China’s turn to woo the Gulf The GCC-ASEAN-China summit underway this week contained a lot of platitudes, but it doesn’t change our view that the Gulf’s geopolitical alignment is tilting away from China and towards the US. For China, the summit was an …
29th May 2025
Over to the Senate The House passed its “One Big Beautiful Bill” budget reconciliation on Thursday, which extends the 2018 Trump tax cuts beyond this year, raises the personal exemption for retirees, and eliminates taxes on tips and overtime pay. To …
23rd May 2025
President Trump’s recommendation of a 50% tariff on the EU gave the dollar only a short-lived boost and the DXY index is still on track to snap a four-week ‘winning’ streak. This looks likely to be the largest weekly decline since early April and, as was …
How concerning is underlying inflation? The removal of the carbon tax pushed headline inflation down to 1.7% in April, comfortably in the bottom half of the Bank of Canada’s 1% to 3% target range. Nonetheless, the acceleration of the Bank’s preferred …
Copom: one final hike? Brazil’s Q1 GDP data due next Friday should show that the economy recorded strong growth in Q1, supporting the case for the central bank to deliver one final hike in this cycle. Having slowed sharply at the end of last year, …
RBI to transfer record dividend The RBI today announced a dividend transfer of INR2.7trn (US$34bn, 0.8% of GDP) to the Finance Ministry for FY24/25 (which ended in March). This is a record amount in both INR terms and relative to GDP, and exceeds the …
Assessing the fallout after a busy election weekend Last Sunday was a busy day of voting in CEE and threw out some surprises. Pro-EU centrist Nicusor Dan won the second round of Romania’s presidential election, even though he’d lagged in the polls. …
ECB account reveals disagreement The account of last month’s ECB meeting, published on Thursday, showed diverging views on the risks to inflation and the appropriate monetary policy stance. It noted that “a few” members of the Governing Council “could …
The headline news this week was the bigger-than-expected leap in CPI inflation from 2.6% in March to 3.5% in April. (See here .) It would be easy to conclude that most of the increase was due to one-off price rises that will stay in the inflation rate for …
SA budget merely presses pause on fiscal debate South Africa’s finance minister appears to have succeeded – at the third time of asking – at delivering a 2025 Budget that will make it through parliament. But it seems almost certain that tensions within …
Fewer exports to US but more to other markets Chinese exports have so far held up much better than many had feared in response to US tariffs. In dollar terms they expanded a robust 8.1% in April . And there are few signs of weakness this month. Growth in …
Note: we will be discussing oil, gold, industrial metals, and more in an online briefing on Wednesday 4th June at 3pm BST. You can register here . Not a literal Golden Dome… Gold bugs’ hearts will have skipped a beat when President Trump announced the …
MAS to loosen policy further GDP in Singapore contracted by 0.6% q/q last quarter according to the second estimate of national accounts figures published on Thursday. While this marked a slight improvement from the initial estimate (a 1.0% decline), it …
Deficit shrinking, debt ratio falling While the cabinet’s approval rating has declined since PM Ishiba came to power in October, it hasn’t yet reached levels that in the past triggered electoral defeats or prompted other Prime Ministers to resign. That …
Inflation fight isn't over yet While the RBA’s decision to cut rates by 25bp at its meeting on Tuesday was widely expected, the Board’s overtly dovish messaging still caught most observers off guard. Indeed, Governor Bullock made news in her post-meeting …
Israel readying strikes on Iran’s nuclear facilities? Rumours that Israel could strike Iran’s nuclear facilities suggest that conflict in the region could escalate. But there are reasons to think that the fallout for the oil market, and therefore the Gulf …
22nd May 2025
The softening housing market has mostly flown under the radar, but that is soon likely to change following April’s data, which showed house prices taking another sharp leg down. Combined with the steep decline in manufacturing sales volumes reported for …
16th May 2025
Tariff man triumphant Following the agreement between the US and China to reverse most of the prohibitive tit-for-tat tariffs imposed a month earlier, stock markets have rallied further this week. The S&P 500 is now closing in on the high reached in …
A deal is perhaps not so imminent Optimism that India was poised to seal a quick trade deal with the US has faded in the past week. Admittedly, Donald Trump still sounds positive about the negotiations – he claimed yesterday that India had offered a “no …
Copom minutes intensify debate over June meeting The minutes to the Brazilian central bank’s monetary policy meeting last week, at which the Selic rate was hiked by 50bp, have added further fuel to the debate over whether the tightening cycle is already …
The agreement to roll back some tariffs reached by the US with both China and the UK raises the question of whether the EU will reach a similar deal before 9 th July, when the pause on the so-called “reciprocal” tariffs expires. We suspect a US-EU deal …
The implications of the government’s latest policies for the economy bring to mind the quote “what the right hand giveth, the left hand taketh away”. The right hand – EU reset In the right hand is the UK-EU reset, which will begin on Monday to much pomp …
GNU will struggle to fill VAT hike-related hole South Africa’s finance minister takes his third stab at delivering the 2025 Budget on Wednesday. Disputes within the ruling GNU seem to have been resolved but this may come at the cost of slippage on …
US-Iran nuclear deal on the table Despite President Trump’s previous focus on pushing OPEC+ to loosen the taps and lower oil prices, there was surprisingly little explicit talk of oil prices during his trip to the Middle East. Instead, the biggest …
We still expect a slowdown this year The tariff de-escalation agreed at the start of this week is good news for Chinese exporters who were facing a collapse in exports to the US. But we haven’t changed our growth forecasts for China’s economy for a few …
