While card transaction data have overstated the health of consumer spending in recent years, we suspect they didn’t do so recently. As such, we’re willing to take the jump in transaction amounts in Q3 at face value and have pencilled in a strong rise in …
9th November 2020
Much of President-elect Joe Biden’s agenda will be dead on arrival with the Republicans maintaining control of the Senate, but there is still a chance of more fiscal stimulus being passed, albeit probably not until after Biden takes office on 20 th …
7th November 2020
While the US election has dominated the news cycle across the world, the outcome is unlikely to have a significant impact on the world economy. Short-term global prospects will continue to be overwhelmingly driven by the evolution of the virus and the …
6th November 2020
New national lockdowns in Europe have led us to revise down our oil demand forecasts for Q4. But the decline is likely to be much smaller than in Q2, not least because the economic hit will be less severe . European oil demand slumped in early 2020, as …
A Biden presidency won’t reverse the tide of US-China decoupling and could lead to economic strains on new fronts if climate change and human rights become greater US priorities. While some ballots are still being counted and the composition of the US …
The apparent failure of the Democratic Party to win a ‘clean sweep’ in this week’s US election means that many of the policy initiatives and spending proposals made by presidential hopeful, Joe Biden, during his campaign are likely to be – at best – …
Poland’s central bank left its policy rate on hold at 0.10% at today’s MPC meeting and opted to reinforce its commitment to its asset purchase programme rather than announce new unconventional measures. These asset purchases are likely to work in tandem …
German occupier demand has slumped in the pandemic, though rents have generally held steady so far this year. But with demand likely to remain weak and an overhang of supply in some markets, declines are still likely over the next 12 months or so. Our …
While there could still be more twists and turns to come after this week’s elections in the US, in general we expect equities there to outperform Treasuries between voting day and the end of 2022. The S&P 500 has risen significantly since voting day, even …
With the markets still relatively calm amid the ongoing election uncertainty, the Fed took the predictable decision to stand pat today. However, if the election results in a divided government – as now looks likely – that will reduce the odds of any …
5th November 2020
The Czech National Bank (CNB) kept interest rates on hold at today’s MPC meeting and, despite its downbeat view on the economic outlook, gave no hint that monetary policy would be loosened further. We expect interest rates to remain on hold for some time …
The imminent easing of restrictions in Ontario is another reason to think that GDP will keep rising in the fourth quarter, but there is clearly a significant chance that restrictions will be reimposed again soon. The most populous provinces have had …
This UK Economics Update contains full details of our new economic and financial market forecasts if there is a Brexit deal and for two different kinds of no deal Brexit. It also highlights that business investment is going to remain in the doldrums for …
T he second virus wave in CEE came at a time when the region’s retail sector was already on its knees. We now expect the fall in rents to continue in Q4, albeit at a slower pace than in Q2. After successfully controlling the virus outbreak in the spring, …
As expected, the Norges Bank did not set off any fireworks this morning, and the decision to leave its key interest rate on hold at zero was never in doubt. The economy is likely to prove comparatively resilient during the second wave, but we still expect …
Despite a small revival in thermal coal prices ahead of winter in the Northern Hemisphere, we doubt it will be long before they start to test historic lows again. And if, as we expect, the COVID-19 pandemic serves to accelerate the push towards …
The deterioration in Gulf public finances this year has pushed governments across the region to finance a significant portion of their budget deficits through international debt markets, which we expect to continue in the coming years. While this doesn’t …
Back in June, we predicted that the Bank of England would expand quantitative easing (QE) by a further £350bn over the following 18 months (consensus £100bn). (See here .) By announcing an extra £150bn of QE today, the Bank has already done £250bn of …
While Switzerland has not yet followed France and Germany in announcing a new national lockdown, we now expect GDP to contract in Q4, broadly in line with the euro-zone. Meanwhile, although the Nordics economies will remain comparatively resilient, we …
4th November 2020
