Filtered by Region: G10 Use setting G10
The rise in severe weather events over the last five years has left property insurers scrambling to price-in physical risks, causing premium growth to reach a 20-year high. While we think the worst is over, growth will likely remain above the historic …
31st July 2024
The Bank of Japan outlined a plan for reducing its bond purchases and hiked its policy rate by 20bp today. We think it will follow up with another 20bp hike at its October meeting . Only one-third of analysts polled by Reuters, ourselves included, had …
The JOLTS labour market data for June will do little to change the Fed’s assessment of labour market conditions ahead of its policy announcement tomorrow, with slack continuing to grow gradually and clearer signs of an easing in wage pressures. With JOLTS …
30th July 2024
Significant homebuilding in the Sun Belt region over the past three years has restored housing inventory to pre-pandemic levels, which is why house prices there have stalled. In contrast, markets in the Northeast and California, which haven’t seen the …
In detailed analysis last year, we concluded that equilibrium nominal interest rates would settle at between 3% and 4% in advanced economies in the next ten years. We maintain that opinion and in fact some of the forces boosting equilibrium rates seem to …
Our best judgement is that in order to fund the increase in spending of £22bn outlined by the Chancellor today, Reeves will raise an additional £10bn a year (0.3% of GDP) via higher taxes and increase borrowing by about £7bn a year (0.3% of GDP). The …
29th July 2024
A second consecutive reduction in the size of value falls – just 1.4% q/q – in the Q2 NCREIF NPI appears to point to the price correction being all but over. However, with evidence of distress growing and larger price falls reported in other indices, we …
As well as adversely impacting the growth of the workforce, ageing populations may also have a small negative impact on productivity. There is plenty of scope for this to be offset by a positive boost to productivity from the adoption of AI. However, …
While headline balances saw little movement, digging deeper the Q2 RICS survey shows a reversal of last quarter’s more positive outlook. Indeed, respondents seem more downbeat, with almost half now believing we are still in the downturn phase of the …
25th July 2024
Alongside its decision to cut interest rates today, the Bank of Canada struck a more dovish tone than in June, supporting our forecast that another cut is coming at the next meeting in September. The Bank’s second 25 bp cut, taking the policy rate to …
24th July 2024
The latest flash PMIs suggest that while GDP growth probably slowed in Europe at the start of Q3, it continued to recover in Japan. Although the rise in shipping costs has caused manufacturers’ input prices to rise, central banks may take comfort from the …
Without wishing to downplay the ugly fiscal picture, we think the new government is overplaying the gloom. We suspect more optimistic economic forecasts and various tweaks to the fiscal rules will save the new Chancellor from hitting the electorate with …
23rd July 2024
We doubt the independent pay review bodies’ recommendations for the government to give teachers and NHS staff a 5.5% pay rise will prevent wage growth from slowing to 3.0% by the end of next year. But if the government chooses to extend this pay rise to …
Much of the recent resilience in Australia’s house price growth can be attributed to a handful of capital cities where the property markets have gone from strength to strength. We believe that there are a number of factors that help explain the divergence …
With the share of non-performing CMBS loans on the rise, and plenty of loans set to refinance onto a higher rate this year, recent data provide further evidence that distress will rise both this year and next as we expected. However, while there is still …
18th July 2024
Housing market turning a corner Further interest rate cuts from the Bank of Canada should breathe some life into the housing market in the coming months, but the dimmer outlook for rent growth and apartment prices present downside risks to construction. …
16th July 2024
Many households have left western metros in favor of those in the South over the past two years. With remote working looking like a permanent fixture of office-based jobs and affordability significantly stretched in the West, we do not expect to see a …
The downward revisions to global population growth in the UN’s latest projections won’t have a major bearing on our long-term GDP growth forecasts. That’s because a lot of the revision was driven by lower population projections in China, where we had …
The Bank of Canada’s business and consumer surveys point to weak GDP growth, show that firms’ wage expectations are now lower than their pre-pandemic peak, and suggest that consumers are increasingly concerned about the health of the labour market. All …
15th July 2024
Disinflation in the services sector seems to have stalled in several advanced economies this year. That’s partly because the easiest wins related to food and energy effects are behind us and also reflects some temporary factors. Much now depends on the …
12th July 2024
It is not clear that Donald Trump, if elected, would gain much from trying to force Fed Chair Jerome Powell out of the role only a year before his term expires anyway. Trump might instead focus his efforts on securing Senate approval for future …
11th July 2024
While there are tentative signs that Japan’s economy is becoming more dynamic, this has yet to produce significant improvements in aggregate productivity. We still think that a more meaningful pick-up in productivity growth will only happen towards the …
10th July 2024
The Monthly Household Spending Indicator is often revised several months later so the plunge in spending in May won’t deter the Reserve Bank of Australia from hiking rates next month if inflation remains hot. According to the Monthly Household Spending …
8th July 2024
With the public finances in the UK in decent shape relative to France and the US, and the new UK government committing to greater fiscal discipline, we think investors are right not to worry as much about the UK’s public debt. But there is little room for …
5th July 2024
We’re holding a 20-minute online briefing today (9.30am BST 5 th July) to discuss what a Labour government means for the economy and the financial markets. (Register here .) The big shift in the political landscape that has delivered the first Labour …
