Policymakers in Russia and Turkey have loosened monetary policy more than elsewhere in the emerging world over the past few months, but we think that easing cycles are nearing an end. Communications from Russia’s central bank suggest that, after one more …
17th December 2019
Economic growth across the emerging world has slumped this year but, with the important exception of China, recoveries should take hold in 2020. Recent interest rate cuts will keep financial conditions accommodative. And governments will continue to …
The post-election jump in UK equities could just be the start of a sustained rally. Concerns Brexit and higher taxes under a Labour government mean that UK equity indices have underperformed over the last few years. (See Chart 1.) However, the removal of …
Singapore’s economy appears to be benefitting from tourists and business travellers shunning Hong Kong. Since the Hong Kong protests intensified in July, tourist arrivals to Singapore have picked up. Meanwhile, hotel occupancy rates have jumped and were …
Despite recent optimism about trade and Brexit, we doubt that equities in developed markets (DMs) will fare as well next year as they have in 2019. That said, those in the UK will be an exception in our view. Two key factors have boosted equities across …
What a difference a few months make; from being the worst performing G10 currency by some margin between the start of the year and late October, the Swedish krona has risen by about 3% against the euro since the Riksbank hinted that it would “most …
16th December 2019
Optimism about an imminent resolution to the trade war between the US and China and subsiding protests in Latin America have supported EM currencies over the past month. But, barring a few exceptions, we think that they will weaken against the US dollar …
11th December 2019
The available data on retail sales, household spending as well as the Bank of Japan’s consumption activity index show that consumer spending fell broadly as much in October as in April 2014, when the sales tax was raised from 5% to 8%. Even so, our …
Hopes that the euro-zone is turning a corner look premature. The latest activity data have been disappointing, with retail sales falling in October and national data pointing to another decline in industrial output. Business surveys paint a bleak picture …
10th December 2019
Overview – Warmer-than-expected weather, amid subdued global economic growth, put downward pressure on the prices of coal and LNG since the start of November. In contrast, the price of oil rose on the back of the agreement that OPEC+ will cut output …
9th December 2019
Housing market activity and house price growth showed few signs of improvement at the end of 2019. Indeed, activity has, if anything, been cooling. (See Chart 1.) That partly reflects economic and political uncertainty. But the big picture is that high …
Summary: A narrowing in the spread against the 10-year Treasury yield kept the 30-year mortgage rate close to 4% even as yields reached a three-month high in early November. Mortgage rates are likely to stay close to 4% over the next couple of years. But …
Now that all major economies have released their Q3 national accounts, it is clear that the world economy pulled off a third consecutive quarter of around 3% annualised growth. (See Chart 1.) And over the past six weeks or so, there has been mounting …
6th December 2019
Despite somewhat more encouraging economic data releases, industrial metals prices struggled to find direction in November mainly owing to the ongoing uncertainty surrounding US-China trade negotiations. We think most base metal prices will rise next year …
5th December 2019
The anticipation of next week’s election delivering a substantial majority for the Conservative Party and leading to a Brexit deal has already triggered a turning point in the financial markets, with the pound rising to a seven-month high of $1.31 and a …
Overview – Commodity prices struggled to find direction in November despite the release of somewhat stronger economic data. Meanwhile, developments on the US-China trade front remained a key driver of sentiment. While a “phase one” trade deal seems likely …
3rd December 2019
We estimate that regional GDP growth picked up to about 0.5% q/q in Q3, which would be the fastest pace in 18 months. But that probably marks the peak in the recovery. Argentina and Chile are set to contract in Q4, Mexico’s economy is showing few signs of …
29th November 2019
As things currently stand, the US is due to extend its punitive tariffs to cover nearly all goods imported from China in two weeks’ time. But the Trump administration has appeared keen to avoid that happening almost since the president announced the …
Headline inflation has eased across Central and Eastern Europe (CEE) over the past few months, but that was entirely due to falling food and fuel inflation; core price pressures have continued to build. Indeed, core inflation hit multi-year highs in …
28th November 2019
Figures released over the past month painted a very downbeat picture of economic conditions in Africa’s two largest economies. Growth in Nigeria did, admittedly, pick up a touch in Q3. But activity remained very weak by past standards, with GDP rising by …
Although we think that the Fed is now done cutting rates, we think that more easing is coming outside the US and that major central banks will remain net buyers of bonds. With this in mind, we forecast that government bond yields in most developed …
Looser monetary and fiscal policy should help to drive a modest recovery in Thailand over the coming quarters, and we are revising our GDP growth forecast for next year up slightly. Figures released earlier this month showed Thailand grew by just 2.4% y/y …
26th November 2019
The stagnation of retail sales volumes over the past 12 months shows that all is not well in the consumer sector, but there have been some tentative signs of improvement recently. While retail sales volumes edged down by 0.1% m/m in September, growth over …
25th November 2019
Preparations for the public listing of Saudi state oil company, Aramco, have stepped up a gear this month but the signs are that it is unlikely to be the blockbuster sale that the Kingdom once hoped for. When plans for the listing were first mooted in …
Capital values have been falling since late 2018 (See Chart 1.) This has led by declining retail capital values and slowing growth in office and industrial. We expect that all-property yields will continue to rise next year, driving further declines in …
