The focus on political risk and Lebanon’s growing debt problem have meant that the sharp slowdown in growth across large parts of the region has gone unnoticed. The latest figures suggest that the economies of Saudi Arabia, Qatar and Lebanon were all …
29th October 2019
This rise in all-property rental value growth in September was not enough to prevent capital values falling on an annual basis for the fifth consecutive month. (See Chart 1.) The fact that the chance of a no deal Brexit has reduced is positive for the …
25th October 2019
Local bond yields have dropped over the past few months (see Chart 1) as the Reserve Bank has continued easing monetary policy, but we think they will start rising again before long. Fiscal policy has been loosened substantially - the finance ministry …
23rd October 2019
If Boris Johnson’s Brexit deal is approved in Parliament soon, we expect the pound would rise from $1.29 now to about $1.35 and 10-year gilt yields would increase from 0.72% to around 0.90% by the end of the year. While a lot of good news is already baked …
22nd October 2019
The news of an apparent trade “deal” between the US and China has pushed back the threat of further tariffs and helped to un-invert the yield curve, but economic growth still appears to be slowing. Our tracking estimate suggests that growth slowed to 1.5% …
21st October 2019
The continued decline in core inflation across many emerging markets supports our view that most central banks’ easing cycles have further to run. Our measure of EM core inflation fell to 2.8% y/y last month (see Chart 1), the weakest rate since our …
18th October 2019
We still think that returns from many “safe” assets, including most developed market government bonds, will fail to beat those from US dollar cash over the rest of 2019, even as “risky” assets, notably equities, REITs and corporate bonds, struggle against …
A sharp rise in consumer spending in the run up to the 1 st October sales tax hike will almost certainly be followed by a plunge in consumption this month. However, on a quarterly basis the swing in spending is likely to be more muted than around previous …
17th October 2019
While the Swiss and Swedish economies appear to have contracted in Q3, mainland GDP growth in Norway is chugging along nicely. And even though activity is set to slow in 2020, Norway will remain a bright spot over the coming years. This comparatively …
Summary: A slowing economy has increased concerns around job security, which has weighed on mortgage applications for home purchase even as mortgage interest rates have stayed close to three-year lows. Coupled with low levels of home inventory, that will …
11th October 2019
Available data suggest that world GDP growth was stable at around 3% annualised in Q3, which is below the ten-year average of 3.5% but stronger than the 2.5% pace recorded in the second half of last year. (See Chart 1.) Growth looks to have accelerated in …
10th October 2019
There have been one or two positive signs in the past week or so, such as the increase in German industrial production in August. But the overall picture remains gloomy. Indeed, at face value the Composite PMI, which is one of the most reliable timely …
8th October 2019
After some fleeting optimism on the back of an apparent easing in US-China trade tensions in September, the recent run of weak US survey data saw demand concerns return to the fore. We think that global economic growth will slow further over the coming …
3rd October 2019
Overview – Energy prices diverged in September. There were strong gains in European gas and coal prices in part owing to strikes at France’s utilities at a time when seasonal demand is also picking up. Meanwhile, oil prices have been falling amid fears …
Overview – Oil prices dipped in September despite the attacks on Saudi Aramco. In contrast, the prices of most other commodities increased owing to a rise in investor risk appetite. However, we expect US equities to fall in the coming months, which should …
1st October 2019
The central banks of Brazil and Mexico loosened policy this month, and we expect that they will continue to cut rates in Q4. Inflation in both countries is below target, and both economies are struggling and in need of policy support. In Mexico, dovish …
30th September 2019
Events this month have highlighted the risks posed by politics to the region’s two largest economies. While Saudi Arabia initially suspended around half of its daily oil output following attacks on its oil facilities, it looks like there won’t be any …
Economic growth has continued to ease in both countries in the first half of 2019. In Australia, GDP growth eased to 1.4% y/y in Q2. And while the government’s tax cuts may mean that consumption supports a pick-up in growth in the coming months, the …
The economies of Central and Eastern Europe (CEE) shrugged off ongoing troubles in the euro-zone economy for most of 2019 but the latest data offer evidence that this now taking a bigger toll. Industrial production growth in Poland and the Czech Republic …
26th September 2019
Figures released over the past month brought bad news for almost all of Sub-Saharan Africa’s key economies. After a surprisingly-strong rebound in Q2, growth in South Africa seems to have slowed at the start of Q3. And leading indicators in South Africa, …
In August, stronger rental value growth in the office and industrial sectors meant that annual all-property rental value growth held steady. (See Chart 1.) This is consistent with the recent improvement in economic activity, following the contraction in …
The brief rise in London buyer activity proved to be short lived, suggesting that the capital’s housing market malaise has further to run. Indeed, even if a no-deal Brexit is avoided, we expect London’s house price decline to intensify, with prices to end …
24th September 2019
Households appear to be taking advantage of recent strong income gains to strengthen their finances. Over the past year, real incomes increased by 3.0% but real consumption increased by just 1.4%. (See Chart 1.) Reflecting this, the household saving rate …
PBOC Governor Yi Gang today appeared to pour cold water on the prospect of imminent monetary easing. He said that the PBOC would not rush to follow the US Fed and ECB in cutting rates and that “China’s monetary policy will maintain its prudent …
