The sharp rise in the US dollar following last week’s FOMC meeting reinforces our view that the greenback will appreciate further against most currencies this year. After a period of remarkable stability, the US dollar rose sharply after the June FOMC …
24th June 2021
Economic activity across Emerging Europe is rebounding strongly now that virus waves have passed and restrictions have been lifted. High-frequency data show that mobility has surpassed its pre-pandemic level in most countries and vaccination programmes …
Worries about a third wave of COVID-19 in the region have intensified in the past month and the tightening of lockdown measures in some countries – most notably South Africa – will weigh on recoveries. As things stand, surges in cases appear concentrated …
The price of oil has continued to rise and will help to improve balance sheets in the Gulf. With oil prices at $75pb, all Gulf economies with the exceptions of Bahrain and Oman are likely to be running current account surpluses, having run deficits in …
The hawkish surprise delivered by the Fed at its latest meeting and the subsequent market reaction have not changed our view that the 10-year US Treasury yield will end the year higher and that the “rotation trade” in equity markets will resume before …
The combination of the Fed’s more hawkish tone and the larger-than-expected rise in UK CPI inflation in May to 2.1% has led the financial markets to bring forward their expectations of when the Bank of England will raise interest rates from around the end …
23rd June 2021
India’s 10-year government bond yields have remained stable at around 6% over the past month, taking the unexpectedly large jump in inflation in May and a more hawkish turn by the US Fed in their stride. That reinforces our long-held view that borrowing …
The improvements in all-property rents and capital values continued in May, supporting our view that we are at the start of a slow recovery in property. Looking ahead, with non-essential retail and most of leisure now open, and the final restrictions …
18th June 2021
Inflation has risen sharply across the emerging world in the last few months, prompting much more cautious words from central banks (mainly in Latin America and Emerging Europe), but we expect that EM price pressures will ease in the coming months. (See …
The housing market has had its busiest start to the year for 14 years as changing preferences due to the pandemic, forced saving, low mortgage rates, and the stamp duty holiday have led swathes of existing homeowners to enter the market. We estimate that …
17th June 2021
The further jump in CPI inflation in May was again driven by a handful of categories most affected by the lifting of pandemic restrictions. But there were also clear signs that inflationary pressures are becoming more widespread, with rent of shelter …
16th June 2021
Japan’s now fast-moving vaccine rollout is set to gather more speed. PM Suga’s one-million-a-day goal could be hit on a 7-day average basis as soon as tomorrow. 18-to-64-year-olds have from today been able to fill vacant slots at large-scale vaccination …
Global GDP growth slowed sharply in Q1 as most parts of the world grappled with renewed waves of coronavirus. The US and Korea were among the few exceptions where recoveries accelerated. But with global infection numbers now falling, activity seems to be …
11th June 2021
We are still anticipating an extremely rapid recovery in the global economy over the rest of this year. But even so, it has become more difficult to make the case that returns from risky assets across the board will remain very strong, at least in the …
10th June 2021
The risks to our forecast that CPI inflation will rise from 1.5% in April to a peak of 2.6% in November before dropping back in 2022 are increasingly on the upside. Rises in shipping costs and global agricultural commodity prices as well as shortages of …
Rising global price pressures have pushed inflation up in Switzerland and Sweden this year, but their central banks look set to leave policy on hold. In contrast, inflation in Norway has been falling recently (see Chart 1) and yet its central bank is …
9th June 2021
Both new and existing home sales dropped back in April and the May pending home sales index points to further declines in existing sales over the next couple of months. (See Chart 1.) House price growth of over 13% y/y and a rise in mortgage rates since …
8th June 2021
The economic outlook has brightened as the virus has subsided and governments have permitted people to return to the shops and restaurants as well as to travel a bit more freely. However, manufacturers are struggling to keep up with booming demand due to …
4th June 2021
Overview – May was a strong month for the prices of most metals, but we suspect that this may be as good as it gets. After all, if we’re right in expecting economic growth in China to slow in the second half of this year, the prices of most industrial …
3rd June 2021
Overview – Cold weather in parts of the northern hemisphere helped push up the prices of coal and natural gas last month, while oil prices also rose. We still think that average energy prices will be higher this year than last but expect the prices of …
2nd June 2021
Overview – Prices generally rose in May, bolstered by signs of recovery in the global economy – led by the US – and stronger commodities demand. While prices could make further gains in the near term, we expect the prices of most commodities to be in …
State media announced today that China’s family planning policy will be relaxed to allow all families to have three children, up from the current limit of two. This comes shortly after China’s once-a-decade census showed that its population is aging even …
31st May 2021
Australian Treasurer Josh Frydenberg noted in October that the Government would not pursue budget repair until the unemployment rated was comfortably below 6%. However, the unemployment rate fell much more rapidly ahead of the May Budget than almost …
Capital growth was solid in April at 0.5% m/m, although that reflected a slight reduction from the rate seen in March. Looking ahead, we expect the recovery in economic activity to continue which will support demand for commercial property. However, …
28th May 2021
Capital value growth improved in Scandinavia and Switzerland in Q1, helped by the easing of virus restrictions and by the improvement in economic activity towards the end of the quarter. The uptick in the pace of Scandinavian industrial capital value …
