Overview – Global inflation looks set to undershoot consensus forecasts, amid falling commodity prices, cooling labour markets, and an absence of inflationary spillovers from tariffs. In the US, we expect core inflation to ease later this year once the …
3rd February 2026
This weekend’s Japanese election is shaping up to be one of the most consequential in years. As Sanae Takaichi, newly installed leader of the ruling Liberal Democratic Party, seeks to cement her mandate, government bond yields and the yen have been moving …
We recently hosted a Drop-In on the sell-off in gold and other precious metals. This Update answers six key questions on topics such as the role of leverage in driving prices, the macroeconomic and market risks from falling prices, and our view on where …
Our Interactive Markets Chart Pack gives you a comprehensive and timely view of the latest developments in financial markets, and how we expect them to perform in 2026 and beyond. The Chart Pack can be downloaded in PDF form using the Download button on …
Among the largest euro-zone countries, public debt looks most worrying in France because it is on an upward trajectory and Italy because it is likely to remain very high. Government debt is also set to increase in Germany, but it will remain low by …
The ECB’s Q4 Bank Lending Survey, published this morning, suggests that banks have become more cautious about lending to companies while consumers remain reluctant to spend. It also showed that the growth in mortgage demand has slowed sharply, implying …
Gulf’s non-oil sectors start the year on softer footing January’s PMIs from across the region showed that non-oil sectors across much of the Gulf lost momentum against the backdrop of low oil prices and heightened tensions in the region due to the …
Korea’s equity boom is unlikely to deliver a major boost to Korean consumers or the broader economy. But it is sending a clear signal about the external outlook. The rally reflects Korea’s central role in the global AI cycle and points to strong export …
Australian bonds have been battered lately, and its currency boosted, by the prospect of the country’s central bank reversing course on monetary easing. But even though it’s now followed through with a rate hike we don’t expect many, if any, other bond …
The Reserve Bank of Australia struck an unambiguously hawkish tone when it raised rates by 25bp at its meeting today. Our base case is that the Bank will deliver only one more 25bp hike this year, but the balance of risks is arguably tilted towards …
RBA hands down a hawkish 25bp hike The RBA continued to sound concerned about rising capacity pressures when it lifted its cash rate by 25bp today. There is a growing risk that rates will need to be taken above the 4.10% peak we have pencilled into our …
The 18% tariff that President Trump has announced will be applied to imports from India – down from 50% – would significantly boost India’s attractiveness as an alternative manufacturing hub to China. And there could be geopolitical ramifications too; …
2nd February 2026
We doubt that any other major EM central bank will imminently follow Colombia in kicking off hiking cycles, although a strengthening of inflation pressures in parts of Central Europe (Czechia and Poland) and domestic demand in Taiwan could prompt their …
The recently signed EU-India trade deal promises big tariff reductions which should support EU export growth. However, the starting level of exports is low, the phase-in will be gradual, and imports from India will also keep rising. So while euro-zone …
Finally turning a corner? The surge in the ISM Manufacturing Index in January suggests that after years of malaise, perhaps the manufacturing sector might be turning a corner. While the headline index is still at a level that historically has been …
The data published since the start of the year suggest economic activity and price pressures have strengthened. But we still expect annual GDP growth to slow and the weak labour market to weigh on price pressures. This and the smaller rises in regulated …
Saudi Arabia’s economy strengthened over the course of 2025 as the resumption of oil output hikes fuelled growth. But as that boost starts to fade and fiscal consolidation is ramped up against the backdrop of falling oil prices, we think that overall GDP …
The idea that the Fed could pave the way for much lower policy rates by shrinking its balance sheet is unconvincing. Balance sheet reduction is a blunt tool for tightening financial conditions, and pushing it too far risks disrupting short-term funding …
This has been a turbulent past week for the dollar. A sharp sell-off at the start of last week revived the “Sell America” narrative, before the currency partially recovered after Donald Trump nominated Kevin Warsh to be the next Federal Reserve Chair. But …
Whichever party wins Thailand’s general election on 8 th February will inherit a weak economy, tight fiscal constraints, and deep-seated structural and demographic challenges. The continued shift towards economic populism means that the new government …
PMIs in contractionary territory The manufacturing PMIs out of Emerging Europe all came in below 50 which suggests that industrial sectors across the region started the year on the back foot. We think that demand conditions in Central Europe should …
We now believe that the BoJ’s policy rate will climb to 2.5% during the 2030s as inflation settles at higher levels, potential growth picks up and a shift in incentives alters the balance between desired savings and investment. Japan’s 10-year yield has …
