India’s stock market has had such a good few years that it started to raise concerns about whether it was in a “bubble”. And as it’s come under pressure recently, some have speculated that the bubble is bursting. For our part, we think that there are …
26th November 2024
We discussed the global impact of higher tariffs in a Drop-In on Tuesday, 26th November. Click here to watch the 20-minute online briefing. In this Focus, we construct a framework to explore the channels through which an import tariff works, which we use …
25th November 2024
Our base case is that protectionist policies from the US next year will have only a small economic impact on Europe, but the fallout will vary between countries and there are risks of greater damage if the trade conflict escalates. Meanwhile, the EU will …
22nd November 2024
Romania will elect a new government over the coming weeks at a time when the economy is performing poorly, inflation is running above target, and macroeconomic stability depends on policymakers pushing through much-needed fiscal consolidation. The most …
21st November 2024
While we expect the RBNZ to cut interest rates by the most since the GFC over the coming year, housing affordability was never as stretched at the start of an easing cycle as it was at the start of the current one. Accordingly, we only expect house prices …
19th November 2024
The recent downturn in US commercial property has piqued investor interest in alternatives as they look to diversify. With an aging population, senior housing has a clear long run structural demand driver pointing to further growth in the sector. Our …
18th November 2024
Donald Trump’s second presidency is likely to result in lower US GDP growth, faster US inflation and a slightly higher path for the fed funds rate. The implications for the rest of the world are highly uncertain, not least because it is unclear how many …
6th November 2024
We think that if Vice President Harris wins the US presidential election next week, she would be more likely to stick to policy continuity, and EM risk premia would remain low. If former president Trump is elected, we would expect an initial adverse …
1st November 2024
The government’s plan to trim the population will hit potential GDP growth and, given the headwinds for residential investment, reduce the chance of GDP reaching that lower potential level. Rents on new leases are set to fall, which presents downside …
31st October 2024
This Budget is big, both in the way it defines the government’s plans and the money it raises and spends. The key point is that it loosens fiscal policy relative to previous plans and is therefore consistent with GDP growth perhaps being a bit stronger …
30th October 2024
With the Conservatives currently on track to win a clear majority at the next federal election, which is due by October 2025 but could come much earlier, there is a high chance that the carbon tax will soon be scrapped. We do not think this would alter …
28th October 2024
While the perceived probability of a Trump win has increased over recent weeks, we believe there is still ample scope for a sizeable repricing across markets once the election outcome becomes clear. We think a Republican “sweep” would probably lead to …
Our central forecast is that there won’t be a fiscally induced ‘crisis’ in the Treasury market. But there is clearly a risk of yields rising in response to higher term premia and more restrictive monetary policy than would otherwise be the case, if the US …
25th October 2024
Poor economic growth and vulnerability to structural change in the office and retail sector are set to weigh on German property returns in the coming years. But solid rental prospects in the residential sector mean it remains a compelling candidate for …
23rd October 2024
The September release of US non-farm payrolls was just the start of a run of strong employment releases in advanced economies this month, reigniting fears about pay growth and inflation. However, when putting a few quirks to one side and judging a range …
21st October 2024
The persistent strength of wage growth in Central and Eastern Europe (CEE) reflects continued tightness in labour markets and lingering effects from the 2022-23 inflation shock. While the latter should unwind, we think that wage growth will generally …
Clients can view all of our financial market forecasts here , and all of our commodity market forecasts here . This Focus assesses the outlook for US energy equities, which have come into the spotlight of late amid swings in oil prices. In short, we …
18th October 2024
Several EMs have reached provisional agreements with creditors to restructure their sovereign debts in recent months, including Zambia, Ukraine, Sri Lanka and Ghana. In principle, restructurings should pave the way for improved fiscal positions, stronger …
17th October 2024
Balancing investing in the economy and fiscal credibility In her first Budget on Wednesday 30 th October the Chancellor, Rachel Reeves, faces the unenviable task of trying to achieve three objectives. First, being able to say there will be “no return to …
16th October 2024
Our new House Price Leading Index combines several leading indicators that capture the balance of supply and demand in Australia’s housing market and suggests that house price growth will continue to slow over the coming months. We’ve been tracking a wide …
7th October 2024
After falling to 1.8% in September, headline inflation in the euro-zone is almost certain to rise in the final few months of 2024. But we think that falling oil and natural gas prices will cause it to drop back again next year and average about 1.5% in …
3rd October 2024
Access to commodities – particularly critical minerals – is a growing area of competition between China and the West. And those EMs with deposits of the minerals used in new and low-carbon technologies are likely to see higher investment and, ultimately, …
Saudi Arabia’s Vision 2030 reform programme has resulted in major societal and cultural changes, but many of the economic reforms are currently not on track to hit their targets. That is not to say Vision 2030 should be dubbed a failure. But officials …
23rd September 2024
While the green transition and AI-related use will boost demand for industrial metals over the rest of this decade, we expect this to largely be offset by a substantial contraction in demand from China’s construction sector. Against this backdrop, and …
19th September 2024
Even though state and federal budgets point to a sharp slowdown in public demand in 2024/25, our analysis suggests that the public sector will keep providing a sizeable boost to GDP growth. And if we’re right that private demand will pick up as real …
