Large downward shifts in interest rate expectations mean that mortgage rates will continue to fall for the next month or two. That will support some recovery in activity and means that price declines are behind us for now at least. As we expect the Bank …
18th December 2023
Property yields rose further in Q3, but with risk-free rates now falling back, we think they will flat-line in Q4. That will help stabilise capital values, but given historically narrow yield spreads, we doubt we will see much yield compression ahead. As …
Africa Chart Pack (Dec. 2023) …
EM GDP growth has started to weaken, and we expect activity to enter a slower phase over the coming quarters. While some economies that underperformed this year will start to recover, many of the EMs that fared surprisingly well in 2023 will slow by more …
15th December 2023
We think that global growth will undershoot consensus expectations in 2024 as the lagged effects of monetary policy tightening filter through. Among the advanced economies, the US will continue to outperform Europe. And while China’s policy-induced …
Recent falls in Treasury yields have bought mortgage rates back down from a peak of 8% in October to 7% earlier than we had anticipated, setting the scene for a recovery in housing market activity in 2024. That said, as we don’t think borrowing costs will …
14th December 2023
GDP growth should rebound modestly in the fourth quarter but we expect it will remain soft in 2024. Meanwhile, weak job openings data suggests the labour market should loosen slightly in the short term. However, there are mounting signs that a virtuous …
India’s economy has grown at a healthy clip over recent quarters and, with the help of government spending, we think it will continue to hold up well ahead of next year’s general election. Given also that food inflation has picked up again, the RBI will …
13th December 2023
All-property values are down by 12.5% since mid-2022, but we expect an eventual decline of above 20%. Much of the correction at the all-property level is driven by our forecast for cap rates to go above 5% for all-property. For offices, additional drivers …
4th December 2023
Andrew Wishart, who leads our UK housing coverage, presented an Economic Update to attendees of the Land, Planning and Development Federation Annual Conference in London on the 30th November. The presentation addresses the questions: Is the economy in …
1st December 2023
Despite a rebound over recent days, the dollar fell sharply in November and, in aggregate, is now roughly flat on the year as a whole. With interest rate expectations shifting down decisively in the US and most other major economies, we expect the rebound …
30th November 2023
GDP contracted in the third quarter and there are downside risks to the outlook. As house prices are falling again, household debt is elevated and high interest rates are still feeding through, the key risk is that the mild recession we forecast could …
Our View: We are more dovish than investors regarding the amount of rate cuts that the Fed – and several other DM central banks – will deliver next year. As a result, we forecast that Treasury yields will fall further over the next year or so, putting …
We expect “safe” assets to continue to rally over the next couple of years, largely informed by our belief that investors are still underestimating how quickly and/or how far many central banks will cut interest rates over the next couple of years. And …
Economic growth across Sub-Saharan Africa is likely to pick up in 2024, but a challenging external environment means that balance of payments positions will remain under strain and fiscal and monetary policy will need to stay tight. Our GDP growth …
28th November 2023
The rebound in the activity data in November has convinced investors that the first interest rate cut will happen later, in August next year instead of June. Our view that core inflation will ease only slowly explains why we think interest rates won’t be …
After a sharp slowdown this year, GDP growth across the Middle East and North Africa will improve in 2024 as OPEC+ starts to reverse recent oil output cuts, while fiscal policy in the Gulf remains supportive. Outside of the Gulf, balance of payments …
China’s economy is making headway again after stalling during the summer. A step up in policy support looks set to deliver a modest cyclical recovery but trend growth remains under pressure. … China Chart Pack (Nov. …
Emerging Asia Chart Pack (Nov. 2023) …
India’s economy continues to show resilience this year and annual GDP growth is likely to come in stronger than the 6.3% we had been forecasting. While inflation is well within the RBI’s tolerance range, the renewed surge in food prices in November is a …
23rd November 2023
Our Emerging Europe Chart Pack has been updated with the latest data and our analysis of recent developments. Russia and Turkey had a strong first half to the year, but large policy tightening is likely to result in slower growth in 2024. Inflation will …
Brazil and Mexico will outperform others in the region this year, but that’s likely to flip on its head in 2024 as they slow – and by more than most expect – while the Andean economies recover. Rapid wage growth will keep inflation above target for some …
21st November 2023
The economy’s third-quarter strength was not the start of a renewed acceleration and we continue to expect GDP growth to weaken. Regardless, resilient economic growth has not prevented a continued easing in wage and price inflation, and we still think the …
Emerging Markets Chart Pack (November 2023) …
While the US economy considerably outperformed its DM peers in Q3, we think that all advanced economies will suffer a weak Q4. High interest rates are weighing on credit growth, and a further rise in debt servicing costs in the coming quarters is likely …
17th November 2023
