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Investors’ continued optimism about corporate earnings in the US is hard to square with our view that economic growth there and in the rest of the world will remain weak. That is the key reason why we expect US equities to perform poorly during the rest …
27th September 2019
We have revised up our forecasts for India’s Sensex equity index following the corporate tax reform there. And more generally, we expect it to be one of the best performers among EM stock markets over the next few years, even if it falls back a little …
Mexico’s central bank will probably cut rates later on Thursday We think that the euro-zone Economic Sentiment Indicator fell to a 4½-year low (10.00 BST) US personal spending data likely to show another rise in consumption in August (13.30 BST) Key …
26th September 2019
The combination of a broad-based easing cycle in emerging markets and strong demand for risky assets has pushed local currency emerging market (EM) sovereign yields down sharply in 2019. However, we expect that rally to go into reverse by the end of the …
25th September 2019
UK MPs to return to Parliament on Wednesday following Supreme Court ruling We think that the Bank of Thailand will cut its policy rate by 25bp (08.05 BST) But the New Zealand and Czech central banks will probably leave policy unchanged Key Market Themes …
24th September 2019
We think that the German Ifo Business Climate Indicator fell to a near-decade low (09.00 BST) UK Supreme Court to give its ruling on the prorogation of Parliament (10.30 BST) The central banks of Colombia and Hungary will probably leave rates unchanged …
23rd September 2019
Economic sentiment indices for the euro-zone and Germany probably edged up in September We expect the central banks of Mexico, Thailand, the Philippines and Egypt to cut rates Those in New Zealand, Colombia, the Czech Republic and Hungary are likely to …
20th September 2019
The strong performance of US equities this year has continued to be, at least in part, fuelled by expectations that growth in corporate earnings there will be much faster than elsewhere. Nonetheless, given our view that the US economy will slow further in …
Given our view that the US economy will avoid a recession, we doubt that the Fed will deliver as many rate cuts as investors anticipate. As such, we think that Treasury yields will rise substantially next year. To re-cap, the Fed voted this week to cut …
A drop in fresh food prices probably weighed on Japan’s headline CPI inflation (00.50 BST) Canada’s retail sales are likely to have bounced back in July (13.30 BST) We suspect that euro-zone consumer confidence deteriorated in September (15.00 BST) Key …
19th September 2019
Although the oil price has fallen back since the weekend’s attacks on production facilities in Saudi Arabia, it could surge again if there are further strikes or if tensions in the Middle East escalate into a full-blown conflict. In that event, we think …
The Fed is highly likely to deliver a 25bp cut at today’s FOMC meeting We expect Brazil’s central bank to cut its policy rate by 50bp this evening But both the Bank of England and BoJ will probably keep rates on hold Key Market Themes The surge in US …
18th September 2019
We think that Japan’s export values dropped by more than 10% y/y in August (08.50 BST) The FOMC will probably cut rates by 25bp for the second time in a row (19.00 BST) Brazil’s central bank is also likely to lower its main policy rate Key Market Themes …
17th September 2019
FOMC meeting starting on Tuesday widely expected to result in a 25bp rate cut UK-EU Brexit talks set to “intensify”, increasing optimism about a deal We think that US industrial production rebounded by 0.2% m/m in August (14.15 BST) Key Market Themes …
16th September 2019
Cyclical headwinds to activity and spending in China may have abated slightly (Mon) US industrial production probably rebounded by about 0.2% m/m in August (Tue) Fed highly likely to cut rates again, but we think that the BoJ and BoE will stand pat Key …
13th September 2019
Despite what Mr Trump’s tweet yesterday appears to suggest, we don’t think that the ECB is “trying, and succeeding, in depreciating the Euro”. And although we expect the euro to weaken further against the dollar this year, we think that appetite for risk, …
