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Note: We’ll be discussing key takeaways from our Outlook published last week on Tuesday, 25th October. Register here . Italy’s new government may initially steer clear of major fiscal loosening, but it will have to provide some more support to cushion the …
24th October 2022
We have downgraded our expectations for Athens prime rental growth over the next two years on the back of a weaker outlook for economic activity. However, with the Greek economy still expected to be relatively resilient, we think all-property rental …
Note: We’ll be discussing key takeaways from our Outlook published earlier in the week on Tuesday, 25th October. Register here . PMIs signal recession and high inflation The flash PMIs for October provide yet more evidence that the euro-zone is sliding …
PMIs show recession and high inflation The flash PMIs for October provide yet more evidence that the euro-zone is sliding into quite a deep recession but that inflationary pressures remain intense. The decline in the flash euro-zone Composite PMI from …
While interest rates are unlikely to rise as high as investors expected in the immediate aftermath of the “mini budget”, those hoping that the surge in mortgage rates since will be reversed are likely to be disappointed. Admittedly, the peak in Bank …
21st October 2022
The big story this week has been the roughly 20% week-on-week fall in the European natural gas price , as mild autumn weather has combined with weak economic activity and the still-high gas price to drag demand lower than usual for the time of the year. …
The main message from our latest quarterly Euro-zone Economic Outlook , which we published this week, is that we now expect the euro-zone to experience an even more extreme case of stagflation. We now forecast both headline and core inflation to average …
Recession just around the corner September’s industrial production and retail sales figures out of Poland showed that activity continued to recover last month. Even so, it may be touch-and-go as to whether Poland’s economy was already in a technical …
Policymakers in Turkey have doubled down on their new economic model of “lira-isation” by pursuing more extreme de-dollarisation policies in recent months. These appear to be having an impact in terms of stemming lira depreciation. But the central bank …
20th October 2022
While the UK government’s apparent U-turn on fiscal policy offers some hope of relief for sterling, we think the outlook remains precarious. We continue to expect that sterling will lose further ground against the US dollar in the near term. But while …
It is a close call but we think a 100bp hike most likely next week. Further rate hikes will follow, bringing the deposit rate to a peak of 3%. But the hawks’ hopes to shrink the balance sheet will go unfulfilled. The ECB is certain to opt for another …
Overview – The drag on the economy from CPI inflation being stuck at 10% for a year and interest rates rising to 5.00% will be enough to trigger a recession that involves real GDP declining by around 2.0% from its peak to its trough. What’s more, …
The deep recession faced by the euro-zone in the coming year will cause a sharp slowdown in prime rental growth, which we now expect to drop to 0% at the all-property level next year. We don’t think any sector will be immune from the rental deceleration, …
We don’t think COP27 is likely to achieve much. At the heart of our new Climate Economics coverage is the idea that economic and market forces – far more than government diktat – will drive the green transition. As the challenge of tackling climate change …
Euro-zone Drop-In: Deeper recession and more persistent inflation …
The UK property market has a long history of either causing or worsening recessions. But that history has taught both banks and regulators a lesson. So while higher debt payments, falling property prices and a slump in construction will play a major …
19th October 2022
Weak sentiment points firmly to recession Although the headline ZEW investor sentiment indicator edged up in October it is still at a very low level, while the current conditions index – which is more closely corelated with GDP – actually fell by more …
18th October 2022
Germany’s ZEW indicator probably plunged again in October (10.00 BST) US industrial production appears to be flatlining (14.15 BST) Sign up here for our final CE Spotlight Drop-In to discuss commodities and green transitions Key Market Themes While …
17th October 2022
With interest rates now higher, we have made downgrades to our forecast for UK GDP growth. We expect that this will bring a sharper deceleration in rental growth at the all-property level, with falls now likely during 2023, led by the office sector. We …
The spread between the 10-year Gilt yield hedged in US dollar terms and the 10-year Treasury yield has widened dramatically of late. But given our forecasts for short-term interest rates in the UK and the US and the unhedged government bond yields in …
14th October 2022
Governing Council members were out in force this week giving their euro cent’s worth on the monetary policy outlook. Sifting through the various comments, there are three main takeaways. First, even the most hawkish are not prepared, in public at least, …
Credit conditions already tightening prior to market turmoil The Q3 credit conditions survey doesn’t capture the impact of the market turmoil of recent weeks, with the deadline for responses falling a week before the “mini-budget”. Nonetheless, it shows …
13th October 2022
Core inflation to remain uncomfortably high The reversal of temporary measures to reduce travel costs played a big role in the surge in German inflation in September. But underlying price pressures remain strong and broad based. We continue to expect that …
Growing acceptance price falls are in the pipeline While optimists can still point to limited supply, a fifth consecutive drop in new buyer enquiries in the RICS survey in September has convinced a majority of surveyors that house prices are heading for a …
Chile’s central bank is likely to hike by 50bp later today (22.00 BST) We think consumer price inflation in Sweden climbed higher in September… (07.00 BST) … but headline CPI probably eased in the US last month (13.30 BST) Key Market Themes A generous …
12th October 2022
