Filtered by Region: G10 Use setting G10
Buying a first home has become increasingly difficult over the past 30 years. A high income is still essential, but other circumstances such as whether the individual is buying as part of a joint-income couple or has significant family wealth have become …
2nd October 2023
The Italian government’s decision to raise its deficit targets suggests it is trying to get away with as little fiscal tightening as possible. With EU fiscal rules set to come back into force next year, that raises the risk of tensions escalating between …
29th September 2023
Global goods trade fell at its fastest pace since the pandemic in July and the timelier trade and survey data point to further declines in August and September. What’s more, given that we still expect several advanced economies to fall into mild …
28th September 2023
The direct hit to the economy from even an extended government shutdown beginning next week would be modest. But it could also result in delays to key data releases, including the September employment and CPI reports due over the next couple of weeks. At …
As we anticipated , housing starts in England spiked to their highest level on record in Q2 as builders began work early to avoid having to conform with the Future Homes Standard. More timely monthly data show that starts slumped in July and August in …
Rising bankruptcy filings by large corporations are another reason to doubt that the economy will continue to grow at close to its potential rate, as the Federal Reserve now seems to believe. Admittedly, the bankruptcy data suggest that consumers and …
26th September 2023
The sharp slowdown in broad money growth since late last year suggests that higher interest rates are working by reducing households’ and firms’ demand for borrowing, which should lead to softer activity and lower inflation. This supports our view that a …
The abandonment of Yield Curve Control would probably prompt the Bank of Japan to reduce its bloated holdings of government bonds, which could push up long-term bond yields. However, there are good reasons to think that the fiscal consequences wouldn’t be …
25th September 2023
The September Flash PMIs add to evidence that economic activity in the US and Europe is weakening. This supports our view that the Fed, ECB, and Bank of England have finished hiking interest rates. Our estimate of the DM average composite PMI edged down …
22nd September 2023
Although the 10-year Treasury yield rose further to a post-Global-Financial-Crisis high of ~4.5% in the wake of this week’s FOMC meeting, we continue to forecast that it will drop back to 3.75% by the end of this year and to 3.25% by the end of next year. …
We held a Drop-In yesterday to discuss the latest policy meetings of the Fed, ECB, and Bank of England and what they might mean for the future path of policy and financial markets. (See the recording here .) This Update answers several of the questions …
We now expect the Bank of Japan to hike its policy rate – for the first time in sixteen years – next January. While we think global markets are generally braced for such an event, there’s a clear risk nonetheless that it puts pressure on long-term bonds …
The Bank of Japan still sounded dovish when it kept policy settings unchanged today. But with inflation proving stickier than expected, we expect the Bank to lift its policy rate in January and have pencilled in the full-fledged dismantling of Yield Curve …
We think that both the Fed and the BoE are finished hiking interest rates and will cut by more than investors are discounting over the next couple of years. We also expect the US and UK economies to tip into mild recessions before long. These similarities …
21st September 2023
Despite ending the interest rate hiking cycle today, the Monetary Policy Committee (MPC) succeeded in convincing financial markets that interest rates will remain high for some time. As market interest rate expectations determine fixed mortgage rates, the …
Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST today. Register here to join. The surprise decision by the Bank of England to leave interest rates unchanged at 5.25% today probably means that …
The Fed doubled down on its mantra that interest rates will remain higher for longer, with its updated projections suggesting that the economy will enjoy the softest of soft landings and core inflation will still take some considerable time to return to …
20th September 2023
The prevalence of fixed-rate debt suggests the Fed’s aggressive rate hikes will continue to deal less damage to the economy than they might have done in the past. But higher rates are still likely to take a further toll on consumption and business …
The United Auto Workers (UAW) strike action aimed at the Big Three automakers should have only a trivial effect on the broader economy. More generally, despite the tightness of labour market conditions and the recent surge in prices, work stoppages …
19th September 2023
On Tuesday 19th September, our Energy and Global Economics teams discussed the oil market outlook and its implications for inflation and monetary policy in an online briefing for clients. Watch the recording here . We are not convinced that the increase …
The wage-setting behaviour of Japanese firms has changed over the last couple of years and to reflect this we’re revising our long-run inflation forecast from 0.5% to 1.0%. However, that would still mean that inflation will settle well below the BoJ’s 2% …
House price inflation turned positive in August, but the smaller monthly price gain combined with signs of easing demand and increasing supply show that the housing market continues to cool. The 0.4% y/y increase in the MLS House Price Index in August was …
18th September 2023
The recent outperformance of single-family REITs versus apartment REITs appears to be down to differences in the capital value outlook for the sectors, rather than any major difference in rental growth prospects. With our forecasts for single-family and …
15th September 2023
CPI food inflation has remained elevated in recent months but, with wholesale price growth easing rapidly, we are confident it will soon fall sharply. That will help to offset the impact of higher oil prices on energy inflation and means there is still …
14th September 2023
Depressed activity remains consistent with falling house prices The further deterioration of the RICS survey figures in August suggest the peak in mortgage rates seen in July are continuing to dampen demand. And as we don’t think rates will fall …