Peru’s central bank is likely to cut its policy rate later today Euro-zone pay growth probably picked up in Q2, but we doubt it will last (10.00 BST) We suspect that US retail sales rose only slightly in August (13.30 BST) Key Market Themes Although the …
12th September 2019
The valuations of EM assets have fallen significantly from their peaks in this cycle around the start of last year, but remain above their averages since the Global Financial Crisis (GFC). In our view, they could easily fall further if the global economy …
Italian assets have rallied since a new ruling coalition between the Five Star Movement (M5S) and the Democratic Party (PD) was formed. While we have revised our forecasts to reflect the reduced political risk associated with the new government, we still …
11th September 2019
The central bank of Poland is likely to stand pat, and strike a more hawkish tone Mexico’s industrial production probably edged down in July (12.00 BST) We think that both headline and core producer price inflation picked up in the US (13.30 BST) Key …
10th September 2019
UK MPs are likely to vote against PM Johnson’s second bid for a general election this evening Climbing food prices probably pushed China’s inflation higher in August (02.30 BST) We think that core inflation in Norway and Sweden edged up last month Key …
9th September 2019
UK MPs are likely to vote against PM Johnson’s second bid for a general election (Monday) We expect the ECB to cut deposit rate by 10bp and reinforce forward guidance (Thursday) US retail sales probably increased slightly in August (Friday) Key Market …
6th September 2019
Although we are revising down our once-bullish forecast for the 10-year US Treasury yield, we think that it has fallen too far and will rebound to 1.75% by the end of 2019 and rise significantly next year. Since early October 2018, the yield has fallen …
Germany’s industrial production is likely to have fallen further in July (07.00 BST) Russia’s central bank will probably cut its deposit rate by 25bp (11.30 BST) We estimate that US non-farm payrolls increased by 110,000 last month (13.30 BST) Key Market …
5th September 2019
The last few weeks have been kinder to EM financial markets than the start of August, when equities and currencies slumped as the US-China trade war ramped up again. Even so, neither has performed particularly well, and we think that the stage is set for …
We expect Chile’s central bank to cut its policy rate by 25bp The US trade deficit is likely to have narrowed in July as exports rebounded … … but Canada’s trade balance probably dropped back into the red (13.30 BST) Key Market Themes Boris Johnson’s …
3rd September 2019
Argentina’s capital controls storing up more trouble for the future UK Parliament will try to block a no-deal Brexit as it returns from its summer recess The US ISM manufacturing index probably rebounded in August (15.00 BST) Key Market Themes Despite the …
2nd September 2019
Activity in China’s manufacturing sector probably improved in August (Monday) Policy rates are likely to be cut in Ukraine, Russia and Chile We estimate that US non-farm payrolls increase by 110,000 last month (Friday) Key Market Themes The Bank of Japan …
30th August 2019
Besides Argentina, EM sovereign debt risks are most acute in the smaller frontier markets. Investors have, rightly in our view, become more concerned about Lebanon’s public finances. And the experience of Argentina suggests that the country’s bond spreads …
We doubt that stocks that reliably pay high dividends will fare better than their peers during the rest of this year, as we think that bond yields are unlikely to fall much further and might even bounce back a bit. Dividend aristocrats are companies that …
29th August 2019
Sterling falls as threat of parliamentary suspension fuels fears of a no-deal Brexit EC Business and Consumer Survey probably fell to a 41-month low in August (10.00 BST) We estimate that the US economy grew by 2% q/q annualised in Q2 (13.30 BST) Key …
28th August 2019
As the global economy slows, we think that expectations for bank earnings will prove too optimistic and that relatively high bank equity valuations in the US, Canada, Australia, and the Nordics are likely to fall. Bank equities have struggled more than …
We think that Germany’s Ifo survey deteriorated further in August (Monday) Euro-zone inflation probably remained subdued in August (Friday) Divergence between US manufacturing sector and real consumption likely to have persisted Key Market Themes Jerome …
23rd August 2019