The recent strength in Asian exports reflects sustained growth in global electronics demand, which has been a factor underpinning the recent rally in industrial metals prices. We expect electronics exports to hold up well in the months ahead, which should …
While the final results are yet to be determined, whoever wins the US presidency probably faces continued gridlock in Congress. That may explain why the moves in markets overall so far have been limited. Admittedly, Treasury yields have fallen as the …
The new lockdowns in Germany and France, as well as the stricter virus containment measures in other countries, are likely to cause low inflation in the region to become even more entrenched. The lockdowns being implemented across the euro-zone are …
The second lockdown will have a smaller immediate impact than the first as the housing market is allowed to remain open this time. But it will also put the economic recovery into reverse and push the unemployment rate up to 9% next year. With policy …
The volume of available sublease space already exceeds that seen in the last two downturns. And an average discount of 20% to landlord asking rents, rising to 30%-plus in some cities, will reduce the demand for available landlord space. As a result, while …
We still don’t know the winner of the presidential election or which party will control the Senate, and, with President Donald Trump threatening to challenge the outcome, the legal wrangling and uncertainty could drag on for some time. It is still …
We now expect euro-zone GDP to contract by 3% q/q in Q4 and to be unchanged in Q1 2021, based on the latest lockdown measures staying in place for three months. A return to the stricter measures of the first wave, which is a quite plausible, would result …
3rd November 2020
We think that energy commodities will claw back a bit of the ground that they have lost relative to industrial metals over the next two years or so, as some cyclical factors linked to COVID-19 which have weighed more heavily on the former unwind. However, …
The recent pressure on the Argentine peso and the Turkish lira has echoes of the currency crises both countries suffered in 2018. But there are also some important differences which mean that, even if Turkey and Argentina were to suffer outright currency …
We suspect that the rapid recovery in Asia LNG prices will run out of road in the coming months, as supply returns and LNG cargoes are potentially diverted away from Europe . Asia LNG prices plummeted earlier this year as the plunge in economic activity …
We think that the latest activity surveys for October may be overstating growth in Brazil, although they reinforce the view that its economy remains ahead of Mexico at this stage of the recovery. The recently-released October activity surveys can give us …
Lockdowns in Q2 this year caused global GDP to drop by 7% q/q, with the hospitality, recreation, and transport sectors suffering most. The hit from second lockdowns should be much smaller since activity is below normal levels to start with, restrictions …
We estimate that the second England-wide lockdown will cause GDP to fall by around 8% m/m in November, prompt the unemployment rate to climb to a peak of 9% next year, contribute to the government borrowing around £420bn (21.7% of GDP) this year and lead …
In the past, La Niña weather conditions in the Pacific Ocean have had a significant impact on agricultural crops and prices. In this Update we consider the risks that the development of La Niña over the coming months pose to our current agricultural price …
The Turkish lira has continued to fall sharply over the past couple of days and pressure is mounting on the central bank (CBRT) to deliver aggressive policy rate hikes at the MPC meeting later this month (if not before). But the political backdrop means …
Bank Negara Malaysia (BNM) left its main policy rate on hold at 1.75% today, but with a new set of restrictions to combat a second outbreak of the virus dragging on the economy, we doubt this marks the end of the central bank’s easing cycle. Of the 21 …
Commercial property transactions are likely to end the year around 40% down on 2019 totals. And with the prospect of an extended lockdown this winter, a slower economic recovery and falling capital values, this will weigh on transactions well into 2021. …
The RBA didn’t disappoint when it cut interest rates and launched quantitative easing today. And even though it turned more optimistic about the economic outlook, we suspect it will expand its government bond purchases beyond the planned six months . The …
India’s banks entered the crisis in worse shape than other major EMs, although large state involvement in the financial sector means the government is unlikely to remain idle if loan losses start to mount. Elsewhere, we have concerns in Brazil, Mexico, …
October’s headline manufacturing PMIs released so far for EMs were generally encouraging across the board, but they do not fully reflect the very latest surge in global COVID-19 cases and restrictions imposed across much of Europe. We think that these …
2nd November 2020
