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BoJ will stay on sidelines for now The relief that followed the suspension of reciprocal tariffs for all countries except China on Wednesday proved short-lived as bilateral tariffs between China and the US are still being ratcheted up to eye-watering …
11th April 2025
Downside risks to the economy that prompted March cut have eased Meanwhile, underlying inflation pressures are far too strong for comfort Bank likely to pause next week, but we still expect further cuts this year Despite the economy facing the existential …
10th April 2025
President Trump’s trade war has created material downside risks for the global economy. Our forecasts assume that tariffs on most countries outside China will stay at 10% and retaliation by other governments will be moderate. In this scenario, global GDP …
Despite President Trump’s latest decision to pause the US’s “reciprocal” tariff regime for 90 days, there is still a real risk that the second-order effects of higher US tariffs on the UK economy are bigger and that UK inflation and interest rates fall …
We have updated our forecasts for Canada to account for the latest changes in US trade policy. (See Table below.) A recession should be avoided, but the harsh tariffs on the vehicle sector and uncertainty about the future of the USMCA mean GDP growth is …
Core PCE prices on track for below-target 0.11% gain The unexpectedly small 0.06% m/m rise in the core CPI in March was partly due to steep falls in hotel prices and airline fares, which reflect both weakening domestic demand and the recent drop in …
The trade war has merely delayed rather than scuppered further policy tightening by the Bank of Japan. Accordingly, we’re sticking to our forecast that the 10-year JGB yield will rise to 1.75% by year-end. Whereas the 10-year US Treasury yield has on net …
Housing activity set to slow in the near term March’s RICS survey suggests both the weak domestic economy and the headwinds from the global tariff storm continue to increase the downside risks to our 2025 forecasts for housing demand and prices. But the …
Enter your own universal and specific tariff scenarios and see the impact on the effective tariff rate, inflation and GDP. If you have subscriber access to the data underlying this dashboard, you can download it via the menu options in the top right of …
While Canada escaped “liberation day” relatively unscathed, the imposition of US tariffs and risk of more to come will still weigh on exports, consumer confidence and investment. With immigration also plunging, we now expect GDP to expand by just 0.4% …
9th April 2025
Even if Japan’s attempts to negotiate a trade deal with Trump succeed quickly, concerns about the impact of escalating tensions between the US and other trading partners will force the Bank of Japan to keep interest rates unchanged for a few more months. …
RBNZ will cut further than most anticipate The RBNZ cut rates by 25bp at its meeting today, while signalling that further easing would be forthcoming in the months ahead. We think the Bank will ultimately loosen policy settings to a greater degree than …
We think the turnaround in longer-dated Treasury yields has bit further to run, if – and it’s a big if – the worst is now over for the US stock market. One reason for the volte-face in bonds is second thoughts about the prospects for Fed policy after …
8th April 2025
The apartment market is on track to recover over our five-year forecast, with new supply falling back sharply, while demand remains solid. However, the size and speed of recovery will differ widely by region. The largest vacancy rate declines – around …
7th April 2025
The Bank of Canada’s quarterly business and consumer surveys were nowhere near as bad as we feared, but that may only be because the survey periods preceded the most recent tariff announcements. Either way, it’s clear that those tariffs and uncertainty …
Australia and New Zealand are safe havens in the current global trade storm because they have small manufacturing sectors, export little to the US and haven’t been hit with high US tariffs. We’re therefore sticking to our forecast that the RBA will only …
This page has been updated with additional analysis since first publication. Housing market loses steam in Q1 The 0.5% m/m fall in Halifax house prices in March provides further evidence that the boost from buyers rushing to complete home purchases before …
Underlying wage growth remains strong We suspect that the sharp slowdown in regular earnings growth in February is just a sampling anomaly rather than a sign of genuine weakness. With this year’s spring wage negotiations resulting in a larger pay hike …
Clinton adviser James Carville famously quipped that he would like to be reincarnated as the bond market but, as President Donald Trump is now finding out, the equity market can be pretty intimidating too, with the S&P 500 down by more than 10% since his …
6th April 2025
Republicans need to get with the recycling program President Donald Trump’s big “Liberation Day” announcement went down badly in the markets, as fears mounted that the bigger-than-expected reciprocal tariffs would trigger a recession. The surge in March …
4th April 2025
Despite being one of the first targets in President Donald Trump’s crosshairs following his return to the Oval Office, Canada made it through “Liberation Day” relatively unscathed. We gave our full thoughts in a note published on Thursday. (See here .) …
Payrolls brings better news The bumper 228,000 rise in non-farm payrolls in March offers some welcome good news amid the escalating global trade war, showing that the labour market remains healthy despite the drag from DOGE-led federal job cuts. We expect …
Tariffs not entirely to blame for employment fall While US tariffs will be the obvious culprit for the fall in employment in March, two-thirds of the decline was concentrated in the services sector, suggesting that other factors were at play. Nonetheless, …
With President Trump announcing reciprocal tariffs of 34% and 20% on all US imports from China and the European Union respectively this week, the news that UK goods exports to the US will be subject to the minimum 10% “baseline” tariff from 5 th April …
More policy support may be forthcoming Although the RBA left rates unchanged on Tuesday, it sounded a lot more dovish than it did in February. Indeed, it significantly toned down its concerns about upside inflation risks and the dangers of prematurely …
