In this week’s episode, Neil Shearing talks to Vicky Redwood and John Higgins about a tumultuous week in equity markets, how AI is creating winners and losers, and whether there’s any evidence that AI is starting to lift productivity growth in economies. …
6th February 2026
The local real estate board data for January shows that the housing market is still struggling, and we probably can’t blame it all on the weather. Meanwhile, the large fall in the unemployment rate last month could be a sign that the output gap is closing …
Fed Board split The end of the FOMC blackout period last week brought the usual flurry of speeches from Fed officials, including dovish remarks from Governors Christopher Waller and Michelle Bowman. Although Bowman voted to hold rates at the January …
While the US stock market has bounced back today, the ongoing struggles of the previously ascendant tech firms in the wake of another poorly received set of earnings reports raises several tricky questions. First, will the “rotation” away from the tech …
Growth down sharply in 2025, and will slow further this year The slowdown in Russian GDP growth to 1.0% in 2025 is consistent with a slight pickup in momentum in the economy in Q4, but the big picture is that the economy is under strain due to the war, …
DA leadership battle starts but GNU safe for now South Africa’s Democratic Alliance (DA) is set for change in leadership in April. While the stability of the Government of National Unity seems safe for now, municipal elections and the ANC leadership …
Some optimism on the labour market and inflation The robust pick-up in the current conditions index hints that the labour market, while still weak is improving, while inflation expectations seem to be heading in the right direction. Admittedly the …
China loses its foothold in the Panama Canal Panama’s relations with China have taken a sharp turn for the worse following the Panamanian Supreme Court’s ruling last week annulling CK Hutchinson’s licences to operate two ports in the Canal. The government …
Commercial property investment hit a record high in Q4, but we doubt that signals the start of a strong recovery. Admittedly, a fall in financing costs will give transactions something of a boost in 2026. But leading indicators point to a weak level of …
This webpage has been updated with additional analysis since initial publication. Unemployment rate likely to decline further despite weak hiring The 0.3%-pt drop back in the unemployment rate to 6.5% last month came on the back of a large fall in the …
Political uncertainty back to the fore The growing pressure on the Prime Minister this week over his handling of the appointment of Peter Mandelson as Britain’s ambassador to the US has led to renewed speculation over his leadership. In December, we …
But Beijing may step in to fill the gap China’s leadership won’t detail its economic plans for 2026 until the National People’s Congress (NPC) convenes next month. But provincial governments have already held their annual meetings, offering early signals …
During this week’s largely uneventful ECB policy meeting (see here ) Christine Lagarde went out of her way to say that AI-related investment is picking up in the euro-zone. Among other things she said “surveys indicate that firms are increasingly …
Oil traders hanging on news from the Middle East The tensions between the US and Iran continue to dominate the near-term outlook for oil prices. Having fallen back below $70pb in late January, the price of Brent crude has crept upwards again as US …
We think that the recent drop in precious metals prices has further to run, and the recent outperformance in South Africa’s financial markets has come to an end. But on the macro side, South Africa’s terms of trade are likely to remain much stronger …
Russia at risk after US-India trade agreement The details of the trade deal announced between India and the US this week are still not fully clear, but US President Trump has claimed that India has agreed to halt purchases of Russian oil as part of the …
India-US trade deal buoys markets and exporters And breathe. It’s been an extraordinary week in India macro and markets, headlined by President Trump’s announcement of a trade deal between India and the US on Monday. (See here .) The big picture is that …
Indonesia GDP figures – treat with caution Indonesia’s economy expanded by 5.4% y/y in Q4 according to official figures reported this week, well above both the 5.0% consensus forecast and the tight 4.9–5.2% range that has prevailed for much of the past …
Larger than expected fall in inflation increases chance of a rate cut Underlying inflation fell significantly in January, partly due to the reweighting of the CPI basket, but it is also clear that inflationary pressures are weaker than they appeared only …
The Reserve Bank of India (RBI) kept the repo rate unchanged today at 5.25% and sounded a touch more confident on the growth outlook. With a key downside risk to growth having abated, thanks to the India-US trade deal, and inflation set to return to …
This page has been updated with additional analysis since first publication. Decent start to 2026 likely to continue, but political risks rising The 0.7% m/m rebound in the Halifax measure of house prices in January suggests the housing market started …
German industry struggling to gain momentum The slump in German industrial production in December pours cold water on the hopes of an industrial recovery. And though the recent pick-up in industrial orders suggests the outlook for the start of this year …
RBI holds and concludes easing cycle The Reserve Bank of India (RBI) kept the repo rate unchanged today, at 5.25%, and sounded more confident on the growth outlook. With a key downside risk to growth having abated, thanks to the India-US trade deal, and …
Fiscal splash looking less likely The 10-year JGB yield is now the lowest it has been since Takaichi pledged that she will suspend the sales tax on food in mid-January. That partly reflects the influence of lower US-Treasury yields. But there are also …
