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Unsurprisingly, a second Trump presidency will support oil and gas production while rolling back environmental regulations. The fate of the Inflation Reduction Act is less certain, given that the support for manufacturing investment aligns with Trump’s …
22nd November 2024
This page has been updated with additional analysis since first publication. Budget and Trump may have triggered slowdown in activity At face value, the fall in the composite PMI from 51.8 in October to 49.9 in November suggests that real GDP growth is …
This page has been updated with additional analysis since first publication. Slow start to the golden quarter, but the outlook is improving The bigger-than-expected 0.7% m/m fall in retail sales in October (consensus forecast -0.3% m/m) suggests that …
Risks are shifting towards more BoJ tightening The stars are aligning for our long-held view of another rate hike before year-end. For a start, the LDP/Komeito coalition and the DPP have agreed on a ¥13.9tn (2.3% of GDP) supplementary budget. The LDP …
Student numbers set to fall regardless The minutes of the November RBA meeting were rather hawkish. The Bank noted that even if inflation weakened more sharply than expected, it would “need to observe more than one good quarterly inflation outcome to be …
This page has been updated with additional analysis since first publication. Flash PMI points to continued rebound in activity The renewed rise in the composite PMI supports our view that activity will continue to expand at a robust pace in the remainder …
Pick-up in underlying inflation will prompt rate hike next month The slowdown in headline inflation in October was due to base effects from utilities prices. With underlying inflation climbing further above the Bank’s 2% target, the case for another rate …
21st November 2024
Modest rise in homes sales does not mark the start of the recovery The modest rise in existing home sales in October reflects the earlier drop in mortgage rates over the summer and is unlikely to be repeated, as borrowing costs have since rebounded to 7%. …
We don’t think the S&P 500’s AI tailwind has run out of puff yet, despite the seemingly lukewarm market reaction to Nvidia’s latest profit result. It’s tempting to see a warning sign for the broader market in the reaction to Nvidia’s latest profit …
We have updated this page with additional analysis since first publication. Disappointing borrowing figures highlight Chancellor’s lack of wiggle room October’s disappointing public finances figures underline the fiscal challenge that the Chancellor still …
Our ANZ Chart Pack has been updated with the latest data and our analysis of recent developments. The Antipodean central banks will tread different paths on policy over the forecast horizon. With the New Zealand economy in a tailspin and inflation well …
Our new forecast that Bank Rate will fall slower and not as far means that we now think mortgage rates will decline from 4.4% in October to 3.9% by the end of 2026, rather than to 3.5%. But we still think that mortgage rates will fall by more than most …
20th November 2024
The slump in the participation rate this year at least partly reflects the cyclical weakness of hiring, which means that the labour market is weaker than the unemployment rate alone might suggest. The silver lining is that an eventual rebound in …
This page has been updated with additional analysis since first publication. Surprisingly big rebound suggests BoE will leave rates at 4.75% in December October’s surprisingly large rebound in CPI inflation from 1.7% to 2.3% (CE 2.1%, consensus & BoE …
We expect the Reserve Bank of New Zealand to cut its policy rate by 50bp, to 4.25%, at its meeting next week. With inflation back at target, the labour market loosening rapidly and activity in the doldrums, there continues to be a compelling case for the …
Upside surprise not only due to property tax update With headline inflation still at target and given the Bank’s recent emphasis on the need to ensure that GDP growth and the labour market pick up again, the upside surprise to core inflation in October …
19th November 2024
Higher US interest rates will probably continue to weigh on government bonds globally. But we still expect bond yields in most developed market (DM) economies to fall back by the end of 2025, as domestic monetary policy eases further. Sovereign yields …
While we expect the RBNZ to cut interest rates by the most since the GFC over the coming year, housing affordability was never as stretched at the start of an easing cycle as it was at the start of the current one. Accordingly, we only expect house prices …
RBA still in “wait and watch” mode With the RBA maintaining its neutral stance, we’re sticking to our view that the Bank won’t begin cutting rates before Q2 2025. The minutes of the RBA’s November meeting confirmed that the decision to leaves interest …
Although last week’s pull-back in the S&P 500 coincided with a big increase in the 10-year TIPS yield, we don’t think this marks the start of prolonged period of weakness in US equities driven by government bonds. Our view is that the S&P 500 will resume …
18th November 2024
In response to Donald Trump’s election win and the likelihood that his policies will be inflationary, we have revised up our forecast for the terminal fed funds target range in 2025 by 50bp, to between 3.50% and 3.75%. There are, if anything, still some …
The recent downturn in US commercial property has piqued investor interest in alternatives as they look to diversify. With an aging population, senior housing has a clear long run structural demand driver pointing to further growth in the sector. Our …
A plunge in the average household size kept housing demand strong during the pandemic even as population growth ground to a halt. RBA estimates suggest that the average household size has remained low ever since, but economic forces point to a rebound. …
