We were not surprised that European Commission (EC) President Ursula von der Leyen announced in her State of the Union address this week that the EC will launch an anti-subsidy investigation into electric vehicle (EV) imports from China. Indeed, we had …
15th September 2023
Argentina: Devaluation triggers inflation jump This week’s inflation data from Argentina made for a grim reading. Consumer prices rose by 12.4% m/m in August on the back of last month’s devaluation , pushing inflation to 124% y/y – the highest rate since …
Russia seeking closer friendship with North Korea The strengthening relationship between President Putin and North Korean leader Kim Jong Un was on show this week but we doubt the discussions will yield any meaningful benefits for Russia’s economy or …
Core inflation still on firm downward trend Although core CPI increased by 0.3% m/m in August (or 0.28% to be precise), up slightly on the 0.2% m/m gains (both 0.16%) in the preceding two months, the rise last month was still smaller than the average gain …
Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST on Thursday 21st September. (Register here .) We’ve been surprised by the resilience of the labour market over the past year. More recently, …
Property controls have been substantively relaxed in recent weeks. The big announcements came on the last day of August. But there has since been plenty of easing at the local level too. At least ten large cities have lifted all home purchase …
G20 summit exceeds low expectations T he G20 managed to deliver a joint statement at its summit in New Delhi, which was deemed as something of a foreign policy triumph for Prime Minister Modi given the uncertainty ahead of the event. This owed much to …
Hold likely in Philippines despite jump in inflation The scheduled highlights of the coming week are monetary policy meetings in Indonesia, Taiwan and the Philippines. While Indonesia and Taiwan are very likely to leave policy settings unchanged, the …
Wage growth will remain contained Data published by the Fair Work Commission on Monday showed that average annualised wage increases under new enterprise bargaining agreements (EBAs) soared to 4.4% in the two weeks leading up to August 11 th . That meant …
Ueda signals tighter policy Bank of Japan Governor Ueda’s comments over the weekend that the Bank may have enough information by the end of this year to call time on negative interest rates sent 10-year JGB yields above 0.7% for the first time since 2014. …
All eyes on the CBE The Central Bank of Egypt (CBE) resumed its tightening cycle in August and, with inflation rising further, we expect interest rates to be hiked again. More than anything, though, investors will be looking for any shift in the exchange …
14th September 2023
The US dollar looks set to end the week higher against nearly all other major currencies. Remarkably, the DXY Index is set for an eight consecutive weekly rise, something that has rarely occurred since 1990. (See Chart 1.) And while that index is …
8th September 2023
In his speech this week, Governor Tiff Macklem sounded much more confident that the Bank will be able to meet its 2% inflation target. The latest labour market and local housing data suggest that may still be possible without a recession. Policy rate has …
Policy mistakes risk being repeated in Nigeria Recent interventionist actions from Nigeria’s central bank and government have heightened our fears that growing political pressures are undermining policy reforms. This could see Nigeria’s inflation and …
Higher energy prices not a game changer for the Fed Crude oil prices up, wholesale gasoline down? The further rise this week in the WTI crude oil price to a 10-month high of $87 a barrel, from a recent low of less than $70 in late June, has raised …
Sheinbaum follows in Amlo’s footsteps Former Mexico City mayor Claudia Sheinbaum was unveiled as the ruling Morena party’s presidential candidate this week and with her facing off against the main opposition candidate Xóchitl Gálvez in next June’s …
It’s no surprise that the reverberations from the revisions to GDP announced by the Office for National Statistics (ONS) last week continued into this week because the upward revisions were so big. As we noted at the time, we estimate that the level of …
Christine Lagarde and her colleagues will have some new and gloomy data releases to contemplate when they gather in Frankfurt next week. First, revised data published on Wednesday show that the euro-zone eked out only a 0.1% increase in GDP in Q2 as …
The decision by the National Bank of Poland (NBP) to kick off its easing cycle this week with a much larger-than-expected 75bp interest rate cut has been heavily criticised, and suggests to us that policymakers are underestimating the challenge of …
Geopolitics loom large over New Delhi showcase Following the success of the Chandrayaan-3 mission to the south pole of the moon in August, this weekend’s G20 summit in New Delhi will undoubtedly be presented as another foreign policy triumph by the BJP as …
Headline inflation jumps in August The long and steady decline in inflation across Emerging Asia came to an end last month, with headline inflation picking up in all six countries that have so far reported August price data. (See Chart 1.) Chart 1: …
Huawei's chip breakthrough The launch of Huawei’s new phone, the Mate 60 Pro, has sparked a debate over the effectiveness of US export controls that were tightened last year, restricting the sale to China of machinery needed to produce sub-18nm chips. The …
Consumption set to slow further The 0.4% q/q rise in Q2 GDP was a touch stronger than the RBA’s August estimate of 0.2%, but the more important question is what the figures mean for the outlook for the economy over the coming quarters. On past form, the …
MoF signaling some concern over weaker yen As the yen weakened to nearly 148 against the dollar this week, the government has signalled its readiness to intervene in foreign exchange markets to stop its slide. Masato Kanda from the Ministry of Finance …
Saudi oil output cut rollover a significant GDP hit Earlier this week Saudi Arabia confirmed that it will extend its additional voluntary 1mn bpd oil output cut until the end of this year which will result in a significant hit to economic growth this …
7th September 2023