Rates will return to their post-pandemic peak As expected, the Reserve Bank of Australia raised its cash rate by 25bp this week, making it the first G10 central bank to reverse course on earlier rate cuts. We have been arguing for some time now that the …
Hawkish pause in the easing cycle Mexico’s central bank (Banxico) left interest rates unchanged at 7.00% as expected today, and its communications suggested that this marked a pause, not the end of the easing cycle. But the overall tone was hawkish, …
5th February 2026
A dovish UK MPC meeting prompted big falls in both short-dated Gilt yields and sterling today, whereas there wasn’t so much reaction in the markets to the ECB’s gathering . (See Chart 1.) We think there is scope for sterling to fall further, but that the …
The boom in build-to-rent (BtR) housing starts to record highs, despite the immigration crackdown and accompanying fall in rents on new leases, reflects the significant expansion of government support for the sector. Nonetheless, elevated supply is …
The further gains in GDP in the ICT industries in the third quarter, despite another fall in employment, is a clear sign to us that AI is boosting productivity. While other factors help to explain the pick-up in productivity growth elsewhere in the …
The stockpiling of critical minerals is an age-old response to a modern-day problem posed by China’s dominance over the supply of rare earths and other raw materials. That said, “Project Vault” will not offer a quick nor easy solution. By way of …
The large downside surprise in December job openings may concern Fed officials and suggest they were premature to remove language in last month’s policy statement emphasising elevated downside risks to the labour market. That said, with the hiring rate …
Geopolitical risk and speculation lifting prices for now The sharp rise and fall in precious metals prices, which appeared to be driven somewhat by leveraged investors, has all the hallmarks of a bubble. Our view is that, while there may be more episodes …
While the ECB left rates on hold today and put a positive spin on the outlook for the economy, we think its next move is likely be a rate cut, albeit not until much later in the year. The ECB’s decision to leave its deposit rate unchanged at 2.0% in its …
We’re hosting a 20-minute online briefing at 3pm GMT today on the outlook for policy at the Bank of England, Fed and ECB. (Register here .) While leaving interest rates at 3.75% today, as widely expected, the Bank of England sounded more dovish than we …
CNB leaves rates on hold, but odds of another cut rise The decision by the Czech National Bank (CNB) to leave its policy rate on hold today, at 3.50%, was widely expected, but a dovish shift seems likely in the post-meeting communications. The risks to …
Policy will be on hold for several more months Today’s decision to leave the ECB’s deposit rate unchanged at 2.0% was never in doubt. While the press release puts a positive spin on recent developments we suspect that policymakers will leave their policy …
BoE appears more open to more interest rate cuts While leaving interest rates at 3.75% today (as widely expected), the Bank of England sounded more dovish than we expected, which supports our long-held view that interest rates will be reduced to 3.00% …
US-Iran set for crunch talks Negotiations between the US and Iran are due to take place tomorrow. But relations are fragile and the risk of talks breaking down, and the US launching fresh strikes on Iran, remains high. Eyes have been trained on the Strait …
The upcoming election on 12 th February will be pivotal for Bangladesh as the country seeks to restore stability following the 2024 political crisis and place the economy on a more sustainable footing. While we have concerns about both major parties, the …
Construction activity may be turning a corner The headline CIPS construction PMI leapt to 46.4 in January, a level broadly in line with September 2025 after three particularly weak months at the end of 2025. Nevertheless, that kept the index in …
We think conditions for the long-awaited revival in private corporate investment in India are now largely in place. As a result, we now expect real GDP growth in India to average 6.5% per year from 2026 to 2035, up from our previous forecast of 6.0%. …
Japan’s government holds more financial assets than governments elsewhere. While the value of the government’s domestic asset holdings could plunge during a crisis, a large share is invested overseas and the value of those assets should hold up much …
Growth close to 5% yet again, desire for faster growth to prompt more rate cuts Official figures released today showed that Indonesia’s GDP growth stood at 5.4% y/y in Q4, but we have little faith in the quality of the data – growth has been close to 5% …
Asia-Pacific valuation scores worsened in Q4 as bond yields rose across markets while property yields held flat. As we expect risk-free rates to remain high, all-property valuations are likely to stay stretched throughout this year. … APAC Commercial …
We don't think the falls suffered by software stocks in recent days are indicative of waning enthusiasm for AI. We think investors will continue to judge that the benefits accruing from AI will outweigh the costs, driving the stock market higher this …
4th February 2026
Warming US-India relations, centred around an agreement for India to purchase less Russian oil, risks tightening the global oil market. However, we aren’t convinced that India will curtail imports from Russia completely so suspect the upward pressure on …
This weekend’s election in Japan could be bad news for JGBs if the LDP emerges victorious and this prompts expectations of even more fiscal stimulus. That might not be good for the yen either. But it would help to underpin Japan’s stock market. As it …
