Chile and Korea fit into this group and we expect rate hikes from both in August. …
Strong industrial demand and constrained domestic supply will support US natural gas prices throughout the remainder of this year. However, we expect that the average price will fall in 2022 in large part because of higher production . The ongoing …
The labour force survey overstates the strength of the recovery in employment because it doesn’t capture the plunge in the number of non-resident workers. However, their impact on the labour market isn’t as large as the headline figures suggest as they …
27th June 2021
The student accommodation sector faces high levels of uncertainty for the fall 2021 academic year. In our view, demand for student housing will rebound from last year, but fall short of its pre-pandemic peak. Overall, we expect vacancy to nudge higher and …
25th June 2021
The surprise 25bp rate hike by Mexico’s central bank (to 4.25%) suggests that its reaction function is less dovish that we had expected, as it is now reacting to quell high inflation. With the headline and core rates set to remain above target over the …
The further slowdown in the money supply growth in May is due to big changes during the first lockdown dropping out of the annual comparison. Money supply data will be affected by the pandemic for a while, making them difficult to interpret, but the …
We doubt that US equity REITs would significantly outperform US equities in a period of higher inflation. US REITs have performed strongly in Q2 so far, with the 13.2% return from the FTSE Nareit Equity REIT index beating the 7.5% return from the MSCI USA …
24th June 2021
Although the 10-year Treasury yield has eased back following last week’s FOMC meeting, we still expect it to increase again before too long. To recap, after surging following the FOMC meeting, the 10-year Treasury yield has since given up its gains . At …
We think that delayed Central London office projects and new industrial starts will drive commercial construction output this year. But once the backlog of delayed projects has been exhausted, we think structural factors and high costs will deter …
Lingering restrictions on international travel to control the spread of the Delta variant mean that Spanish foreign tourist revenues this year will probably be only half what they were in 2019. That will hold back the pace of the overall recovery, even as …
Argentina’s GDP expanded by a stronger-than-expected 2.6% q/q in Q1 and, while the recent third virus wave has dragged down activity in Q2, we are sticking with our above-consensus forecast of 8% growth over 2021 as a whole. One implication is that the …
Other than the Monetary Policy Committee (MPC) noting the growing upside risks to inflation alongside today’s policy decision, there were no real signs that it is thinking about tightening policy sooner, à la the Fed. We think policy will be tightened …
Inflation in the cost of construction materials has soared as resurgent new home development led to strong demand at the same time as supply was still recovering from disruption due to the pandemic. It is likely to peak soon as supply disruptions ease, …
The central bank in the Philippines (BSP) left its main policy rate on hold at 2.00% today, but with inflation fears receding, more rate cuts to support the beleaguered economy are only a few months away. The BSP has been on hold so far this year after …
The surge in consumption in Q1 resulted in the savings rate falling to a 15-year low. While we expect households to respond to falling house prices with higher savings, the rebound in GDP could be even stronger than we currently assume if households keep …
PM Suga unveiled his administration’s first mid- to long-term growth strategy – known as the “big-boned policy” – on Friday. While most themes have been carried over from the Abe administration, PM Suga’s economic strategy contains new angles such as a …
Although we remain optimistic about the near-term demand outlook, we think that the price of US lumber will fall further in the coming months as domestic supply continues to revive . The price of US lumber (CME random lengths) briefly rose to a record …
23rd June 2021
A year ago, we were just digesting the impact of remote working, but already permanent change looked likely. And while we know more now and continue to refine our views, we see little reason to change our conclusions from last summer that office demand …
The pandemic has heightened occupiers’ focus on the quality and green credentials of the space they occupy. This trend is set to impact on demand, with modern, well-configured buildings with green building certifications set to attract tenants at the …
Inflation indicators in the flash PMIs for June reached new record highs and supplier delivery times lengthened still further. However, outside the US at least, there are few signs that goods shortages and higher costs have held back the recovery in …
The Czech National Bank (CNB) raised its two-week repo rate by 25bp to 0.50% at today’s meeting and the accompanying communications support our view that this marks the start of what will be the most aggressive tightening cycle in Europe. We expect that …
For EMs, vaccine supply appears to be by far the biggest constraint on immunisation campaigns; vaccine hesitancy will probably rear its head at a much more advanced stage of rollout in most countries. And even then, governments seem to be having some …
Last week’s surprise change in the Fed’s guidance about how soon it is likely to raise its key policy rate raises the question of whether the ECB will follow suit. In our view, although the euro-zone faces similar inflationary pressures in the coming …
The Bank of Thailand (BoT) today left interest rates unchanged at their all-time low of just 0.5%, dovish comments from the press conference support our view that rates will be on hold for a long time to come. Interest rates have now been left unchanged …
We now expect the unemployment rate to approach 4% by late-2022. Even though the reopening of the border should ameliorate staff shortages a bit next year, we expect wage growth to accelerate markedly. As such, we’re bringing forward our forecast for the …
The housing market hit a milestone in April, with real house prices rising above the previous peak recorded during the boom of the mid-2000s. But that doesn’t mean valuations are at dangerous levels. House prices look far more reasonable when gains in …
22nd June 2021
Hungary’s central bank (MNB) raised interest rates by 30bp today and with inflation set to remain above the MNB’s 4% upper tolerance level well into 2022, we expect an additional 60bp of tightening at the next three Inflation Report meetings. This would …
The recent jump in India’s consumer price inflation has taken us (and most others) by surprise and we have revised up our near-term forecasts. However, a big chunk of the surge – even in the most closely-watched core measure – can be explained by rising …
There are tentative signs that global demand for Asian consumer goods has peaked. But with demand for key components still running well ahead of supply, shortages are likely to persist for some time to come. Taiwan’s export orders deserve close attention …
21st June 2021
While policymakers in Hungary and Czechia look set to lift interest rates from their pandemic lows later this week, we doubt that Poland’s central bank will follow suit this year. That said, with inflation in Poland set to be higher than we had previously …
Headline Mexican inflation has now peaked and will drop back within Banxico’s 2-4% target range as the earlier spike in fuel inflation unwinds. In contrast, we expect that core inflation will continue to hover at, or just above, this range in the coming …
Virus numbers have fallen in the past few months in the MENA region and a rapid vaccine rollout should allow most of the Gulf economies, as well as Morocco, to lift restrictions further over the second half of the year. Elsewhere in the region, where the …
The passing of this morning’s “no confidence” vote in Swedish Prime Minister Stefan Löfven has plunged Sweden back into a period of political purgatory. While the political outlook is unclear, the near-term macroeconomic implications are likely to be …
Commercial banks left the Loan Prime Rate (LPR) on hold again today. The PBOC has now fully reversed last year’s credit acceleration using quantitative controls. Accordingly, policy rate hikes that could prompt LPR increases are unlikely in the near …
Much of the rise in inflation in major advanced economies from February to May has reflected the fact that prices fell in the same period a year ago. That said, depending on how you measure it, around half of the jump in inflation in the US and UK over …
18th June 2021
We expect the yen will continue to depreciate against the US dollar this year as 10-year US Treasury yields resume their rise. Since January, much of the movement in developed market (DM) exchange rates appears to have been driven by changes in the …