A run of soft US labour market data has left the dollar on track to end the week slightly lower against most major currencies, threatening to break the DXY index’s six-week winning streak despite a strong rebound in the wake of the ISM manufacturing …
1st September 2023
Bank to pause amid rising recession risks The surprise second-quarter contraction in GDP was partly due to the wildfires but, even without that damage, growth would have been very weak. With the August CFIB Business Barometer showing further concerning …
IMF losing its patience with Argentina The IMF’s fifth and sixth reviews (which were combined) of Argentina’s $44bn programme out late last Friday make for pretty depressing reading. The Fund slashed its 2023 GDP growth forecast to -2.5% (from +2%) and …
Most commodity prices rose this week (see Chart 1) after data showed that US labour market conditions are easing (see here and here ), lowering expectations for US interest rates and weakening the dollar. Chart 1: S&P GSCI Sub-Indices (2 nd Jan. 2023 = …
Rising gas prices doesn’t mean energy crisis is back Wholesale European natural gas prices jumped more than 20% in the early part of this week and have been highly volatile recently, but this doesn’t mean the energy crisis in the region is coming back to …
This week brought more data showing that real economic activity is holding up surprisingly well given surging interest rates but, in part due to the easing in labour market conditions, price pressures are nevertheless fading. US consumer remains the …
Coup contagion? The military coup in Gabon this week, coming so shortly after a coup in Niger, has raised further concerns about political instability and institutional frailty in the region. Soldiers removed Gabon’s president, Ali Bongo, from power on …
This week the Bank of England’s Chief Economist, Huw Pill, indicated that while the Bank still had to “see the job through” and remain vigilant with “stubbornly high inflation”, he didn’t think interest rates need to rise much further from 5.25% now. But …
Core inflation heading down August’s inflation data, published this week, increase our confidence that the core rate has passed its peak. Core goods inflation is clearly on a downward trend and has much further to fall as lower energy prices and improved …
A poor start to Q3 This week’s data dump from Korea suggests the economy weakened at the start of Q3, increasing the chances that the BoK will cut interest rates soon. Figures published yesterday showed that industrial production in July fell by 2.0% in …
Vegetable price inflation still elevated The surge in tomato prices since early July has gone into reverse over the past couple of weeks and prices are now close to their levels from June. (See Chart 1.) This has been mostly due to improvements in supply …
Stimulus efforts are finally gaining momentum. Yesterday, regulators announced measures to support households and shore up the property sector, including looser downpayment requirements and reductions to existing mortgage rates. And today, the state banks …
What’s driving the slide in SAMA’s assets? The drop in the Saudi Central Bank’s (SAMA) foreign assets to a 14-year low in July caused some concern this week, but we suspect this reflects funds being recycled to the Public Investment Fund. Figures …
31st August 2023
While the Women’s World Cup ultimately ended in disappointment for English supporters, it’s somewhat fitting that climate policy is increasingly being made into a political football. The failure in the UK and elsewhere to address climate policy’s inherent …
Australia’s energy-sector woes On Monday, union representatives at Chevron’s Gorgon and Wheatstone LNG plants announced their intention to take industrial action starting September 7 th . A union document suggests that members will engage in rolling work …
Government extending gasoline subsidies Japan’s government this week confirmed that the gasoline subsidies that were scheduled to expire in September will be extended until year-end, though gasoline prices will now be capped at 180 yen/litre instead of …
PMI and other data released this week have added to evidence of the relative strength of the US economy amid a weakening global backdrop, shifting yield gaps in favour of the greenback and pushing it higher against most major currencies yet again. (See …
25th August 2023
After a relatively cautious speech at Jackson Hole from Fed Chair Jerome Powell and data this week which cast doubt on the idea of an economic resurgence, we still aren’t convinced that the rise in market interest rate expectations for the next few years …
South Africa fiscal concerns build Growing concerns about the direction of South Africa’s public finances have caused the yield curve to steepen as risk premia have risen, a trend that may continue as next year’s election approaches. Short-dated local …
The worst Canadian wildfires on record appear to be behind much of the recent weakness in GDP and, with more areas now under evacuation orders, the data are likely to remain weak in the coming months. Broader negative impact than 2016 wildfires Worst “on …
CBRT policy shift now firmly back on track There’s a lot of confusion about what drove Turkey’s central bank to deliver an unexpected 750bp rate hike this week and doubts remain about the policy U-turn. But at this point we’re minded to focus on the …
Drought takes its toll on the Panama Canal Panama is the latest victim of climate change in the region. The country is reeling from a drought with “no historical precedence” according to Panamanian authorities, which has seen water levels at the Gatun …
BRICS expansion unlikely to challenge G7 India made history this week after its Chandrayaan-3 mission became the first to touch down on the south pole of the moon. Remaining column inches in the local press have been given to the BRICS summit in …
Worries that Germany is becoming the “sick man of Europe” again have resurfaced over the past few weeks. The term was first used in relation to Germany in 1999, at a time when it had been growing much more slowly than countries such as France and Spain …
This week’s bigger fall in UK rate expectations, bond yields and the exchange rate compared to elsewhere is largely due to the markets deciding that a weaker economy will trim inflation, meaning the Bank of England has less work to do. Market pricing is …