A year ago, we were just digesting the impact of remote working, but already permanent change looked likely. And while we know more now and continue to refine our views, we see little reason to change our conclusions from last summer that office demand …
23rd June 2021
The pandemic has heightened occupiers’ focus on the quality and green credentials of the space they occupy. This trend is set to impact on demand, with modern, well-configured buildings with green building certifications set to attract tenants at the …
Inflation indicators in the flash PMIs for June reached new record highs and supplier delivery times lengthened still further. However, outside the US at least, there are few signs that goods shortages and higher costs have held back the recovery in …
The Czech National Bank (CNB) raised its two-week repo rate by 25bp to 0.50% at today’s meeting and the accompanying communications support our view that this marks the start of what will be the most aggressive tightening cycle in Europe. We expect that …
For EMs, vaccine supply appears to be by far the biggest constraint on immunisation campaigns; vaccine hesitancy will probably rear its head at a much more advanced stage of rollout in most countries. And even then, governments seem to be having some …
Last week’s surprise change in the Fed’s guidance about how soon it is likely to raise its key policy rate raises the question of whether the ECB will follow suit. In our view, although the euro-zone faces similar inflationary pressures in the coming …
The Bank of Thailand (BoT) today left interest rates unchanged at their all-time low of just 0.5%, dovish comments from the press conference support our view that rates will be on hold for a long time to come. Interest rates have now been left unchanged …
We now expect the unemployment rate to approach 4% by late-2022. Even though the reopening of the border should ameliorate staff shortages a bit next year, we expect wage growth to accelerate markedly. As such, we’re bringing forward our forecast for the …
The housing market hit a milestone in April, with real house prices rising above the previous peak recorded during the boom of the mid-2000s. But that doesn’t mean valuations are at dangerous levels. House prices look far more reasonable when gains in …
22nd June 2021
Hungary’s central bank (MNB) raised interest rates by 30bp today and with inflation set to remain above the MNB’s 4% upper tolerance level well into 2022, we expect an additional 60bp of tightening at the next three Inflation Report meetings. This would …
The recent jump in India’s consumer price inflation has taken us (and most others) by surprise and we have revised up our near-term forecasts. However, a big chunk of the surge – even in the most closely-watched core measure – can be explained by rising …
There are tentative signs that global demand for Asian consumer goods has peaked. But with demand for key components still running well ahead of supply, shortages are likely to persist for some time to come. Taiwan’s export orders deserve close attention …
21st June 2021
While policymakers in Hungary and Czechia look set to lift interest rates from their pandemic lows later this week, we doubt that Poland’s central bank will follow suit this year. That said, with inflation in Poland set to be higher than we had previously …
Headline Mexican inflation has now peaked and will drop back within Banxico’s 2-4% target range as the earlier spike in fuel inflation unwinds. In contrast, we expect that core inflation will continue to hover at, or just above, this range in the coming …
Virus numbers have fallen in the past few months in the MENA region and a rapid vaccine rollout should allow most of the Gulf economies, as well as Morocco, to lift restrictions further over the second half of the year. Elsewhere in the region, where the …
The passing of this morning’s “no confidence” vote in Swedish Prime Minister Stefan Löfven has plunged Sweden back into a period of political purgatory. While the political outlook is unclear, the near-term macroeconomic implications are likely to be …
Commercial banks left the Loan Prime Rate (LPR) on hold again today. The PBOC has now fully reversed last year’s credit acceleration using quantitative controls. Accordingly, policy rate hikes that could prompt LPR increases are unlikely in the near …
Much of the rise in inflation in major advanced economies from February to May has reflected the fact that prices fell in the same period a year ago. That said, depending on how you measure it, around half of the jump in inflation in the US and UK over …
18th June 2021
We expect the yen will continue to depreciate against the US dollar this year as 10-year US Treasury yields resume their rise. Since January, much of the movement in developed market (DM) exchange rates appears to have been driven by changes in the …
The yields of 10-year US Treasuries and German Bunds have moved in lockstep since the latest Fed meeting, but we doubt that this will continue. While we expect the Treasury yield to rise sharply between now and the end of 2022, we think that the Bund …
Wednesday’s hawkish surprise from the Fed adds weight to our views that i) the US stock market will see only limited gains between now and the end of 2023, even as the economy generally continues to power ahead and ii) the stock market ‘rotation trade’ …
Lead demand should bounce back this year, despite the shortage of semiconductor chips which is currently curtailing global vehicle production. However, we think a simultaneous recovery in lead supply (particularly secondary supply) will keep the market in …
The Central Bank of Egypt (CBE) announced it kept interest rates on hold on Thursday evening and, with inflationary pressures building, the CBE is likely to refrain from cutting rates in the near term. Even so, very high real interest rates and the …
While the Bank of Japan kept its major policy settings unchanged today and will continue to do so for the foreseeable future, it extended the deadline for applications to its emergency lending facility from end-September 2021 to end-March 2022. And it …
Although portfolio rebalancing by US pension funds may have played a role in depressing Treasury yields, it is likely to have been a small one in the grand scheme of things. After all, they own only a small share of the Treasury market and the actions of …