Yield curves have inverted in most advanced economies over the past couple of weeks, including in the US, Germany and the UK, sparking fears of an imminent global recession. While most advanced economies will just avoid falling in a recession in our view, …
While the Swedish krona and the Norwegian krone are now near the record lows they reached against the euro in 2008-09, we think that monetary policy and rising risk aversion will push them down further. The Swedish and Norwegian currencies have …
21st August 2019
US FOMC minutes might give details about support for further easing (Wed. 19.00 BST) We think that the euro-zone composite PMI and consumer confidence index fell in August Account of last ECB meeting may hint at size of further stimulus (Thurs. 13.30 BST) …
Italian PM Conte has announced his resignation, raising the chance of early elections UK PM Johnson to discuss Brexit backstop with French and German leaders ahead of G7 Minutes from last US FOMC meeting might give indications about future easing (19.00 …
20th August 2019
The PBOC’s may loosen policy again as it launches a new loan prime rate Italy’s government is likely to lose a vote of no confidence on Tuesday Russia’s weak activity data in July probably pave the way for further policy stimulus Key Market Themes Hopes …
19th August 2019
Japan’s exports probably fell at a slower pace in July (Monday) Powell could signal that the Fed will cut rates further at Jackson Hole symposium (Thursday) We think that policymakers will cut rates in Egypt but stand pat in Indonesia (Thursday) Key …
16th August 2019
The Japanese yen has continued to appreciate and is now close to our year-end forecast of ¥105/$. Though the drivers behind its strength may shift, we expect upward pressure on the yen to persist. Since President Trump’s latest escalation of the …
We think that emerging market (EM) currencies will continue to struggle over the rest of 2019 as the global economy remains weak for longer than investors anticipate, the trade war escalates further and political risks, notably in Argentina, remain high. …
15th August 2019
We think that Mexico’s central bank will cut its policy rate to 8.00% (Thursday, 19.00 BST) GDP growth in Malaysia probably slowed a bit in Q2 (Friday, 05.00 BST) US consumer confidence likely to have deteriorated in August (Friday, 15.00 BST) Key Market …
We think that government bonds in Italy will come under pressure again in the coming months, given the brewing political crisis there and the resulting increased uncertainty over the country’s fiscal policy. Last week, Deputy Prime Minister Matteo Salvini …
US retail sales growth is likely to have edged down in July (13.30 BST) We think that US industrial production fell by about 0.1% m/m in July (14.15 BST) Interest rates will probably be left on hold in Norway, but cut in Mexico Key Market Themes After a …
14th August 2019
US administration delays new tariffs on many Chinese imports until 15 th December Germany’s GDP probably contracted in Q2, and euro-zone growth may be revised down We think that UK CPI inflation remained at the BoE’s 2% target in July (09.30 BST) Key …
13th August 2019
Argentina’s financial markets likely to remain under pressure as focus returns to default risk UK unemployment probably fell in June but is unlikely to go much lower (09.30 BST) We think that US headline and core CPI inflation picked up in July (13.30 …
12th August 2019
US core CPI inflation is likely to have held steady at 2.1% (Monday) We think that GDP fell in Germany, and growth was revised down in the euro-zone, in Q2 Euro-zone and US industrial production probably ended Q2 on a weak note Key Market Themes Matteo …
9th August 2019
Government bonds have rallied further in developed economies in recent weeks, fuelling speculation that they are in a bubble which will burst at some point. We disagree. Admittedly, we think that the rally has gone a bit too far. But we doubt that bond …
Japan’s GDP growth is likely to have slowed substantially in Q2 (00.50 BST) We think that China’s CPI inflation continued to rise in July (02.30 BST) The UK economy probably did not grow at all during the last quarter (09.30 BST) Key Market Themes …
8th August 2019
Further weakness in the Chinese renminbi is likely in our view We think that wage growth in Japan rose slightly in June (00.30 BST) The Reserve Bank of Australia will probably leave its policy rate unchanged (02.30 BST) Key Market Themes China ’s decision …
5th August 2019