22nd November 2019
Q3 GDP data due next week are likely to show a further slowdown in India’s economy, with the industrial sector the main source of weakness. However, some comfort can be taken from the fact that the services sector – which accounts for over 50% of the …
We do not expect to see a resumption of the “ reflationary ” pattern that until recently had characterised markets over the past month. This is primarily because we think that the global economy will remain stuck in a low gear for some time to come, and …
21st November 2019
The decline in bond yields in Australia and New Zealand throughout 2019 has paused in recent months following optimism about a potential trade deal between the US and China and hawkish language from the Fed. But we think that bond yields in both countries …
The latest activity data suggest that economic growth will slow to just 1.0% annualised in the fourth quarter, from 1.9% in the third, but there are growing hopes that may prove to be the nadir. Much of that slowdown is being driven by firms running down …
20th November 2019
Ongoing protests in Chile, Hong Kong and Lebanon will weigh on their economies and financial markets, but to different degrees. While the tightening of financial conditions and strikes in Chile will hit activity in Q4, the strength of the government’s …
15th November 2019
Inflation in Switzerland fell below zero for the first time in nearly three years in October and business surveys suggest that it will remain in negative territory until at least early 2020. (See Chart 1.) As it happens, we suspect that a combination of …
Despite the softness in economic activity, occupier demand generally held up in Q3. And while there are signs that the cyclical slowdown in the euro-zone is starting to hit CEE markets, given their historically low vacancy rates, we think that rents could …
A fall in office and industrial yields supported all-property capital value growth in Q3. However, the slowdown in the retail sector weighed on all-property rental growth. With economic growth softening, we think that rental growth will slow further. …
EM equities have continued to rise over the past month, seemingly driven by optimism about an imminent US/China trade deal and some improvement in the economic data. But we are sceptical that the rally will last, and forecast that EM equities will tread …
13th November 2019
After a brief mid-year recovery, economic and political uncertainty is once again discouraging housing market activity. In all, the near term outlook for both housing sales and house prices is therefore weak. But beyond that, even if Brexit uncertainty …
8th November 2019
Given Q3 national accounts data from early-reporting countries and monthly data from other economies, it looks like world GDP growth actually picked up a touch last quarter to just over 3% annualised. And there have been some encouraging signs about the …
The jump in the unemployment rate in September is evidence that the labour market has entered a loosening phase. (See Chart 1.) The Bank of Japan reiterated that the output gap was its key gauge of price pressures in the economy at its meeting last week. …
7th November 2019
Although we estimate that the 0.2% q/q contraction in GDP in Q2 was followed by a 0.4% q/q rise in Q3, it is clear that the economy is spluttering rather than firing on all cylinders. We think that GDP will rise by just 0.2% q/q in Q4. Seeing as the …
6th November 2019
Although the euro-zone economy grew by more than expected in Q3, helped by solid growth in France and Spain, the overall picture remains fairly gloomy. Euro-zone GDP expanded by only 0.2% q/q, and survey data, such as the Composite PMI, suggest that it …
A cocktail of an apparent softening of US-China trade tensions coupled with several supply outages pushed the prices of most base metals higher in October. Perhaps somewhat unusually, the price of gold also gained ground as investors remain concerned …
Summary: The 30-year mortgage rate increased to an eight-week high in October, which helps explain why mortgage applications for home purchase have been trending down since mid-September. A lack of inventory, slowing economy and tightening credit …
5th November 2019
Overview – Despite signs that the global economy continued to slow in October, only coal prices fell. While we expect global growth to remain subdued in the year ahead, we think that a recession will be avoided, which underpins our forecast of somewhat …
Overview – The apparent thaw in the US-China trade dispute gave a lift to the prices of most industrial commodities in October. However, we are sceptical that a lasting resolution to the trade conflict will be reached. Instead, we think that the ongoing …
31st October 2019
Political risk grabbed the headlines this month, with protestors taking to the streets across the Andes and Argentina electing a new Peronist president. Demonstrations in Ecuador and Chile will weigh on growth in Q4 and have already forced policymakers to …
Policymakers in South Africa and Angola admitted the severity of their countries’ economic problems this month, while their Nigerian peers moved further down the road to autarky. South Africa’s finance minister revised his government’s deficit and debt …
In its latest World Economic Outlook, the IMF predicted Australia’s economy to expand by 1.7% in 2019 and by 2.3% in 2020. While the 2019 forecast is consistent with our own expectations, their forecasts assume a larger bounce in GDP growth next year than …
Campaigning ahead of Sri Lanka’s presidential election, to be held on 16 th November, is well underway. President Maithripala Sirisena has already confirmed he will not stand again and will step down when his term ends on 9 th January. Altogether 35 …
30th October 2019
The corporate earnings season currently underway in China has been disappointing. Admittedly, the Q3 results published so far point to a slight improvement in year-on-year growth in earnings per share of domestically-listed firms. But the recovery was …
Large interest rate cuts and dovish comments from central banks in Russia and Turkey this month drove rallies in both countries’ local currency bond markets. The yields on sovereign 10-year local currency debt have dropped by 60bp since the start of this …
29th October 2019
The Business Outlook Survey painted a mixed picture ahead of the Bank of Canada’s October monetary policy decision. The Future Sales Indicator (FSI) – which includes firms’ expectations for future sales as well as their assessment of order books, advance …