17th June 2021
The reaction to this week’s FOMC meeting supports our view that the US dollar will strengthen against most currencies this year. Yesterday the FOMC revised up its forecasts for growth and inflation in the US relative to its last set of economic …
Our Mobility Trackers show that global economic activity is benefitting from the removal of restrictions in advanced economies. Good progress with vaccinations suggests that this trend should continue, albeit with risks around new variants. The story is …
Marine Le Pen’s RN party is likely to do well in French regional elections this month, a key test ahead of next year’s presidential election. A Le Pen presidency would no longer entail a “Frexit” but would hinder European fiscal integration. And it would …
By September, China could be in a position to export 340mn vaccines doses each month – more than most regions of the world have administered in total so far. China’s vaccines are less effective than others, but have been found to suppress outbreaks where …
The home equity share has surged to a 31-year high, which in the past may have persuaded mortgage lenders to ease credit conditions. But Ability to Repay regulations brought in after the financial crisis have broken the link between home equity and …
The statement accompanying today’s decision by the Turkish central bank (CBRT) to leave its policy rate at 19.00% suggests that policymakers are (for now) standing up to political pressure to lower interest rates. But we still think that an easing cycle …
Taiwan’s central bank (CBC) left interest rates unchanged today at 1.125% despite the booming economy. With inflation relatively subdued and the currency at multi-year highs against the US dollar, we suspect the CBC will be in little hurry to start …
Global oil demand looks to have held up much better so far in 2021 than during 2020, despite a resurgence of COVID infections in many parts of the world . We expect strong oil demand growth to continue for the rest of the year, but this won’t stop rising …
While the Norges Bank left its policy rate on hold at a record low of zero once again this morning, it all but confirmed that it will raise rates in September – which would be well ahead of the RBNZ and the Fed, for example. We expect the NOK to gain …
While the Norges Bank will start hiking in Q3, and we now expect the Fed to raise rates twice in 2023, developments in Frankfurt will continue to set the tone at the Swiss National Bank. Having left the policy rate on hold at -0.75% again this morning, …
The hawkish statement from the Brazilian central bank meeting (at which the Selic rate was raised by 75bp to 4.25%) indicates that policymakers are more confident in the economic recovery but also more worried about energy inflation than we had …
Bank Indonesia (BI) left its policy rate unchanged at 3.5% today and signalled that it was in no rush to adjust its monetary policy settings again this year. We expect rates to remain low to support the recovery for some considerable time. The decision …
We expect the RBNZ to impose new lending restrictions in the months ahead which, in addition to rising interest rates, should result in house prices declining next year. The median house price in New Zealand was up 32.3% y/y in May. Part of that was due …
The Fed continued to stick to its view that the surge in inflation "largely" reflects "transitory factors", but officials revised their inflation projections up significantly for this year and the median projection now shows two 25bp interest rate hikes …
16th June 2021
Recent strong inflation data have heightened concerns about global price pressures. At present, we think there will be limited impact on short-term property performance. Further out though, higher inflation expectations reinforce the view that bond yields …
There is less spare capacity in Germany’s labour market than elsewhere in the euro-zone, and economic activity is set to regain its pre-crisis level before long. However, we think wage inflation (which has fallen sharply in the past year) will increase …
The retreat in US Treasury yields over the past month or so seems at odds with the US economy’s fundamentals, and we doubt that it will be sustained. Our forecast that the 10-year yield will end 2021 well above its current level informs our view that US …
Higher production from OPEC+ member states and in the Americas means that global oil production is set to rise sharply over the next eighteen months. This is the reason why we expect oil prices to fall from Q4 this year and throughout 2022 . Global oil …
The Delta variant does not appear to have taken hold in mainland Europe as yet, but the experience of the Alpha variety suggests that it could be dominant by the end of July. While this would be far from helpful, it should not prevent the euro-zone …
A further expansion of gas production is likely to boost Israel’s current account surplus by an additional 0.4% of GDP per annum by 2025. This will put upwards pressure on the real exchange rate, but Israel’s export composition means that this should not …
The broad-based rise in inflation across EMs this year has elicited varying degrees of policy responses from central banks. Those facing above-target inflation and most worried about credibility (Brazil, Russia) have already started hiking rates and will …
India’s goods trade deficit narrowed to an eight-month low in May as exports held up much better than imports. Strong external demand will help to offset some of the damage to domestic demand caused by the virus surge and ramping up of containment …
Chile’s renewed lockdown measures provide further evidence that its rapid vaccination programme has a lot further to run to quash the virus. The good news is that the economy seems resilient to stringent restrictions, and there is evidence that vaccines …
15th June 2021
The ECB made significant upward revisions to its GDP forecasts last week, presumably encouraged by the recent experience of other economies. The Bank also seems to have come round to our view that the pandemic will not leave deep, lasting scars on the …
Russian household spending looks set to rebound strongly this year as “excess” savings are drawn down, credit continues to expand, government support boosts incomes, and the labour market recovers. This will keep inflation elevated for a while. But some …