Tankan consistent with further tightening Compared to other Asian economies, the 24% US tariff on imports from Japan announced this week looks rather modest. Nonetheless, the chances that the Bank of Japan will hike rates in May as we’re forecasting have …
Canada has escaped much more lightly than we feared from President Trump’s big announcement, with the import-weighted US tariff likely to be 8% based on current plans and potentially below 5% in the near future. Nonetheless, the much larger tariff rate on …
3rd April 2025
Gold playing a key role in the slight narrowing of the trade deficit The narrowing of the trade deficit in February was driven by stronger exports, mainly of non-monetary gold, while imports remained at record levels, as businesses continued to rush …
Tariffs knock trade balance back into deficit The large fall in exports in February was to be expected given the (albeit temporary) imposition of tariffs on goods imports into the US that month. While Canada may have gotten off relatively lightly on …
We are significantly downgrading our end-2025 forecast for the S&P 500 for two key reasons. The first is yesterday’s announcement of greater tariffs on US imports than we had assumed . In such circumstances, we no longer think the economic backdrop will …
Asian economies will be hit harder than most by US reciprocal tariffs. We were already expecting more rate cuts than the consensus in most countries in the region, but there’s now a risk that central banks in Malaysia and Taiwan may have to start easing …
The easing in house price growth in both February and March suggests momentum in the housing market is waning. What’s more, as we now think the Bank of England will press pause on the interest rate cutting cycle later this year, mortgage rates may fall a …
2nd April 2025
Our scenarios of how different rates of US tariffs on UK exports could influence the UK are designed to provide clients with some real-time context when President Trump announces tariffs tonight. These are rough rules of thumb for blanket tariffs on all …
Volatility in the US stock market hasn’t picked up sharply since Donald Trump returned to the White House, despite a very high degree of uncertainty about his economic policies. That may remain the case even after “Liberation Day”, judging by the …
We expect the Reserve Bank of New Zealand to cut its Official Cash Rate by 25bp, to 3.5%, at its next meeting on 9 th April. Although activity is now on the mend, spare capacity will ease only gradually, consistent with a sustained decline in …
The latest PMIs suggest that global industry is heading into Q2 on a weaker footing. Meanwhile, price pressures accelerated sharply in the US but generally eased elsewhere. The output component of the global manufacturing PMI fell to 50.5 in March from …
1st April 2025
February’s JOLTS data show a labour market settling back into its pre-pandemic norms. With limited signs of DOGE’s trimming of the federal workforce in the survey, all eyes will now turn to March’s employment report, due on Friday. Job openings fell to …
Fall suggests manufacturing renaissance remains elusive The slight dip in the ISM manufacturing index in March suggests that, rather than triggering a reshoring factory renaissance, the uncertainty surrounding President Trump’s tariff threats are …
This page has been updated with additional analysis since first publication. House prices continue to lose momentum The stagnation in Nationwide house prices in March suggests any boost from buyers rushing to complete home purchases ahead of the rise in …
While the RBA is becoming increasingly confident that inflation will sustainably return to target, we still expect its easing cycle to be shallower than most anticipate. The RBA’s decision to leave its policy rate unchanged at 4.10% was correctly …
RBA’s easing cycle will be shallow While the RBA is becoming increasingly confident that inflation will sustainably return to target, we still expect its easing cycle to be shallow. The Bank’s decision to leave the cash rate unchanged at 4.10% was …
Australian house price growth remained soft in March, amid still-weak housing demand. Although the RBA’s easing cycle could help deliver a shift in momentum later this year, stretched affordability is likely to constrain the strength of the rebound. Much …
Consumer spending remains muted With consumers seemingly keeping spending on a tight leash, there is a risk that the RBA will loosen policy a bit more than we currently expect this cycle. The 0.2% m/m rise in retail sales values in February was a touch …
Tankan suggests economy is firing on all cylinders While business conditions were unchanged in the latest Tankan survey, the survey suggests that an increasingly overheating economy is creating strong price pressures. The Tankan’s headline measure of …
Overview – We’ve become more concerned about the outlook for the economy due to the drags from higher businesses taxes and the more uncertain global backdrop being bigger than we thought and the boost from government spending being smaller. Our forecasts …
31st March 2025
This page has been updated with additional analysis since first publication. Tentative signs households may be starting to spend a bit more freely February’s money and lending figures provide some green shoots of households starting to save less and spend …
Motor vehicle tariffs to boost inflation The Trump administration’s 25% tariffs on most motor vehicle and some parts imports is an upside risk to our inflation forecasts. As a reminder, our forecasts have long been based on the assumption that Trump would …
28th March 2025
Hopes of making it a week without any new tariff news were dashed on Wednesday when President Donald Trump announced a 25% tariff on motor vehicle and parts imports from April 3 rd . Despite accounting for 10% of Canada’s goods exports to the US, the hit …
Solid rise in GDP not a sign of things to come The stronger-than-expected 0.4% m/m rise in GDP in January, along with an upward revision to the December outturn, shows the economy still had solid momentum at the start of this year. The weak February …
Tariffs – UK still not very exposed The announcement of US reciprocal tariffs on 2 nd April will dominate next week. The UK has mostly flown under the radar of Trump’s tariffs and its economy is naturally less exposed than others – our Trade War Dashboard …