The Indonesian government’s budget for 2020 came a step closer to being passed this week after the parliament’s budgetary committee approved President Joko Widodo’s spending plans for the coming year. Although spending is set to rise by 8.5% next year, …
Equity markets have recovered much of their losses in recent weeks and, after hitting multi-year lows at the start of September, sterling and bond yields have also rebounded. (See Chart 1.) This is partly due to signs of a temporary détente in the …
23rd 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 …
20th September 2019
For all the talk of a global slowdown, the incoming data from the emerging world have been encouraging. Having bottomed out in Q2, GDP growth held steady at around 3.5% y/y at the start of Q3. EM manufacturing growth picked up, while exports stabilised. …
The latest activity data for India have been disappointing but, despite the economy’s recent soft patch, developments over the past month should boost optimism over long-run prospects. In late August, the government announced that it was easing …
19th September 2019
The Fed will look through any rise in headline inflation resulting from the recent jump in crude oil prices, but the acceleration in core CPI inflation, to an 11-year high in August, is harder to ignore. (See Chart 1.) Tariffs on Chinese imports explain …
18th September 2019
Business surveys suggest that conditions in manufacturing worsened again in August. The Cabinet Office’s survey-based index of manufacturing conditions fell to its lowest level since 2011, when the country was recovering from the Great East Japan …
17th September 2019
The ebbs and flows in investor risk appetite in recent months have resulted in a rollercoaster ride for the Swiss government bond market. The run-up in the price of Swiss 50-year government bonds between early-July and mid-August – which reflected a fall …
13th September 2019
Consumer spending continues to be a relative bright spot in the global economy. Spending growth picked up to a healthy 2.9% quarterly annualised in the advanced economies in Q2 (see Chart 1), reflecting marked improvements in the US and Japan. But the …
12th September 2019
Summary: The 30-year mortgage rate has dropped to its lowest level since late 2016, but that has not given much of a boost to home demand. Indeed, mortgage applications for home purchase dropped back over July and August. (See Chart 1.) A lack of …
11th September 2019
Oil & Gasoline – Oil prices continued to fall last month on concerns about a slowing global economy and rising US-China protectionism. Our forecast of a further downturn in global growth suggests prices could fall by more. That said, supply is …
6th September 2019
We expect worries about the escalating US-China trade war and prospects for the global economy to continue to drive metals prices in the coming months. Precious metals are benefitting from the uncertainty, but there have been renewed falls in industrial …
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 …
5th September 2019
While the 0.2% q/q decline in GDP in Q2 and the further falls in the IHS Markit/CIPS activity PMIs in August mean that there is a real risk of a recession, there are reasons to believe that GDP will rise in Q3 and a recession before Brexit will be …
In the face of the downturn in manufacturing, the services sector is still holding up well. Indeed, the business activity index of the services PMI survey suggests that output in the sector is growing by about 1.5% y/y. (See Chart 1.) The strength of the …
July saw the second consecutive monthly rise in new buyer enquiries and house purchase mortgage approvals, as Brexit uncertainty briefly eased. (See Chart 1.) But with house prices very high and economic uncertainty set to intensify once more, we expect …
Overview – The escalation in US-China trade tensions led to investors becoming more risk averse, which boosted the prices of gold and silver but depressed the prices of agricultural and industrial commodities. Looking ahead, we expect trade tensions to …
4th September 2019
At the start of the year, we were a lone voice forecasting that the Australian dollar would decline to US$0.65 by year-end. The Australian dollar has come under increasing pressure this month on a number of fronts. Trade tensions have continued to ramp up …
2nd September 2019
The collapse in Argentine assets this month and the subsequent news that the government will seek to reprofile its debts puts the country on the brink of its fifth default in thirty years. The economy is likely to fall back into recession, although the …
30th August 2019
Governments across the region made a series of economic policy moves this month, with Ethiopian and South African politicians taking steps forward, and Nigerian ones – again – retreating towards protectionism. In Ethiopia, the government issued a license …
29th August 2019
Central Europe is one of the few parts of the world where central banks haven’t eased monetary policy recently. Indeed, we think that the focus is likely to remain on tightening, particularly in Poland and Hungary. Inflation is likely to remain above …
28th August 2019
Following the escalation of the US-China trade war and further signs of weakness in much of the global economic data, investors have increased their bets on looser monetary policy in Canada. Market pricing implies that the chance of an October rate cut …
27th August 2019
Although there have been signs that economic activity has improved in Q3, the slowdown in the commercial property market looks set to continue. In July, all-property rental values barely grew and yields rose across most sub-sectors. (See Chart 1.) …
Despite the poor global outlook, GDP growth across Emerging Asia actually picked up slightly in the second quarter, and our forecast is for a further gradual recovery over the remainder of the year and into 2020. (See here .) One of the key risks facing …
26th August 2019
Hong Kong’s GDP is now just 3% of mainland China’s, down from 18% in 1997 when the city returned to Chinese control. But Hong Kong still serves as the main gateway between China and the world where financial flows are concerned. (See Chart 1.) This …
22nd August 2019
Argentina political developments sparked sharp falls in EM currencies over the past month, but this wasn’t enough to deter policymakers from continuing their easing cycle. Central bankers in Turkey, India, Brazil, Russia, Mexico, Thailand, and the …
21st August 2019