Currencies of the two biggest economies in Africa have had contrasting fortunes recently, with Nigeria’s official naira exchange rate recently devalued but the South African rand soaring on the back of higher metals prices. Nigerian policymakers have …
27th May 2021
The jump in inflation to 3.4% in April was stronger than most forecasters expected and, with firms’ selling price expectations rising again in May, there seem to be further upside risks to inflation over the rest of the year. We expect inflation to …
We forecast that emerging market (EM) equities will make further gains between now and end-2022 as the global economy recovers further. However, they have lost a bit of ground to developed market (DM) equities recently and we doubt they will perform much …
The strength of inflation and expectations for a strong economic recovery have prompted a clear hawkish shift among Central European central banks. In Hungary, the MNB has set in motion the start of a tightening cycle in June and used its meeting this …
Headline inflation rates have increased in almost all countries in the region since the turn of the year reflecting a combination of price pressures as economies re-open, higher food inflation and tax changes, as well as unfavourable base effects created …
Political risks have intensified in the Andes this month, which could be part of a broader trend throughout the region. In Colombia, the protests against tax reforms have pushed policymakers away from the fiscal austerity measures required to repair the …
26th May 2021
The fall in all-property rents, dragged down by office and retail sectors, meant that annual capital value growth remained in negative territory in Q1, despite the surprise fall in yields. (See Chart 1.) Looking ahead, while the faster pace of the …
The economic outlook for much of Emerging Asia has deteriorated in recent weeks in response to a sudden jump in COVID-19 infections. Daily cases are surging in Thailand and Malaysia, and while the overall numbers remain low, Taiwan, Singapore and Vietnam …
While inflation fears have taken some steam out of the US stock market rally recently, we still think that equities in the US, and elsewhere, will make further gains over the next couple of years. Much of the focus in the markets over the past few weeks …
20th May 2021
With the faster pace of vaccination paving the way for a rebound in economic activity, the prospects for occupier markets have improved. However, structural changes mean that the recovery in the office and retail sectors will be gradual. In contrast, we …
New virus cases in India remain extremely high, but some solace can be taken from the fact that they have dropped rapidly over the past couple of weeks back to their level in mid-April. The share of tests returning positive has fallen too. Encouragingly, …
The severe waves of COVID-19 that afflicted Emerging Europe and Latin America earlier in the year are now subsiding and the near-term economic outlook there has brightened. But several Asian economies have become the focus of concern instead. India …
19th May 2021
Off the back of the weak Q1 GDP data, we now expect output to only rise 2% across 2021. The economy is unlikely to recover much in Q2 as cases are close to record highs and calls for a nationwide state of emergency growing. Moreover, only 4% of the …
The strength of demand coupled with supply constraints have made shortages of many goods even worse, with the inventory to sales ratio falling to a record low in March. (See Chart 1.) The surge in job openings and share of employers saying they are …
18th May 2021
Near-term inflationary pressures appear to be building. Some of this reflects factors that are likely to be only temporary, such as the “reopening inflation” associated with the easing of virus-related restrictions. We also think the broad-based rally in …
17th May 2021
The economic recovery looks well-set, which should support occupier markets. However, structural change in the office sector means that occupier demand continues to fall, even while the beleaguered retail sector is showing improvement. Both of those …
13th May 2021
The Riksbank will look through the recent pick-up in consumer price inflation in Sweden, which rose above the Bank’s 2% target in April for the first time since May 2019. After all, the energy-driven increase in the headline CPIF rate will be temporary, …
Mortgage rates have edged down since the end of March, but that didn’t prevent a fall in the share of households who see now as a good time to buy a home to a record low in April. (See Chart 1.) House price growth of 12% y/y, and record low inventory, …
12th May 2021
We’ve been more optimistic than most about the economic outlook since it was announced in November that COVID-19 vaccines were effective. But now that the COVID-19 restrictions are being removed, it looks as though the rebound in activity may be even …
11th May 2021
Although we forecast that that the “rotation” in equity markets generally has further to run, as COVID-19 is contained and economies re-open, we project that developed market (DM) Real Estate Investment Trusts (REITs) will continue to underperform DM …
6th May 2021
After contracting again in the first quarter of this year, prospects for the second quarter have improved because the pace of vaccination has accelerated. At its recent pace, the euro-zone is on track to have vaccinated 70% of the adult population by …
The Q1 industrial profits data published this week were very strong. Net profits continued rise rapidly and are now 50% higher than they were two years ago. Only a third of this is due to higher sales. Instead, the bulk of the increase has come from …
30th April 2021
The sharp rises in copper and iron ore prices this month will have given a much-needed boost to African producers such as Zambia and South Africa. Gold also traded higher in April compared to March, supporting recoveries in the likes of Côte d’Ivoire, …
29th April 2021
The ratio of homes under construction to population growth is at a record high, reflecting both the strength of housing starts and the weakness of immigration. (See Chart 1.) While the boom in construction might seem like a much-needed response to the …
House prices are now surging in both countries. House price cycles in the Australian housing market tend to lag those in New Zealand a little, which is consistent with the forward indicators pointing to a rapid lift in the pace of annual Australian price …
