Stimulus announced at China’s NPC is positive for commodities demand and prices But credit growth will be much lower than it was post-GFC Accordingly, the stimulus is unlikely to send prices soaring like in 2009 China’s stimulus spending in 2009 in the …
29th May 2020
The ECB is likely to increase the PEPP by a minimum of €500bn next week. Policymakers may also say the PEPP will run until at least mid-2021. We no longer anticipate a further reduction in the deposit rate. Policymakers have signalled their intention to …
28th May 2020
We estimate that non-farm payroll employment fell by 9 million in May, taking the cumulative decline since February close to 30 million and pushing the unemployment rate above 20%. The loss of 20.5m jobs in April was as expected based on the tsunami of …
First meeting for new governor Tiff Macklem. Some positive signs since last meeting, but some worrying ones as well. Downside risks raise the case for more policy support. We expect the Bank of Canada to announce additional corporate bond purchases next …
27th May 2020
Previous government bond purchases were focused on restoring liquidity Unemployment is rising and inflation set to slump Bank may launch fresh round of purchases focused on lowering long-term rates We suspect that the Reserve Bank of Australia will keep …
26th May 2020
Profitability and production at US shale firms has slumped owing to low oil prices We expect US oil output to remain low throughout the rest of 2020 … … but it could start to bounce back in 2021 Since the outbreak of the coronavirus, oil demand has …
21st May 2020
The silver price has historically been influenced by industrial metals and gold prices As a safe haven, silver has disappointed relative to gold Going forward, we expect the silver price to underperform gold through to end-2020 Silver is often described …
18th May 2020
A last hurrah for OPEC output OPEC production jumped up in April, but this will prove a one-off given the agreed output cuts from May onwards. We expect OPEC compliance with the cuts to be fairly good in the coming months as prevailing low prices and …
13th May 2020
Numerous lending facilities have been either launched, revived, or expanded Many aim to provide liquidity to financial institutions and non-financial firms But the line between liquidity operations and monetary policy is sometimes blurred Traditionally, …
7th May 2020
The virus-led increase in exchange stocks is reminiscent of the GFC But changes in warehouse economics will keep a lid on stocks Nonetheless, we expect stocks to rise and remain high for some time In this Metals Watch , we take a closer look at whether …
6th May 2020
The lockdown hit the New Zealand economy hard RBNZ is supporting the economy with QE and other measures but more is needed The RBNZ will cut the OCR into negative territory, perhaps in August The RBNZ will want to wait to assess the impact of the virus …
Given the toxic combination of Covid-related disruption and precipitous plunge in oil prices, we think that the Norges Bank’s easing cycle has further to run. Whereas financial markets are pricing in only a small chance of further loosening, we have …
1st May 2020
MPC to signal it continues to stand behind gilt market There’s a chance it could extend QE But that’s probably more likely to happen in the coming months The Monetary Policy Committee (MPC) will probably use its policy announcement on Thursday 7 th May to …
30th April 2020
Bank has started to roll back liquidity provision and bond purchases as tensions ease Unemployment set to remain above levels consistent with full employment for years Interest rates will have to remain low for longer than markets anticipate The continued …
28th April 2020
The €750bn Pandemic Emergency Purchase Programme now looks too small. The less EU leaders achieve, the more the ECB will have to do. Further increase in bond purchases very likely, perhaps with explicit yield cap. The ECB has ramped up its asset purchases …
23rd April 2020
Having pulled out all the stops since its last scheduled policy meeting, in February, we suspect that the Riksbank will take stock next week. However, as the focus shifts away from monetary firefighting, we think that the Bank will return to negative …
Fed funds target range will be stuck at zero for foreseeable future Easing financial market stress suggests Treasury purchases will continue to slow But new lending facilities could eventually push balance sheet above $10trn With the Fed having already …
22nd April 2020
Funding strains not severe so major expansion in asset purchases not on the cards But looming slump in activity will derail efforts to reach 2% inflation Bank may also cut policy rate from -0.1% to -0.2% The Bank of Japan will probably take some …
OPEC output surge will not last beyond May OPEC production surged in March after talks between OPEC and its allies broke down. While we expect output to remain relatively high in April, OPEC production should be much lower from May onwards following last …
16th April 2020
April meeting is last scheduled before Poloz’s term expires on 2 nd June Bank to provide guidance on duration of asset purchases, may add corporate bonds Set to slash its forecasts in new Monetary Policy Report The Bank of Canada could announce next week …
8th April 2020
Rates slashed to rock bottom and generosity of lending enhanced Massive asset purchases are intended to boost liquidity and will be reduced in time But radical sustained support seems possible, carrying future inflation risks for some What a difference a …
Tensions in interbank and bond market easing Corporate bond spreads remain high but not high enough for RBA to buy private bonds With inflation set to fall short of its target for years to come, negative rates still an option The recent easing in …
2nd April 2020
We have condensed this edition of the Inflation Watch to focus only on timely data and coronavirus effects. While the coronavirus crisis will have both upward and downward effects on prices, we expect the net impact to be significantly disinflationary, …
31st March 2020
We have developed a new in-house measure of the “fundamental” copper price It suggests that copper was trading at a premium relative to its fundamentals in January And despite the plunge in its price, the premium is likely to have risen since then In this …
30th March 2020
RBI’s response to coronavirus has so far been limited But outbreak and containment measures should prompt aggressive loosening Repo, reverse repo and cash reserve ratios all likely to be trimmed by 50bp The RBI has so far taken only piecemeal steps in its …
26th March 2020
