April’s activity data suggest that the weakness of South Africa’s economy in the first quarter of the year – in which GDP expanded by a measly 0.1% q/q – carried over into the start of Q2. Industry continued to struggle and the retail sector lost some …
18th June 2025
May’s steep decline in euro-zone services inflation was largely due to the timing of Easter. But looking through that effect, services inflation is on a downward trend that we expect to continue. Data published this morning confirmed that services …
Two developments in borrower and lending behaviour mean that housing activity and prices can be higher than before the pandemic for any given mortgage rate. That’s why we expect housing transactions to recover to their pre-pandemic levels and house prices …
Denmark’s exceptional growth in recent years has been driven by one sector (pharmaceuticals) and one firm within that sector (Novo Nordisk). Its output has declined this year, raising questions about how much it will support growth in future. But even if …
17th June 2025
The Bank of Japan decided to taper its bond purchases at a slower pace from next year and retained its pessimistic outlook for the economy. However, we expect that mounting upside risks to the Bank’s inflation forecasts will prompt the Bank to hike rates …
Tariff shock slowly beginning to pass The rise in home sales in May suggests a nascent recovery is underway in the housing market following a tariff-induced shock. While we see further upside for house prices this year, as lower mortgage rates boost …
16th June 2025
If escalating tensions in the Middle East drive a prolonged period of higher oil prices, that could provide enough of an incentive for US oil producers to sustain the current high level of output for now. That said, US oil output faces growing headwinds …
The Israel-Iran conflict has continued to escalate. This Update summarises how our views on the macro impact have evolved over the past few days and answers the most frequently asked client questions that we have received. What have we learnt in the past …
The Colombian government’s fiscal plans unveiled late on Friday will have dashed any lingering hopes that policymakers would try to stabilise the public debt-to-GDP ratio, at least ahead of next year’s election. This points to further downward pressure on …
While spreads in the euro-zone have narrowed further recently, nearing multi-year lows, this is mainly because underlying German Bund yields have risen. Indeed, public finances in some euro-zone countries remain concerning, and rising rates elsewhere may …
13th June 2025
The Deputy Prime Minister has urged the Chancellor to close the commercial property stamp duty ‘loophole’, which could lead to an average increase in tax on property transactions of 2.0 to 2.5%-pts. If well signposted, that is likely to lead to a surge in …
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
The upcoming fiscal stimulus in Germany will boost core inflation a bit, but we think the effect will be small and that the core rate will average just over 2% in 2026 and 2027. The stimulus will have only a very small direct impact on consumer prices and …
12th June 2025
President Trump’s recent suggestion that he may yet ratchet US tariffs higher highlights how much uncertainty there still is around both where tariff rates will eventually settle and the US policy outlook more broadly. That said, our sense is that markets …
EM sovereign debt risks remain much higher than in the pre-pandemic period. There are positive stories of declining risk in those EMs undergoing reforms (e.g. Argentina) and low fiscal risks in the majority of EMs, but sovereign debt dynamics appear …
While it will be close call, we think the SNB is most likely to cut its policy rate by 50bp next week, bringing it back below zero. That would leave little room for more rate cuts further ahead. At its last meeting , the SNB reduced its policy rate by …
We expect Norges Bank to wait a bit longer before it finally starts to cut interest rates. And as the economy is growing at a decent pace and the labour market is still tight, the Bank is likely to cut interest rates quite gradually in the second half of …
Having lagged over the past year, the improving economic backdrop should support office demand in Bucharest and Budapest in the coming few years. However, while we think high vacancy rates will limit rent growth in Budapest, we expect more upward pressure …
President Trump’s claim that China has agreed to supply the US with “ANY NECESSARY RARE EARTHS… UP FRONT” might seem to draw a line under concerns about supply shortages and production shutdowns. But restrictions could be dialled back up. And as we set …
Soft housing rebound While May’s RICS survey suggests the worst of the housing market’s recent weakness is in the rear view mirror, it points to only a modest recovery. Unless there is a more significant rebound in demand in the next few months, house …
A deal with China is done, according to President Trump, but its scope seems to be limited to easing some recent non-tariff restrictions, including China’s rare earth export controls. The wider trade and economic issues that were supposed to be the focus …
11th June 2025
The 2025 Spending Review is the tightest (outside of the austerity years in the early 2010s) since 2000 and the tough decisions for Chancellor, Rachel Reeves, won’t end here. The government’s U-turns on benefit and welfare spending and higher borrowing …
On the back of the MSCI and NCREIF indices reporting rising capital values in Q1 and our significantly below-consensus forecast views for the next two years, we are again re-evaluating our forecasts. But however we look at valuations, they simply don’t …
On balance, we think the Riksbank is likely to wait until its August meeting before cutting interest rates again in order to get greater clarity on the outlook for the economy. After a 25bp cut in August, we think the Bank will leave its policy rate at 2% …
Greater oil demand within OPEC+ economies – most notably Saudi Arabia – could offset additional supply from the group over the coming months and support oil prices. However, given that any boost to demand will be seasonal, we still think that Brent crude …
10th June 2025