The polls ahead of presidential elections in Romania and Poland this Sunday point to diverging political paths for the two largest economies in Central and Eastern Europe over the coming years. We’ll be discussing the implications of Sunday’s election …
Slow progress on trade deals Monday’s agreement between the US and China to lower tariffs marks a significant de-escalation in tensions between the two countries. However, the deal addresses none of the issues that caused tensions to rise in the first …
The de-escalation in the US-China trade war gave the dollar a renewed boost against most G10 currencies this week. But, a fall back in Treasury yields has taken away some of those gains as we head into the weekend, and trade talks have been a double-edged …
Inflationary pressures linger on In case you missed it, our RBA Watch explains why we expect the Bank to cut rates by 25bp, to 3.85%, at its meeting next week. However, we suspect that the cut will be a somewhat hawkish one, with the Board reluctant to …
Lower energy prices will weigh on inflation The truce reached between China and the US over the weekend is a clear positive for Japan’s economy. Even so, we suspect that weak economic activity coupled with an impending plunge in inflation will delay …
The Gulf’s trillion dollar shopping list Headlines have been dominated this week by US President Trump’s dealmaking in the Gulf, striking nearly $1trn of potential deals for investment and trade over the coming years. There’s a big question mark about …
15th May 2025
The dollar has edged higher against most major currencies over the week as a whole, supported by the FOMC’s pushback against expectations of policy easing in the near term. The turmoil in some Asian currency markets at the end of last week also appears to …
9th May 2025
Fiscal slippage appears more likely across SSA Leaders across Sub-Saharan Africa faced with fiscal strains are increasingly embracing tax reform rather than rises. Banking on the former to quickly raise revenue is ambitious and we think this risks further …
The strong showing for far-right nationalist, George Simion, in the first round of Romania’s Presidential election on Sunday has deepened the country’s political crisis, and the fallout in Romania’s financial markets could get more messy in the coming …
Diversifying away from the US? This week’s data releases showed a sharp fall in trade flows between Canada and the US in March, following the imposition of some tariffs by the US and retaliatory tariffs by Canada. Canada’s exports to the US fell by 6.6% …
UK-US trade announcement is no big deal The “full and comprehensive” trade deal between the US and the UK announced this week by President Donald Trump was none of those things. This rush to demonstrate progress on “deals” reveals a rising desperation …
Lower oil prices a mixed blessing The announcement from OPEC+ over the weekend that it will increase oil supply further in June briefly caused the price of Brent crude to drop below $60pb. It has since recovered to c.$63pb at the time of writing, but that …
Five months ago, we incorporated a 10% tariff on all UK goods exports to the US in our forecast. That has turned out to be a good call. Despite this week’s UK-US trade deal, the 10% “baseline” tariff remains. (See here for our response to the US-UK trade …
Tariffs aren't the only headwind facing exporters The US-China trade talks taking place in Geneva this weekend could pave the way for a partial rollback in tariffs. Trump has continued to rule out doing so without anything in return. And China’s …
Tariff damage likely to be limited This week brought further evidence that the impact of US tariffs on activity in the euro-zone has been limited so far, and may even have been positive. March’s industrial production data from Germany and Ireland showed …
$50 oil is not a pipe dream Plenty of oil market analysts, including ourselves, have slashed their price forecasts this week following the OPEC+ decision to raise output in June by more than the group had originally outlined for the second month in a row. …
Asian exporters benefit from front-loading Asia publishes trade data much sooner than other regions which allows us to get an early indication of how Trump tariffs are affecting global trade. While the April data for Korea showed exports to the US …
Market jitters, but limited economic impact News this week has been dominated by the fallout from India’s strikes on suspected terrorist camps in Pakistan in retaliation to the 22 nd April attacks in Pahalgam. This has sent a few jitters through financial …
No signs of progress in US-Japan trade talks Preliminary data for the first twenty days of April point to export values rising by 0.7% m/m, according to our seasonal adjustment. However, that follows big swings across the first quarter, including a 5.7% …
Data flashing mixed signals On the face of it, developments this week strengthen the case for the RBA to err on the side of looser policy, rather than simply withdraw monetary restraint. For starters, the ABS’ Household Spending Indicator suggests that …
OPEC+ shifts tack to recapture market share The decision by OPEC+ to deliver another punchy oil output hike in June was not too much of a surprise, but it confirms that the group are shifting tack to a more aggressive policy in order to recapture market …
8th May 2025
The dollar is ending the week on the backfoot, despite the ongoing normalisation and returning risk appetite across financial markets, as well as a generally decent set of US economic data. Somewhat surprisingly, the greenback remains well below its pre-2 …
2nd May 2025
SA 2025 Budget: fiscal slippage is coming South Africa’s 2025 Budget will be tabled for a third time later this month and, to be approved, we think the ANC and DA will need to agree on some spending cuts, although it probably won’t be enough to avoid some …
Hold in Chile, BanRep turns dovish Andean central banks sent very different signals this week. In Chile, the central bank left its policy rate unchanged at 5.00% as expected. And policymakers still sounded somewhat concerned about inflation, highlighting …
The 0.3% annualised contraction in first-quarter GDP generated a lot of headlines this week. In contrast, final sales to private domestic purchasers rose by a solid 3.0%, implying there was plenty of strength in the underlying economy. Nevertheless, the …