On the cusp of recession The 1.5% m/m increase in industrial production in August was partly due to an out-sized rise in Ireland and was not enough to reverse the fall in July. All the evidence suggests that euro-zone industry is heading for a …
We think online demand will continue to be an important driver of relative rental prospects in European industrial markets as we move into the post-pandemic era. But the outlook for traditional demand, rental affordability and supply will also play a …
Its widely accepted that the jump in mortgage rates from 1.5% last autumn to 6% means that a significant fall in house prices is now inevitable. In this Update we set out how we came to our forecast that prices will fall by around 12% in nominal terms, …
10th October 2022
A raft of economic data for Sweden published this week added to the evidence that its economy is slowing and, like most of Europe, heading for a recession this winter. The 1.3% fall in Statistics Sweden’s monthly GDP indicator in August was the biggest …
7th October 2022
Strong case for even bigger rate increase The case is growing for the ECB to step up the pace of tightening further at its meeting in three weeks. The account of last month’s ECB meeting, published on Thursday, showed that policymakers expect to keep …
Recent revisions to our euro-zone interest rate and bond yield view suggest there is upside risk to our forecasts for prime commercial property yields. With the deteriorating economic outlook also set to weigh on rental growth, this suggests the …
Halifax confirms that house prices have stalled The 0.1% monthly fall in the Halifax house price index in September echoed the message from Nationwide earlier this week that house prices have now stalled. Given the sharp rise in mortgage rates over the …
A recession has looked unavoidable for some time and we now think it will be deeper than most anticipate. Manufacturing output is already declining and services activity is slowing. What’s more, inflation is in double-digit territory and does not seem …
6th October 2022
Account shows hawks still ruling the roost The account of the September ECB meeting confirms that there was a strong consensus in favour of rapid policy normalisation. Since the September meeting, inflation has again increased more than expected, …
Improving supply chains temporarily boost construction activity The surprise increase in the construction PMI reflected an improvement on the supply side, as easing demand cut delivery times and improved contractor availability. But a slowing economy …
Retail sales sliding The 2% year-on-year decline in euro-zone retail sales in August will probably look mild by the end of the year. Measures of consumer confidence point to sales falling much further, which seems quite plausible given that nominal wage …
Germany’s huge off-budget facility designed to compensate households and businesses for the increase in energy prices is bigger than measures announced elsewhere. However, we don’t expect actual spending to be that high, and nor do we think it will be …
5th October 2022
Falls in Paris Centre West vacancy are expected to support a further pick-up in prime office rents in the second half of the year. But this will be short-lived, with the deteriorating outlook for employment growth set to weigh on occupier demand and …
4th October 2022
Looser-than-expected fiscal policy following the mini-Budget means we now expect Bank Rate and gilt yields to be higher. All else equal, that would push the spread between the 10-year yield and all-property equivalent yields to its lowest since the GFC. …
Jump in approvals likely a rush to beat soaring rates The surprise jump in mortgage approvals in August probably reflected a rush to lock in mortgage offers as interest rates surged. There is a possibility that could be repeated next month, but …
30th September 2022
With no end in sight to China’s zero-COVID policy, the dearth of Chinese tourists visiting Europe will suppress a key revenue source for luxury retailers and poses a downside risk to our already-weak prime retail rental forecasts. And even though …
With the winter fast approaching and concern about natural gas supply from Russia looming large, we reviewed the relationship between temperature and gas demand in the EU. The key point is that the temperature, whilst important, will be a weaker driver of …
The stall that precedes the fall The stall in house prices in September was little surprise given the growing downward pressure on demand from rising mortgage rates. We suspect that, despite the reduction in stamp duty announced last week, this marks …
While the market reaction to the Italian election was muted, we think that the worsening economic outlook and concerns about debt sustainability will result in increased risk aversion toward Italian property assets. This means that, after a strong H1, …
28th September 2022
Although the latest sell-off in Gilts has been driven in part by expectations for higher interest rates, the accompanying fall in sterling suggests the risk premia attached to UK assets has risen. In our view, in the absence of a concerted attempt to …
27th September 2022
We think US durable goods orders fell in August (13.30 BST) Hungary’s central bank will probably raise its benchmark rate by 100 bp (12.00 BST) Sign up here for our Drop-In on Tuesday to discuss recent moves in FX markets Key Market Themes Italy’s …
26th September 2022
Overview – The latest data suggest that a property repricing is already underway in response to higher interest rates and stretched valuations. We expect a cumulative rise in all-property yields of 35bps-40bps across the Scandinavian and Swiss markets …
22nd September 2022
Data released this week brought yet more evidence that the euro-zone is heading for recession. The energy crisis was already weighing on industry in July, with output in the sector contracting sharply, especially among energy-intensive producers. And …
16th September 2022
European policymakers have been discussing how to tackle skyrocketing energy prices in the region to ease the financial pain for households and firms this winter. In this Update , we answer five key questions about Europe’s plans to deal with surging …
12th September 2022
The rapidly worsening economic backdrop has put the brakes on Germany’s prime retail recovery. After showing strength in the second half of last year, take-up has now slowed in most of the main markets and prime rents are falling in some. Looking ahead, …
9th September 2022