Colombia’s fiscal problems have returned to the spotlight amid rumours that the government will suspend the fiscal rule. This has triggered a sell-off in the bond market, but it doesn’t look like the deterioration in the fiscal situation has been fully …
Recent presidential elections in Poland, Romania and Korea have led to significant moves in their financial markets. But from a macro perspective, what also matters is the composition of the legislature and the challenges the economy faces. Those …
A slump in the number of foreign visitors to the US could prove to be a helpful source of deflationary pressure this year, while having a limited impact on GDP growth. Amid the Trump administration’s fretting over the goods trade deficit, it is often …
9th June 2025
Wage growth looks set to slow from 4.5% last year to around 3% by the end of 2025, leaving it within touching distance of the 2.5% rate we think is consistent with the ECB’s inflation target. Euro-zone wage growth has been on a steady downward trend since …
6th June 2025
After a lean couple of years, the outlook for commercial property construction is brightening. While the economic outlook is fairly weak, vacancy rates in some subsectors such as prime offices and residential are low which will support rental growth. …
The Reserve Bank of India’s (RBI’s) decision to cut the repo rate by a larger-than-expected 50bps (to 5.50%) while also changing its policy stance from “accommodative” to “neutral” today are clear indications that it has frontloaded the remainder of the …
The abolition of Vietnam’s controversial two-child policy will not lead to a sharp rise in the number of children being born, and will have only a small economic impact. Vietnam’s government announced earlier this week that it was scrapping its two-child …
5th June 2025
If President Trump succeeded in his aim of cutting prescription drug prices by 50% “almost immediately”, it could subtract more than 1%-point from headline PCE inflation. There is little indication of how the administration will achieve that aim, however, …
The ECB’s decision to cut the deposit rate by 25bp to 2.0% was in line with expectations and the messaging in the press conference suggests that a pause at the next meeting in July is most likely. We think the Bank will lower interest rates once more this …
Visa approvals for temporary residents have picked up, which suggests that, rather than contracting as the government previously outlined, the population will continue to grow this year. This will keep upward pressure on labour force growth and we now …
The most frequent question we received from clients during recent meetings in the Gulf was whether lower oil prices would lead to a sharp slowdown in Saudi Arabia’s non-oil sector akin to that in 2014-16. We do expect fiscal consolidation to lead to …
President Lee’s pledge to provide fiscal stimulus would, if implemented, provide a much-needed lift to Korea’s economy. The country’s public finances could easily accommodate a temporary rise in spending. But any signs that a looser fiscal stance is here …
India’s stock market has fared well this quarter, outperforming other emerging market equities in aggregate, but we doubt this bout of outperformance will last in the near term. The good times seem to be back for India’s stock market, after a few months …
The recent court ruling on tariffs has put industrial demand back in the spotlight. Our view is that not enough has changed yet to make wholesale revisions to our short-term view and that, beyond this, healthy fundamentals should still be enough to pull …
4th June 2025
The Bank of Canada avoided surprising markets by keeping its policy rate at 2.75% today, as it continues to wait to see the full impact of US trade policy on the economy. Nonetheless, the Bank confirmed that its bias remains toward loosening policy …
Trade policy uncertainty has damaged investment intentions in the US, Canada, Mexico and South East Asia. But intentions elsewhere have held up better and investment growth itself has yet to falter. We suspect that ongoing uncertainty will act as a drag …
Any short-term boost to domestic steel and aluminium production from higher tariffs is likely to be short-lived and offset by declining output in metal-using industries – making the tariff hike a drag on both manufacturing and the broader economy. After …
Brazil’s monetary tightening cycle is very close to being (or may already be) over, and attention is quickly turning to when and how far Copom will lower interest rates. Historically, the market has tended to underestimate how far rates are lowered – and …
According to the measures of wage growth that we consider the most useful and the fundamentals of the recent easing in the demand for labour relative to the supply, it is only a matter of time before wage growth slows to rates that are more consistent …
May’s batch of PMIs across the Gulf point to a softer Q2 for non-oil sectors and the backdrop of lower oil prices will likely result in less fiscal support and weaker confidence that add to the economic headwinds. In contrast, Egypt’s improved external …
While tariff risks remain, the recent improvement in demand and weaker supply pipeline suggest the Dublin office market has reached a turning point. However, we don’t expect prime rental growth to rebound by as much as most expect given the high level of …
The manufacturing PMIs remained subdued across EMs last month despite the US-China trade truce. That said, the timely hard activity data released so far has shown more resilience than the survey data. The aggregate EM manufacturing PMI fell from 50.5 in …
3rd June 2025
April’s JOLTS data suggest the labour market remained healthy at the start of the second quarter, with job openings rising and layoffs low. While there are some pockets of weakness in areas most at risk from tariffs and the recent fall in foreign …
The latest PMIs suggest that global industrial activity has weakened so far in Q2. Meanwhile, goods price pressures remain subdued in most countries apart from in the US, where tariffs already seem to be having an impact. The output component of the …
We’re hosting an online drop-in on Wednesday to discuss the outcome of Korea’s election and the macro and market implications. Sign up here . Victory for Lee Jae-myung of the Democratic Party (DP) in today’s presidential election in Korea should help …