Group Chief Economist Neil Shearing hops off the plane from New York and hops onto the latest episode of The Weekly Briefing from Capital Economics to explain what Donald Trump’s cabinet nominations signal about the macro policy outlook, how Europe and …
15th November 2024
Road to 2% inflation a bumpy one The hotter-than-expected October price data serve as a reminder that the Fed’s fight against inflation is not over. Based on the CPI, PPI and import price data, we estimate that the Fed’s preferred core PCE deflator price …
The US election outcome means that Canada and the US will not be trading friendship bracelets anytime soon and leaves the risks to inflation more finely balanced, but we still think that growth concerns will prompt the Bank of C anada to cut the policy …
Today’s GDP release, which confirmed that the economy has barely grown at all since March, is clearly a blow for the government given its pledge to secure the “highest sustained growth in the G7”. This means that while the UK has now surpassed Japan and …
Temporary disruptions weigh on production again The fall in manufacturing output in October was driven mainly by temporary disruptions which should soon reverse. Excluding these disruptions, industrial production would have remained unchanged, suggesting …
Manufacturing sales weak, but tentative signs of a recovery Despite the 0.4% m/m decline in manufacturing sales volumes in September, the data still appear consistent with the flash estimate that GDP rose by 0.3% that month. Although manufacturing has …
This page has been updated with additional analysis since first publication. Q3 GDP growth muted, Q4 will be better The 0.1% m/m contraction in GDP in September meant that the economy still grew by 0.1% q/q in Q3 (consensus and CE forecasts 0.2% q/q), but …
Consumption continuing to surge For the first time since the market turmoil in August, the financial markets consider it more likely than not that the Bank of Japan will hike rates by another 25bp at its December meeting. One reason is that markets now …
RBA to stay vigilant for a bit longer At her post-meeting press conference last week, RBA Governor Bullock cited the tightness of the Australian labour market as a key reason why the Board remains reluctant to shift to an easing bias. Those remarks seem …
GDP growth set to remain sluggish The economy lost momentum in the third quarter and we think that GDP growth will remain around trend over the coming quarters. According to today’s preliminary estimate, GDP growth slowed from a downward-revised 0.5% q/q …
It is increasingly clear to us that pricing in all three regions we forecast has bottomed, even if appraisals are yet to reflect that in mainland Europe and the US. And although we expect recent events – the election of Donald Trump and the recent UK …
14th November 2024
PPI points to another above-target-consistent rise in core PCE The price data released this week suggest that inflationary pressures are proving stronger than the Fed anticipated. Based on the combined CPI and PPI data, we calculate that the Fed’s …
The UK is not as exposed to US import tariffs as many other economies and we suspect any resulting reduction in UK GDP would be very small. That said, the car and pharmaceutical sectors are the most vulnerable areas of the UK economy. And we don’t think …
While Trump has vowed to lower mortgage rates to 3%, we expect the net effect of his policies to have the opposite effect, keeping borrowing costs higher for longer. With that in mind, we are changing our home sales forecast to show a shallower and later …
Our forecast that Bank Rate will fall slower means that we now think mortgage rates will decline from 4.4% now to 3.9% by the end of 2026, rather than to 3.5%. But we still think that mortgage rates will fall by more than most expect and that house price …
Improvement in housing market sentiment may be overdone October’s RICS survey points to robust house price growth but the Budget means that mortgages rates will probably fall a bit slower than we previously thought, which will restrain house prices next …
This page has been updated with additional analysis since first publication. Resilient labour market heightens risk that policy easing will be delayed With the labour market still on sturdy ground, there is a growing risk to our forecast that the RBA will …
This dashboard shows our latest UK commercial property forecasts. If you have subscriber access to the data underlying this redesigned dashboard, you can download it via the menu options in the top right of each chart or table. If you would like …
Chief North America Economist Paul Ashworth discusses how Donald Trump’s return could influence the US economic outlook in this 22-minute video presentation. During this presentation, Paul addresses key issues around Trump's second term, including: The …
13th November 2024
CPI points to target-consistent gain in core PCE The third consecutive 0.3% m/m gain in the core CPI in October is somewhat concerning, with our preliminary calculations pointing to another above-target-consistent 0.22 m/m gain in core PCE prices, …
Our base case is that the LDP/Komeito coalition will be able to push through major pieces of legislation, including a supplementary budget by year-end, with only minor concessions to the Democratic Party for the People. If the DPP insists on its radical …
This page has been updated with additional analysis since first publication. Slowdown in wage growth has further to run Wage growth eased markedly in Q3, as workers in the awards system received much smaller pay hikes than last year. Although wage growth …
We doubt the S&P 500 will come a cropper in 2025 even though the index fell in 2018 when Donald Trump began to wage a less ambitious trade war than the one he is planning now. Although the S&P 500 was struggling today at the time of writing, it had been …
12th November 2024
