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This page has been updated with additional analysis since first publication. Disinflation gathering momentum The RBA is unlikely to pay much heed to the slight pickup in headline inflation in November. In fact, with underlying price pressures showing …
8th January 2025
Though we think the market has bottomed, we expect a very weak recovery this year, unlike in other cycles. In fact, we think valuation falls still have further to go, leaving our forecasts generally below consensus, particularly for the industrial sector. …
7th January 2025
The rise in corporate bankruptcies last year is not a huge concern, but it does add to the sense that firms are struggling more than the headline GDP and labour market data suggest. That in turn supports our view that GDP growth was set to slow even …
The November JOLTS data, when paired with recent employment reports, show a labour market returning to pre-pandemic norms. Meanwhile, the fall in the private quits rate to its lowest since the height of the pandemic will reassure the Fed that core …
There is a significant chance that the Office for Budget Responsibility (OBR) will judge that the Chancellor, Rachel Reeves, is on course to miss her main fiscal rule when it revises its forecasts on 26 th March. To maintain fiscal credibility, this may …
ISM services index rebounds, but surge in prices paid a worry The rebound in the ISM services index in December will soothe concerns that the services sector is starting to run out of steam. Less positively, the surge in the prices paid index to a nearly …
There are increasing signs that interest rate cuts are feeding through to the real economy. Household consumption grew strongly in the third quarter and activity in the housing market has picked up. We expect consumer spending to continue to support the …
Export volumes continue to recover The third consecutive rise in export volumes in November provides further evidence that the economy was gaining momentum at the end of last year. US tariffs could cause the recovery to go into reverse this year, but that …
Exports and imports rebound after port strike disruption The US trade deficit widened again to $78.2bn in November, from $73.6bn, as imports rebounded by 3.4%, outpacing a 2.7% recovery in exports, with shipments in both directions recovering after the …
This page has been updated with additional analysis since first publication. House prices may be losing a bit of momentum going into 2025 The small fall in the Halifax house price index in December is at odds with the chunky rise in the Nationwide measure …
Prime Minister Justin Trudeau’s resignation as Prime Minister and Liberal Party Leader sets off a contest for who will lead the party into the election due by October, but which could happen much sooner if the opposition parties manage to topple the …
6th January 2025
Manufacturing outlook looking less gloomy Building on the November rebound, the further small rise in the ISM manufacturing index in December suggests the sector is starting the year in better shape after a tough 2024. The 0.9-point rise in the headline …
3rd January 2025
This page has been updated with additional analysis since first publication. Downbeat sentiment continues to weigh on households’ financial decisions November’s money and lending data suggests that households’ caution with their borrowing and saving ahead …
The manufacturing PMIs overstated the weakness of industrial activity in 2024 but, at face value, their decline throughout most of the world in December suggests that the sector has entered 2025 on a weak footing. While price indices rose, supply chain …
2nd January 2025
2024 was another difficult year for commercial real estate. Although the sector appears to have fared better than we expected, our key calls were broadly right in terms of direction and winners and losers. This time last year we outlined five key calls …
We forecast a 140,000 gain in non-farm payrolls in December. Meanwhile, we expect the unemployment rate and average hourly earnings growth to be unchanged, at 4.2% and 4.0% respectively. Payroll growth to normalise It has been a volatile couple of months, …
This page has been updated with additional analysis since first publication. Strong end to 2024 and outlook for 2025 better than most expect December’s better-than-expected 0.7% m/m increase in Nationwide house prices means that prices continued to gather …
There was little festive cheer in Australia’s housing market last month, with house prices stagnating across the country’s eight capital cities. Given our view that the RBA has only limited room to cut interest rates over the coming year, prospects for a …
Bank unlikely to cut rates before May The minutes of the RBA’s December meeting struck a slightly dovish tone. However, with the labour market still firing on all cylinders, we doubt the Board will risk loosening policy prematurely. Accordingly, we still …
24th December 2024
The latest FOMC meeting suggests the Fed already has its eye on President-elect Donald Trump’s inflationary policy changes. We have therefore revised up our forecast for the terminal fed funds target range, to between 3.75% and 4.00%, with one 25bp cut in …
23rd December 2024
Our apartment metro forecasts continue to show significant variation between metros, even within regions. For example, while we expect continued strong demand growth in the South – especially in Austin, Miami and Dallas – we also expect high volumes of …
Green shoots emerging The stronger-than-expected increase in GDP in October and upward revisions to the prior two months leaves fourth-quarter growth on track to accelerate to 2% annualised, raising the chance of the Bank of Canada pausing at its next …
This page has been updated with additional analysis since first publication. Economy is going nowhere, although households in a decent position The downward revision to Q3 GDP from +0.1% q/q to 0.0% (consensus and CE 0.1%) isn’t quite as bad as it looks …