Big stimulus package from BoE has succeeded so far in easing some financial market stresses But with financial conditions still unusually tight, the Bank may need to do more The Bank may need to test out some new, extreme, tools The decisive action taken …
20th March 2020
Domestic demand slumped after sales tax hike and the recovery is being snuffed out Coronavirus outbreak is pushing the economy into recession Bank to follow other major central banks and cut policy rate from -0.1% to -0.2% The Bank of Japan has limited …
12th March 2020
OPEC output to increase from April OPEC production slumped in February owing to supply disruption in Libya. However, given that the current output agreement expires in March and with no replacement deal, we expect OPEC+ oil production to rise from April . …
11th March 2020
Fed to follow last week’s emergency cut with another 50bp reduction next week Fed funds rate likely to return to near-zero bound at April policy meeting Plans to slow pace of balance sheet expansion to be abandoned We expect the Fed to cut interest rates …
Amid a raft of rate cuts by other G10 central banks, and the recent plunge in oil prices, we have pencilled in a 50bp rate cut at the Norges Bank’s meeting next Thursday. We expect policymakers to follow up with a further 50bp of cuts in Q2, and the krone …
We expect OPEC+ to agree to an emergency output cut of an additional 1m bpd for at least three months at its meeting later this week. This should, at a minimum, put a temporary floor under prices . OPEC and its allies, including Russia, are set to meet in …
4th March 2020
The Bank will cut its forecasts for GDP growth and inflation in light of the virus. On balance, we think it will reduce its deposit rate by 10bp next week. We also expect the Bank to tweak the terms of its longer-term financing operations. The ECB will …
3rd March 2020
Risk still modest, but models can’t capture virus fears The recent re-inversion of the Treasury yield curve and the sharp sell-off in equities, due to growing fears that the new coronavirus will develop into a full-blown pandemic, have reignited fears …
27th February 2020
Fourth-quarter GDP growth probably in line with Bank’s forecast But possible coronavirus pandemic a key downside risk to the outlook Bank to issue a very dovish statement while keeping policy unchanged The potential for the coronavirus to develop into a …
26th February 2020
Bank remains concerned that cutting rates further will undermine financial stability But coronavirus outbreak set to dampen activity and unemployment will climb further We’ve pencilled in a 25bp cut in April and July The Reserve Bank of Australia remains …
25th February 2020
Central bank action so far focused on crisis management in virus-hit countries. Likely fallout reinforces our existing dovish views on several EMs. But the temporary shock does not yet warrant a response from advanced economies. With the coronavirus …
14th February 2020
Deeper cuts not a done deal OPEC production fell sharply in January, but this was mainly the result of supply disruptions in Libya and Iraq. Otherwise, there was little indication in the latest OPEC monthly report that the group will rush to deepen output …
12th February 2020
The risk premium in oil price has fallen in recent years … … despite heightened tensions in the Middle East We expect this premium to remain low as non-OPEC production continues to rise In this Energy Watch , we look at how geopolitical tensions in the …
7th February 2020
Coronavirus will hit the New Zealand economy in the near term. But indicators point to an improvement in economic activity. So we think the RBNZ is done cutting rates. The new coronavirus will inevitably impact the New Zealand economy in the first quarter …
5th February 2020
RBI set to keep rates on hold next week as amid food inflation surge Analyst consensus expects resumption of easing cycle later this year In stark contrast, we expect modest hikes towards the end of 2020 Policy rates look set to be kept on hold at the …
29th January 2020
Falling unemployment allows Bank to keep rates unchanged in February But GDP growth set to fall short of expectations and wage growth still soft More easing will be needed to meet the inflation target The further fall in the unemployment rate in December …
After last year’s collapse, a continued decline in the price of European coal is likely Low natural gas prices and a weak economy will weigh on coal prices in the short term And decarbonisation efforts will push down prices in the long term European coal …
24th January 2020
January’s decision whether to cut rates is very close We think that the MPC will keep rates on hold as the economy appears to have turned a corner We expect the next move in interest rates to be up rather than down, albeit not until 2021 January’s …
Improving data, fading trade and global risks remove need for further rate cuts Policy unlikely to be tightened again for foreseeable future Shelton, Waller nominations a sign of things to come if Trump wins second term Signs of improvement in the …
22nd January 2020
There is no prospect of any change in policy at next week’s meeting… …but we are still forecasting more policy loosening later this year. Details of the scope and timetable of the strategy review may be revealed. At Christine Lagarde’s second meeting as …
16th January 2020
Fourth-quarter GDP probably unchanged – vs Bank’s forecast of 1.3% gain But temporary factors largely to blame and business surveys point to rebound Bank to remain on hold throughout 2020 Next week the Bank of Canada is likely to once again trim its …
15th January 2020
OPEC output to remain low OPEC production fell again in December, led once more by Saudi Arabia. We continue to think that OPEC will maintain its production restraint for the remainder of 2020 to support prices . The OPEC Monthly Oil Market Report (MOMR), …
Consumption hasn’t fallen too much after tax hike and labour market remains tight We still expect GDP growth to fall short of expectations this year But lingering capacity shortages will probably convince Bank to remain on hold The Bank of Japan will …
14th January 2020
Table of Key Forecasts Overview –Inflation in developed markets is likely to be stable in 2020 as a rise in energy inflation is offset by a drop in core. We forecast oil prices to rise to over $70pb in the coming years, so energy prices should now begin …
20th December 2019
Impact of sales tax hike was probably worse than Bank had anticipated But external headwinds are fading and the labour market remains very tight The Bank is unlikely to cut interest rates any further The Bank of Japan seems to have underestimated the drag …
16th December 2019