18th September 2024
After two disappointing years, recent data suggest Europe’s commercial real estate market is stabilising. But will recovery follow and how strong will it be? Join our 20-minute online session on Wednesday 25th September at 10:00 BST as we discuss the …
17th September 2024
All of the historical data supporting this publication can be found on our new Rate Cuts & Asset Returns dashboard. All of the forecasts in this publication can be found on our US Macro or Financial Markets dashboards. This Focus explores the key lessons …
12th September 2024
The structural deterioration in the fiscal situation suggests that a tight grip on the public finances in the Budget on 30 th October will be necessary. That’s why we think the government will maintain existing plans for fiscal policy to be tightened, but …
The Reserve Bank of New Zealand has always ended up cutting interest rates by more than it anticipated at the start of previous easing cycles. We think this time won’t be any different and expect the Bank to cut rates to 2.25% at the end of its easing …
10th September 2024
With a large and growing population and a bright long-term economic outlook, the stage is set for India’s commodity demand to boom. However, there are several reasons why India won’t have the same profound impact on global commodity markets as China has …
Getting an early steer on whether an economy has entered recession requires a holistic assessment of a variety of indicators to see if multiple variables are flagging recession at the same time. In this vein, we have created Economic Momentum Indicators …
9th September 2024
Against the backdrop of central bank buying, strong physical gold demand, and a surge in ETF holdings, China appears to have been a key driver of the rally in gold prices earlier this year. Looking ahead, we think that China’s appetite for gold will grow …
29th August 2024
For all the talk about AI, equities in Europe have delivered nearly as much as those in the US over the past few years. But we think that US equities will take the lead more clearly over the next year or so. Only the eventual bursting of an AI bubble …
28th August 2024
US corporate credit spreads have all but unwound the rise they saw during the recent market turbulence, and are back at very low levels by past standards. (See Chart 1.) We expect them to remain compressed over the next year or so, as long as the US …
22nd August 2024
Retail real estate has faced a tough period, buffeted by the rise of e-commerce, extensive oversupply and the impacts of the pandemic on in-store shopping. But we think the sector is well down the road to dealing with those challenges and now offers a …
20th August 2024
While we expect inflation to fall below the Bank of Japan’s 2% next year, the Bank’s still very accommodative stance means that this alone won’t trigger interest rate cuts. We think it would require a major downturn in activity that results in a looser …
19th August 2024
It has been three months since policymakers unveiled plans to encourage SOEs to buy unsold homes from developers. Progress has so far been slow, not least because participation is voluntary and the incentives for firms to take part are lacking. But the …
16th August 2024
The renewed widening of global imbalances has become another faultline in the fracturing of the world economy, and will continue to provoke trade barriers in the coming decades. With overall imbalances most prominent in the US, further tariffs aimed at …
14th August 2024
Housing inflation has become an increasingly important driver of core services inflation in Mexico – a key concern of the central bank, Banxico. And we think that robust household income growth and a lack of supply of dwellings will keep housing and, by …
13th August 2024
Concerns about a US recession have led to a sharp reassessment in financial markets; some of the shifts in the wake of the latest US non-farm payrolls report look overdone (and have to some extent reversed). Given that we still think a “soft landing” is …
9th August 2024
We suspect that the boost to euro-zone economic growth from interest rate cuts over the next year or two will be quite small. The ECB is likely to lower its policy rates only gradually and leave them well above pre-Covid levels. So borrowing costs in the …
7th August 2024
While faster wage growth should eventually result in a significant pick-up in rental inflation, it seems likely that rental growth will trail income growth for the foreseeable future. That means that the Bank of Japan will have to let the economy run …
5th August 2024
Financial markets have largely taken the dramatic events in the US presidential race over the past month in stride. While the race now appears to be back to a coin toss, the prospect of a second Trump term remains the key uncertainty – a Harris presidency …
1st August 2024
If implemented in full on day one, Donald Trump’s trade, immigration and fiscal policies would together be stagflationary. We suspect that he will be forced to water down his plans, however, and it could take some time to implement them. The upshot is …
31st July 2024
We have revised down our forecasts for government bond spreads in Spain and Portugal, but we continue to think that those in France, as well as in Italy and Belgium, are more likely to rise than fall. The dust has now settled in bond markets after the …
We don’t think the recent rotation in US equities sets the stage for something much bigger. In our opinion, another sustained and substantial rotation won’t begin until shortly before the bubble in the stock market bursts. And our baseline assumption is …
25th July 2024
There are several structural factors that explain the underperformance of Canadian productivity growth compared to the US since the 1980s, but the underperformance in the last few years specifically reflects more cyclical factors including extremely …
23rd July 2024
Donald Trump has said that he could quickly end the war in Ukraine if he is re-elected as US President. This Focus answers key questions on what the shape of any agreement might look like, what might happen to sanctions on Russia, and the possible …
Fiscal policy has become almost as fraught in Germany as it is in France and Italy, but rather than from a desire to run very loose fiscal policy, Germany’s woes stem from its strict “debt brake”. Some loosening of the debt brake is likely in the coming …
This Asset Allocation Focus takes a fresh look at emerging market (EM) equities. Section 1 sets the stage, by briefly reviewing their performance over the past decade. Sections 2, 3 & 4 explore their exposure to three key themes: section 2 examines the …
16th July 2024
