Third virus waves held back recoveries in most countries in Q1, but the good news is that they appear to have peaked as new daily COVID-19 cases have fallen since mid-March. Russia has so far avoided a third wave and easing pressures on health systems …
28th April 2021
The Gulf economies, as well as Morocco, lead the way when it comes to COVID-19 vaccination programmes in the region. The UAE, Bahrain, and Qatar have provided at least one dose to more than half of their population, while Morocco, Saudi Arabia and Kuwait …
A jump in new virus cases in Thailand is already showing signs of holding back the recovery and could jeopardise plans to reopen the crucial tourist sector. Despite its initial success in containing COVID-19 – there have so far been fewer than 200 deaths …
Inflation is above target in Brazil and Mexico, with Chile set to follow in the coming months, but only in the former is the central bank likely to respond with (further) interest rate hikes. Brazil’s case reflects a combination of high inflation, a …
27th April 2021
Our view that the economy’s recovery from the COVID-19 crisis will be faster and fuller than most expect is consistent with UK equity prices continuing to rise over the next couple of years. Admittedly, UK equities have lagged their international …
22nd April 2021
A turnaround in returns during March hinted at a brighter outlook, though this mainly reflected favourable base effects. We think both structural and cyclical headwinds remain and do not see this as the start of a sustained recovery. With restrictions …
21st April 2021
New COVID-19 cases have surged in the emerging world, with India, Emerging Europe and Latin America particularly hard hit. Social distancing measures have been tightened in many countries, which will weigh on activity. The early evidence suggests that the …
Tokyo, Hyogo and Kyoto are soon expected to join Osaka in asking the central government to declare a third state of emergency. While together those four prefectures only generate a third of national output, the experience during the second state of …
Our in-house mobility tracker suggests that the surge in virus infections in India is now weighing on activity. (See Chart 1.) This is likely to become more pronounced as the outbreak has become more widespread, causing several state assemblies to tighten …
The latest round of stimulus cheques and the easing of restrictions are driving a renewed resurgence in demand, with retail sales jumping by nearly 10% in March and the regional manufacturing surveys rising to their highest level since the 1970s. (See …
19th April 2021
The world economy lost considerable momentum in the first quarter as resurgences of the virus and tighter lockdown measures weighed on activity. The lesson from Q4 last year was that households and businesses have adapted to lockdown measures to a …
16th April 2021
The partial unwinding in the reflation trade in recent weeks has stopped the decline in the Swiss franc in its tracks. Having depreciated against both the US dollar and the euro since the start of this year, the franc rose against both currencies in …
14th April 2021
Overview – Strong growth in industrial demand helped push up the prices of energy commodities used primarily in power generation last month, but oil prices slipped back. We continue to expect average energy prices to be higher this year than last, …
12th April 2021
Mortgage rates rose further in March, with the 30-year rate now up 50bps compared to the start of the year. Recent stability in the 10-year Treasury yield means mortgage rates are likely to move sideways over the next couple of weeks, but we expect they …
9th April 2021
Overview – Aside from the temporary blockade of the Suez Canal, March was a relatively uneventful month for industrial metals prices. Nevertheless, we still expect prices to fall this year as mine supply rebounds, particularly in Latin America, at a time …
The euro-zone economy is doing better than many expected given that much of the hospitality and travel sector is still closed due to virus-related restrictions. Indeed, the latest business surveys suggest that manufacturing output is growing at a …
8th April 2021
Overview – A rise in new coronavirus infections in many parts of the world, including Europe and India, weighed on investor sentiment in commodity markets in March. However, all the signs point to a rapid recovery in US activity and, as vaccines are …
7th April 2021
We have become more pessimistic about the outlook for emerging market (EM) assets and currencies as we now expect the 10-year US Treasury yield to rise further over the next two years . EM assets and currencies have come under pressure recently. (See …
1st April 2021
While London house price growth and transactions volumes have underperformed their national equivalents over the past year, they have been robust in absolute terms. Indeed, the peak in house price growth of 6.7% y/y in November 2020 marked a four-year …
China’s vaccination campaign has accelerated sharply over the past week. The daily pace of vaccination is now only just short of the five million needed to hit the target of inoculating 40% of the population by the end of June. (See Chart 1.) The …
We now think that 10-year government bond yields in most developed markets (DMs) will rise further. However, we think that they will climb more rapidly in the US than elsewhere in the developed world. As such, we have revised up our forecast for the US …
31st March 2021
The economic outlook in the Philippines has gone from bad to worse over the past month. The main headwind is a renewed surge in virus infections, with the country now reporting around 10,000 new cases of COVID-19 each day. Metro Manila, which accounts for …
Latin America’s recovery has been far from plain sailing, and the recent rise in new COVID-19 cases across the region is yet another setback. This is most worrying in Brazil, where the health system is close to breaking point and lockdown measures have …
30th March 2021
Central banks in Sub-Saharan Africa bucked a recent “trend” of interest rate hikes in other emerging markets this month. Policymakers in South Africa, Nigeria, Kenya and Angola all kept their benchmark rates unchanged. The backdrop of rising US Treasury …
Emerging Europe has been at the heart of the shift in EM monetary policy over the past month, with central banks in Russia, Turkey and Ukraine raising interest rates in March. The triggers for tightening were largely home grown in nature, including a …
25th March 2021