Although wage growth is clearly falling in the US, the same cannot be said for the UK and euro-zone despite some evidence of labour markets cooling there too. A further fall in inflation expectations and an easing in worker mismatches is probably needed …
13th September 2023
Data on cell phone usage suggest that cities with a high share of professional, scientific and technical occupations and long commute times are typically associated with poorer downtown recoveries. That is in line with our existing views, but also implies …
12th September 2023
The Q2 Mortgage Lenders and Administrators statistics showed that higher rates are limiting lending and making it more difficult than ever for single-income households to get onto the housing ladder. Meanwhile, arrears took a step up as another cohort of …
The recent rise in oil prices to $90 per barrel means CPI inflation is likely to rise from 6.8% in July to 7.1% in August, but it won’t prevent inflation falling to the 2% target by the middle of next year. Even if oil prices climbed to $100 per barrel, …
8th September 2023
Recent patterns in the US stock market are sending mixed signals about the extent to which investors are braced for an economic downturn. Our own view is that equities will struggle to make more headway this year – even if the economy avoids an outright …
7th September 2023
According to Halifax, house prices are up by 20% compared to 2019 even after their recent falls. But adjusted for inflation they slipped to a seven-year low in August. High mortgage rates point to a further fall in prices in both real and nominal terms. …
M1 narrow money continues to contract at a double-digit annual pace, as higher interest rates temper demand for low-return deposits. Broader money growth is not faring quite as badly, since higher rates are also boosting demand for savings deposits and …
6th September 2023
The Bank of Canada accompanied its decision to leave interest rates unchanged with a pledge to hike again if needed, but we doubt it will need to follow through. With recession risks rising and labour market conditions loosening, we continue to think that …
The German government is unlikely to announce the kind of big stimulus package that some are calling for. However, fiscal policy will remain much more supportive than it was before the pandemic. The German economy has struggled since the pandemic. In Q2, …
A growing number of indicators suggest that the labour market is no longer much tighter than it was in 2019 and that, as a result, wage growth is also likely to slow towards pre-pandemic levels soon. This suggests that most of the required adjustment in …
Denver’s poor jobs market performance over the last year appears to have been driven by a combination of a downsizing in Central Bank staff and layoffs in its large telecoms sector. But the former’s weakness is likely to be short-lived and the latter has …
5th September 2023
The adoption of remote work meant central London was left out of the COVID-19 house price boom. But with house prices in outlying towns and rural areas around the capital starting to stagnate too, there are tentative signs that the relative …
At first glance, the rise in corporate profits to a record-high last quarter suggests that greedy firms are driving up consumer prices. However, we still think that most of the increase in inflation reflects surging import costs. Most importantly, the …
The RBA retained its tightening bias when it kept interest rates unchanged at 4.10% today. However, we think the Bank’s next move will be a rate cut, perhaps as early as the first quarter of next year . The Bank’s decision to keep the cash rate unchanged …
The news that the UK economy may now be 1.5% bigger than its Q4 2019 pre-pandemic size, rather than 0.2% smaller, suggests the economy has been much stronger than we previously thought. But with the UK still likely to be suffering from a labour supply …
1st September 2023
Although a rise in Chinese manufacturing output meant that the decline in global manufacturing activity eased slightly in August, the outlook for industry in advanced economies in particular remains weak. Meanwhile, although the PMIs also pointed to a …
This page has been updated with additional analysis since first publication. Economy may already be in recession The surprise contraction in second-quarter GDP leaves little doubt that the Bank of Canada will keep interest rates unchanged next week. With …
Not only did global goods trade fall in June, but timelier trade and survey data for July and August point to further declines. Meanwhile, with the lagged impact of high interest rates likely to weigh more heavily on demand for certain goods, it could be …
31st August 2023
The July JOLTS data cast further doubt on the idea that the Fed will need to keep rates high for longer. With the job quits rate now below its pre-pandemic peak and the job openings rate also rapidly approaching that level, labour market conditions have …
29th August 2023
The SAVE student loan plan eases the burden on low-income households and should reduce the economic impact as repayments resume in October. Nonetheless, with the hit to disposable incomes just one of several headwinds in the fourth quarter, it is still …
Having risen in value by much less than houses over the past three years, flats were selling at the biggest discount to houses on record at the beginning of the year. But higher mortgage costs are causing buyers to reassess what they can afford to buy, …
24th August 2023
GDP in those sectors normally most sensitive to interest rates has weakened over the past year and is now well below the pre-pandemic trend. The resilience of overall economic growth to higher interest rates is mainly due to ongoing recoveries elsewhere. …
23rd August 2023
In an environment in which firms feel able to pass on higher energy costs in their selling prices, the latest leap in wholesale gas prices poses an upside risk to our forecast for core CPI inflation to fall to 2.0% by the start of 2025 and to our forecast …
We estimate that firms have now passed on all of the increase in import costs to consumer prices which suggests that inflation will slow sharply over the coming months. Japan’s import prices have fallen sharply in recent months. However, goods inflation …
22nd August 2023
With inflation cooling, the government may soon become more willing to support the economy, but we doubt it will provide as much support as it did during the global financial crisis. However, net trade may not provide as much support as during previous …
21st August 2023