This page has been updated with additional analysis since first publication. Subdued start to the year but prices to beat expectations Although Nationwide house prices rose by 0.3% m/m in January, that only partially reversed December’s fall and means …
After an unusually hectic few days for financial markets, even by recent standards, here are three key things to watch in the coming week. Mr Warsh goes (back) to Washington The long Fed nomination race is over and the winner is Kevin Warsh . The …
Australia’s house price rally maintained solid momentum in January, while growth in advertised rents accelerated further. With the housing sector likely to feed inflationary pressures for a while to come, the case for the Reserve Bank of Australia to …
The January manufacturing PMI readings for Asian economies remain consistent with generally steady growth in manufacturing. However, the PMIs have recently been a poor guide to the hard activity data in several economies. Exports from most countries have …
Construction downturn weighing on growth The PMIs point to a broad-based loss of momentum at the start of 2026, with a particularly sharp deterioration in construction. The official manufacturing PMI declined from 50.1 in December to 49.3 last month, …
In an unspectacular FY26/27 Union Budget summed up by the fall in equities since the announcement, the Finance Ministry has unveiled small boosts to spending in politically-sensitive areas and made up for the shortfall by projecting higher revenues and a …
1st February 2026
Hiking cycle starts with a bang, more to come Colombia’s central bank delivered a larger-than-expected 100bp interest rate hike, to 10.25%, at today’s meeting and the hiking cycle has further to run as policymakers try to get ahead of the deteriorating …
30th January 2026
China Chart Pack (Jan 26) …
The reaction in the markets to Donald Trump’s nomination of Kevin Warsh to be the next Fed Chair is broadly consistent with our view that the president has made a relatively safe choice . For a start, the dollar rallied and gold fell back after the …
With this week’s Bank of Canada meeting reaffirming that the policy rate will stay at 2.25% for some time, all attention is now firmly on which direction the next move will be in. Following a string of strong labour force surveys, investors had already …
Mozambique gas megaproject restarts Mozambique this week confirmed that its flagship Cabo Delgado gas mega-project will be restarted. But export revenues are still some years away, which is worrying given fiscal and balance of payment strains continue to …
There was “broad support” among the FOMC to leave the fed funds target range unchanged at between 3.50% and 3.75% at this week’s meeting. Non-voting participants, according to Chair Jerome Powell, held the same view. When Kevin Warsh takes the helm at the …
Lat Am a potential beneficiary of the dollar rout The big news in global markets this week has been the fall in the US dollar. We set out our views in detail here and also hosted a Drop-in on Wednesday (a recording can be found here ). From a …
If anyone was still unclear about the US administration’s stance on climate policies, the recent announcement that it would withdraw its membership and funding from the United Nations Framework Convention on Climate Change (UNFCCC) and a host of other …
Asia Chart Pack (January 2026) …
President Trump’s nomination of Kevin Warsh to be the next Fed Chair is a relatively safe choice for investors, with Warsh’s prior hawkish views counteracting concerns he might morph into a full-blown stooge. Nonetheless, his desire for the Fed to operate …
This page has been updated with additional analysis since first publication. GDP slipped in the fourth quarter We now know that GDP probably declined in the fourth quarter, and the monthly data for November is grimmer than first appears, with broad based …
PPI boosted by increasing margins The 0.5% m/m increase in final demand PPI in December was mainly due to an increase in trade services margins. Excluding food, energy and trade services, core PPI increased by 0.4% m/m last month, with final goods prices …
The rally in French government bonds over the past two weeks suggests that investors think there is now less chance of early legislative elections. However, the budget for next year does nothing to improve France’s long-term debt dynamics, so we think …
Construction downturn has farther to run China’s government has dropped its “three red lines” regulatory requirements for property developers, according to state media reports on Thursday. The policy, which was launched in 2020 with the aim of …
Lessons from the 12-day Israel-Iran war The flare-up in US-Iran tensions, as a US “armada” built up in Middle Eastern waters this week, has driven up oil prices. At the time of writing, Brent crude prices are up ~7% on the week, to a six-month high of …
Drop in German services inflation will reassure ECB The small pick-up in German inflation in January won’t worry the ECB too much as it was driven mainly by an increase in food inflation. And officials will be encouraged by the fact that services …
On its own, the 3% rise in the pound against the US dollar since the start of last week, from $1.34 to a four-year high of $1.38, isn’t enough to materially reduce our UK CPI inflation forecast or have a bearing on how fast the Bank of England cuts …