We believe that central banks in both Australia and New Zealand are done tightening policy. However, given that inflation is far from tamed in either country, policymakers are unlikely to drop their hawkish bias just yet. Although activity has proven …
Europe Commercial Property Chart Pack (Q4 2023) …
16th November 2023
GDP growth appears to have all but stalled in Q3 but that was after a very strong first half. There are mounting signs that a virtuous cycle is forming between wages and prices. This is making the Bank of Japan increasingly confident that it can steer …
9th November 2023
The ECB’s recent decision to leave interest rates on hold, and its associated communications, confirm that its tightening cycle is now almost certainly over. But despite inflation having fallen sharply, we believe the strength of the labour market, …
8th November 2023
The recent weakening in employment, easing in wage growth and signs that households are saving more and spending less have provided more confidence that higher interest rates are working. But we think that the restraints on UK labour supply and sticky …
Energy and precious metal prices will remain volatile while there is a risk that the war between Israel and Hamas expands to include other countries in the region. For now, energy supplies have been largely uninterrupted, and prices should remain close to …
3rd November 2023
Energy prices will remain historically high over the remainder of this year. The Israel-Hamas conflict has increased volatility in energy markets, but supply has not been disrupted. Oil prices will remain high as OPEC+ output cuts keep supply constrained. …
Economic growth across Sub-Saharan Africa is likely to pick up over the coming quarters, but a challenging external environment means that balance of payments positions will remain under strain and fiscal and monetary policy will need to stay tight. Our …
31st October 2023
Our View: Growth in the US and other advanced economies will disappoint, keeping pressure on “risky” assets but favouring “safe” ones. But when the economic environment improves, “riskier” assets will rebound, with equities further boosted by enthusiasm …
Emerging Asia Chart Pack (Oct. 2023) …
The dollar stayed strong in October but failed to add much to its broad-based rally since July. We think elevated US yields are likely to keep the greenback on the front foot, particularly if risk sentiment continues to deteriorate. However, while we …
We expect the fortunes of safe assets to improve over the rest of this year, largely informed by our belief that investors are underestimating how quickly and/or how far central banks will cut interest rates over the next couple of years. And while we …
30th October 2023
London house prices have fallen by less than we anticipated, and stopped falling altogether in Q3. However, the high level of house prices compared to incomes should mean that higher mortgage rates weigh particularly heavily on demand from mortgaged …
China’s economy is regaining some momentum after stalling during the summer. A step up in policy support looks set to deliver a modest cyclical recovery but trend growth remains under pressure. … China Chart Pack (Oct. …
Strong immigration is unlikely to be enough to prevent a mild recession, with GDP contracting recently and the business surveys consistent with further declines. As house prices are falling again, household debt is elevated and high interest rates are …
25th October 2023
After a sharp slowdown this year, GDP growth across the Middle East and North Africa will improve in 2024 as OPEC+ starts to raise its output quotas and high oil prices allow the Gulf economies to keep fiscal policy supportive. Outside of the Gulf, …
24th October 2023
Our forecast that the Bank of England won’t start cutting interest rates until the second half of 2024 means mortgage rates are likely to stay between 5% and 6% until mid-2024. While transactions volumes have only seen a modest decline so far, very weak …
23rd October 2023
The renewed surge in long-term Treasury yields illustrates that the full impact of Fed tightening is still feeding through, and we continue to expect economic growth to slow sharply over the coming quarters. With core inflation still looking on course to …
20th October 2023
Russia and Turkey had a strong first half to the year, but large policy tightening is likely to result in a sharp slowdown in 2024. Inflation pressures look set to keep building and further interest rate hikes lie in store. In contrast, downturns across …
19th October 2023
2023 is on track to be the warmest year on record, but somewhat ominously the headwinds to the green transition have strengthened this year. Some of these will prove temporary, particularly as short-term policy interest rates start to come down. That …
After a brief respite earlier this year, property yields are once again on the rise, driven by a further increase in gilt yields. We don’t expect a repeat of the surge seen last year, but we also think any compression beyond this year will be minimal as …
EM GDP has held up well this year, but we expect growth to disappoint in the coming quarters. Inflation has surprised to the upside recently, which will delay the start of interest rate cutting cycles in some places. But we still expect easing cycles to …
India’s economy appears still to be holding up well in the second half of the year. And although inflation has dropped back sharply to within the RBI’s target range, the outlook is still clouded by uncertainties related to food prices. This is a key risk …
18th October 2023
The latest activity and survey data have provided even more evidence that the resilience in activity in advanced economies over the first half of 2023 is now fading. High interest rates are clearly weighing on credit growth, and a further rise in debt …
13th October 2023