W e are sticking to our forecast that the S&P 500 will end next year at 7,000 , despite its slump since this week’s FOMC meeting. That’s even though we think Fed policy will be a bit less accommodative than we had previously projected , and the risk of a …
20th December 2024
Earlier this week we published our US Outlook . We expect the incoming Trump administration’s policies to have a mildly stagflationary impact on the economy. Assuming that Trump introduces tariffs and immigration curbs via executive action by the middle …
Frosty atmosphere at the top Forty years on from his father famously resigning as Prime Minister following a solo walk through an Ottawa snowstorm, reports suggest Justin Trudeau is mulling the same decision after a tumultuous week within government. The …
A look back at 2024 reveals that some of our forecasts were good and some were off. We were right to forecast this time last year that Bank Rate would be cut only gradually, from the peak of 5.25% to 4.75%. (See here .) That turned out to be closer than …
Real economy still strong; as price pressures ease again The 0.11% m/m increase in core PCE prices in November was the smallest gain in six months, although it follows on the heels of two above-target ~0.25% gains in the preceding two months. That …
Consumption losing momentum again Retail sales volumes were unchanged in October, bringing a run of strong consecutive monthly gains to an end. Moreover, the preliminary estimate that sales values were unchanged in November too suggests this may be the …
When matters less than how far Governor Ueda delivered two messages in the press conference after yesterday’s policy meeting : first, the Bank of Japan thinks that policy normalisation is still on track and it intends to raise rates further; second, the …
RBA shake up The week began with Australian Treasurer Jim Chalmers announcing two new picks for the RBA’s monetary policy committee. To recap, in late November, parliament approved an overhaul of the RBA, in line with the recommendations of a review …
This page has been updated with additional analysis since first publication. Little festive cheer for retailers The 0.2% m/m rebound in retail sales volumes in November was slightly worse than expected (consensus +0.5% m/m) and leaves sales on course to …
This page has been updated with additional analysis since first publication. Some good news, but extra revenue-raising measures may still be required Christmas has come early for the Chancellor with borrowing undershooting expectations in November. But …
Surge in headline inflation won’t last, but underlying inflation to remain near target November’s surge in inflation wasn’t a surprise – the Bank of Japan will have known it was on the cards when it decided not to hike rates yesterday. But it should add …
19th December 2024
We expect there will continue to be major divergence between the winning and losing metros. We think the major markets and tech-centric western markets will continue to fare poorly thanks to low office attendance rates and relatively weak office job …
Overview – We expect the incoming Trump administration’s policies to have a mildly stagflationary impact on the economy. Assuming that Trump introduces tariffs and immigration curbs via executive action by the middle of next year, we would expect GDP …
Home sales finally gain some momentum The increase in existing home sales in November, despite rising mortgage rates and weakening mortgage applications the month before, points to stronger demand from cash buyers, possibly driven by investors as election …
While the Bank of England left interest rates at 4.75% today, it struck a slightly more dovish tone. This supports our view that the next 25 basis points (bps) rate cut will come in February and that the Bank will cut rates further and faster than …
Donald Trump’s policies will be a net drag on US GDP growth over the next couple of years, but we doubt that his re-election will prevent the US from remaining the world’s pre-eminent global economy over the coming decades. That said, economic strength is …
For our more detailed analysis of the Bank's December policy announcement, see here . Dovish hold supports our view that rates will be cut further and faster than market pricing While the Bank of England left interest rates at 4.75% today, it struck a …
The Bank of Japan's decision to leave rates on hold for a third consecutive meeting was not a great surprise. But in the post-meeting press conference Governor Ueda sounded in no hurry at all to resume the tightening cycle and there’s now a good chance …
Bank will bring in the new year with a rate hike Although the Bank of Japan left rates on hold for a third consecutive meeting, we think it will resume its tightening cycle before long. The Bank’s decision to leave the policy rate unchanged at 0.25% was …
This page has been updated with additional analysis since first publication. Cratering activity bolsters the case for aggressive easing With activity in freefall, we expect the RBNZ to keep cutting rates aggressively over the year ahead. The 1.0% q/q fall …
18th December 2024
The Fed did cut interest rates by an additional 25bp today, as was largely expected, taking the fed funds rate down to between 4.25% and 4.50%. But the vote was not unanimous and, in a hawkish shift, the new median projection now shows only 50bp of …
Fed delivers a hawkish rate cut The Fed did cut interest rates by an additional 25bp today, as was largely expected, taking the fed funds rate down to between 4.25% and 4.50%. But the vote was not unanimous and, in a hawkish shift, the new median …
Overview – The near-term economic outlook has brightened, with lower interest rates feeding through and consumption benefitting from the recent strong pace of real income growth. That should help to drive quarterly GDP growth above 2% annualised in the …
Is the current account deficit the biggest risk to US outperformance? The precarious nature of the outlook for the Federal budget deficit is well appreciated at this stage, but what if the bigger crisis risk is the mounting current account deficit? The …