The recent rise in COVID-19 cases in the region adds to reasons to think that a recovery in tourism is some way off. Governments across the world seem, in any case, appear increasingly reluctant to open up to international travel amid fears of importing …
The housing market has gathered more momentum in the past month and, if this continues, could prompt the Bank to tighten policy sooner than we anticipate. The Teranet measure of house price growth rose to almost 10% y/y in February and the MLS measure …
24th March 2021
The jump in 10-year gilt yields from 0.29% at the end of January to 0.76% now has been driven by the markets pricing in a rise in inflation after the pandemic that they think will eventually prompt the Bank of England to raise interest rates sharply. With …
After stabilising at the start of the year, all-property capital values grew slightly in February. But we don’t think this spells the start of a sustained recovery over the next few months. After all, virus restrictions are only expected to unwind …
18th March 2021
With mobility rebounding and the state of emergency finally being lifted across all prefectures this weekend, economic activity should enter Q2 with some momentum. While the second state of emergency has been less restrictive and more targeted than the …
Foreign investor appetite for Indian assets has faded in recent weeks. Inflows into the equity market have waned, while foreigners have turned into net sellers of Indian debt. (See Chart 1.) This chimes with movements in portfolio flows in other major …
Base effects will temporarily drive headline and core CPI inflation up sharply over the coming months but, with underlying price pressures also starting to mount, we expect core CPI inflation to remain elevated over the next couple of years. (See Chart …
17th March 2021
There were signs that buyer demand would hold up well this year even before the government announced the extension to the stamp duty holiday in the Budget. Since then, Google searches for property portals have surged to a six-year high. A further …
EM financial markets have been hit this month by the rise in US Treasury yields, which has re-ignited some concerns about a re-run of the Taper Tantrum. So far, capital outflows from EMs have been relatively small. And financial conditions across the …
16th March 2021
The increases in Swiss, Swedish, and Norwegian government bond yields over the past month or so have illustrated the extent to which smaller bond markets get dragged around by global conditions. As has been the case since the start of the pandemic, the …
11th March 2021
Both the hard data and more timely surveys imply that the major advanced economies have had a mixed start to the year. The US has fared particularly well, thanks to easing pandemic-related restrictions and strong fiscal stimulus. Most notably, $600 …
Rising mortgage interest rates are starting to bring housing demand down from its recent elevated level. At 3.26% in the first week of March, mortgage rates were at an eight-month high. Coupled with severe weather in the south, that lead to a steep …
The rapid rollout of COVID-19 vaccines, the reopening of schools and the staggered reopening of other sectors from mid-April should mean that the probable fall in GDP in January proves to be the low point of the year. The extension of the furlough scheme …
10th March 2021
Euro-zone inflation looks set to rise sharply in the coming months as energy inflation shoots up and core inflation edges higher. Indeed, the PMI surveys suggest that manufacturing input prices are rising at their fastest pace in nearly a decade, which …
4th March 2021
Overview – Most metals prices advanced in February, with the exception of gold and silver. However, we suspect that the current prices of industrial metals look overextended, especially given the recent run of China PMIs. Accordingly, we think that …
3rd March 2021
Overview – Oil prices have managed to claw back their lockdown-induced losses from last year, and we think that they will rise in the coming months as demand continues to revive. Meanwhile, natural gas and coal prices generally fell last month, but remain …
While equity markets came under pressure towards the end of the month, they generally weathered February’s roughly 30bp rise in the 10-year US TIPS yield quite well, with most major indices still rising slightly over the month as a whole. A more …
2nd March 2021
Overview – Most commodity prices rose in February encouraged by falling COVID-19 infections and the vaccine rollout, which point to a recovery in economic activity and higher commodities demand later in the year. That said, we expect oil to be the main …
1st March 2021
Labour markets in both countries have tightened in recent months. In Australia, the unemployment rate has fallen from a peak of 7.1% to just 6.4% in January. And other measures of spare capacity have tightened even more sharply. The underemployment rate …
The recent rally across almost all commodity prices is good news for resource-rich economies in Sub-Saharan Africa. Balance sheets in oil producing countries like Nigeria and Angola will get a boost from the pick-up in oil prices. And a surge in …
26th February 2021
The tide is turning towards populist policymaking in Latin America once again. Most notably, Brazilian President Bolsonaro’s move to fire Petrobras’ CEO , Roberto Castello Branco, may be a prelude to greater state intervention in the economy ahead of the …
25th February 2021
Incoming data continue to point to strength in domestic activity, spending and revenues. Yet strains in China’s corporate bond market continue to grow, with the value of defaults hitting all-time highs. (See Chart 1.) This underlines the degree to which …
The rise in all-property capital values in late-2020 proved short-lived and they flattened off again in January. The recent roadmap for easing England’s current lockdown is broadly consistent with our previous expectations for the recovery, so the outlook …
Emerging Europe came through the second virus wave in Q4 in a better state than we had expected, with services sectors holding up and industry booming in Central Europe. But the headwinds have mounted recently. The extension of virus containment measures …
24th February 2021
Indonesia has seen a dramatic shift in its current account position over the past year, with recently published data showing that the country recorded its second consecutive quarterly surplus in the final quarter of last year. The surplus of 0.3% of GDP …