Following his disastrous debate performance last week, President Joe Biden’s odds of getting re-elected have gone from bad to worse. Former President Donald Trump is now unequivocally the favourite to win this November, even if the Democrats replace Biden …
3rd July 2024
The overarching theme of the Labour government’s housing policies will be a rebalancing of rights in favour of tenants and aspiring homeowners at the expense of landowners and landlords. That said, given the incoming government’s commitment to creating a …
We expect the RBNZ to leave rates on hold for a seventh consecutive time at its meeting next Wednesday. To be sure, the Bank will probably strike a hawkish tone out of an abundance of caution. However, with the economy in tatters and inflation on its way …
The rebound in residential investment over the past year will go into reverse in Q2, as housing starts and home sales slump again. We expect this weakness to persist thanks to a coming slump in new multi-family construction, which will soon gradually feed …
2nd July 2024
Despite the modest rise in job openings in May, the big picture remains that labour market conditions continue to slowly normalise, and the low quits rate still points to a sharp slowdown in wage growth. After the sharp fall in April, the marginal rise in …
The latest manufacturing PMIs suggest that the recovery in global industry lost some momentum at the end of Q2. While activity in emerging markets continued to grow strongly, industry was still struggling in some large advanced economies. Nonetheless, …
1st July 2024
Housing market will cool in earnest Australian house price gains softened just a smidge in June as housing demand held up reasonably well. However, as strained affordability takes its toll, we still think that house price growth will ease markedly in the …
If the polls are correct and Labour wins the election, the policies it implements and when it implements them will depend in part on the ‘headroom’ against the fiscal rules it is given by the Office for Budget Responsibility (OBR). We suspect the next …
27th June 2024
While the labour market held up initially as job vacancies started to fall, fewer job openings are now pushing up the unemployment rate in earnest and we expect it to rise from 4% now to 5% by 2026. According to data released by the Australian Bureau of …
After a strong recovery post-pandemic, momentum in hotel revenue growth is likely to remain subdued over the next few years. With a stronger US dollar hindering the revival of the tourist industry, we suspect metros such as Austin and Dallas will remain …
25th June 2024
The latest flash PMIs suggest that GDP growth in most major advanced economies slowed at the end of Q2. But weaker services activity hasn’t translated to softer price pressures, meaning central banks will take a gradual approach to loosening policy. Our …
21st June 2024
The proposal to save governments money by ending interest payments on commercial banks’ reserves is a lot more complicated than some of its advocates suggest. The extreme version could either cause central banks to lose control of monetary policy or …
20th June 2024
The Bank of England predictably left interest rates unchanged at 5.25% today but continued to give the impression that the pieces of the puzzle are almost in place for it to cut rates. This lends some support to our view that the Bank will first cut rates …
The gap between downtown and suburban office vacancy rates has widened alarmingly since 2020. This reflects pandemic-driven changes to working patterns, exacerbated by the cyclical slowdown. In our view, this shift cannot last. While any recovery will be …
18th June 2024
The RBA discussed another rate hike at today’s meeting and an upside surprise to Q2 inflation could force its hand at its August meeting. However, with capacity constraints easing and government rebates pushing inflation into the Bank’s target band by Q3, …
Housing market still struggling for momentum The housing market was soft in May, with sales and prices edging down, but we expect conditions to improve over the rest of the year as the Bank of Canada cuts interest rates further and mortgage rates decline. …
17th June 2024
The Bank of Japan disappointed markets today by announcing that it will only present a detailed plan for reducing its bond purchases at its July meeting. We think it will also deliver a final policy rate hike then . Today’s BoJ meeting was a damp squib . …
14th June 2024
We are retaining our forecast that the 10-year Treasury yield will fall to 4.0% by the end of this year. That reflects our expectation that the Fed will pursue a slightly looser conventional monetary policy than the one discounted in the financial markets …
13th June 2024
While what’s in and what’s out of the election manifestos is informative, the bigger issue is whether the next government delivers or deviates from its manifesto. This Update sketches out three plausible scenarios and the possible implications for the …
The SNB is likely to keep rates on hold at 1.5% at its meeting next week as inflation in Q2 so far has been in line with the its forecast in March. Moreover, the latest data on wage growth were much stronger than ahead of the March meeting, which we think …
Faltering demand and rising supply mean prices will slip back The May RICS survey was the weakest so far this year, as new demand faltered and sales slowed. With the quantity of homes coming onto the market increasing at the same time, prices are likely …
Fed projects one cut this year, but notes inflation progress The median FOMC projection now shows only one 25bp rate cut this year, but it was a relatively close run thing. Four officials expect no cut this year, a further seven anticipate one cut, while …
12th June 2024
While the official job openings figures have fallen since late-2022, the bulk of the evidence suggests that firms are facing increasingly severe job shortages. One explanation for the fall in job vacancies could be a change in firms’ recruitment …
The granular data on mortgage lending in Q1 contained some signs of relief following the dip in mortgage rates at the end of last year. But given that decline in rates has since reversed, we don’t think it signals a further improvement in activity to …
11th June 2024
Rising car prices explain why US import prices from Japan haven’t fallen despite the sharp weakening of the yen. While growth in car prices has slowed as supply shortages have unwound, this hasn’t boosted export volumes so far and we think that the weak …
10th June 2024
