De-escalation hopes have given markets a lift, but we think the effects of the war would, in many cases, persist even if the war did end soon. At the time of writing the mood in markets was fairly jubilant, with comments from both the Iran and US …
1st April 2026
Financial markets are betting that the RBNZ will deliver its first rate hike in Q3, with aggressive tightening to follow thereafter. However, we suspect they are getting ahead of themselves, not least because of the Bank’s stated reluctance to hike into a …
Australian house prices have lost some momentum in recent months. With the Reserve Bank of Australia set to hike rates to 4.60% in the coming months, we think house prices will fall outright before long. Under our baseline scenario, house prices will …
Strong Tankan results will encourage BoJ to hike this month The Tankan survey showed that firms are shrugging off the energy shock caused by the Iran war, which should encourage the BoJ to hike rates at this month’s meeting. The headline index of business …
Aggressive rate hikes set to continue Colombia’s central bank raised its policy rate by another 100bp, to 11.25%, at its meeting today and with the inflation outlook set to deteriorate further over the coming months, we think additional tightening lies in …
31st March 2026
A short conflict in Iran would push global inflation temporarily higher and trim GDP growth, but the fallout would be manageable. A more prolonged disruption to energy supplies would deliver a hit to global activity similar to that seen after the 2022 …
25th March 2026
Notwithstanding some positivity in stock markets today, recent market moves – including a big rally in Treasuries and widening credit spreads – point to growing concerns around economic activity. We expect these fears to ease over the coming months. …
The backdrop of a struggling labour market, already low saving and weak consumer confidence makes it more likely that households will respond to latest real income shock by cutting spending, rather than reducing saving. The reversal in oil prices that we …
This Europe Chart Pack builds on the analysis and scenario forecasts published in the Global Economic Outlook (see here ) to provide more detail on how the Iran War could influence inflation, GDP growth, the labour market and interest rates in the …
House prices already losing momentum prior to Iran war The softer 0.2% m/m rise in house prices in January supports our view that the housing market was already losing momentum before the recent jump in mortgage rates linked to the Iran war, only partly …
Healthier GDP reading helps Bank focus on inflation risks The rise in GDP in January and projected gain in February leaves first-quarter growth roughly in line with the Bank of Canada’s most recent estimates. While this is still consistent with the Bank …
The energy sector has been the strongest performing sector of the S&P 500 since the conflict in the Middle East began, but our baseline assumption is that most of this outperformance will unwind over the rest of the year. Even if energy prices remain …
China Chart Pack (Mar. 26) …
While the direct effect of renewed strikes on shipping in the Red Sea on aggregate world trade is likely to be limited, the impact on Asian economies that rely more heavily on oil imports from Saudi Arabia would be more significant. Pakistan, the …
While developments in the Middle East are the primary concern for markets right now, sentiment around AI remains a key factor too. We still think that renewed AI enthusiasm will boost stock markets this year. The S&P 500 “big-tech” sectors have fared …
Higher fuel prices tell us little about second-round effects The jump in headline inflation in March was almost entirely due to higher fuel prices and tells us little about what will happen to food or core inflation in the coming months. In our baseline …
The surge in energy prices from the Middle East conflict will boost incomes in Angola and Nigeria and upcoming elections and persistent spending pressures mean that much of the windfall is likely to be spent rather than saved. That will support GDP growth …
This page has been updated with additional analysis since first publication. House prices resilient to surge in mortgage rates…for now The big rise in the Nationwide measure of house prices in March suggests that, so far at least, house prices are proving …
The confirmation that real GDP grew by just 0.1% q/q in Q4 of last year is a reminder that the economic backdrop is much weaker now than the last time energy prices surged in 2022. The 0.1% q/q gain in Q4 real GDP was the same as the first estimate. Due …
There is some evidence that generous cash subsidies to new parents have lifted the fertility rate in Korea. But it is not clear whether similar policies would have the same impact in countries where the costs of raising children are less extreme than in …
Iran War pushing up prices but activity holding up This report was first published on Tuesday 31 st March, covering the official PMIs. We added commentary on the RatingDog manufacturing PMI on Wednesday 1 st April. The PMIs for March suggest that while …
Japan will weather hit from energy shock well The February activity data show that Japan’s economy approached the Iran war with solid momentum and with inflation unlikely to surge, we expect any hit to activity from higher energy costs to be limited. …
Emerging Markets Capital Flows Monitor (Mar. 2026) …
30th March 2026
The macroeconomic implications of regime change in Cuba – in whatever form – are likely to remain limited beyond Cuba’s own economy, given that the island does not play a major role on the global stage. The more significant consequences would be …
The Iran war could take some of the momentum out of the AI investment boom but we doubt that it will fundamentally disrupt the overall build-out. The Iran war threatens AI investment in four main ways. First, higher energy prices will raise the cost of …
BoI on hold as conflict risks escalate The Bank of Israel (BoI) left its policy rate unchanged at 4.00% today amid concerns about renewed inflationary and geopolitical risks. Interest rates will remain on hold at the upcoming meetings, but we think the …
Gilts have been under huge pressure since the start of the war in the Middle East and this Update sketches out how much more pressure they might come under if the war were to drag on. Government bond yields in the UK have surged since the Iran war began …
Last week we published revised economic and market forecasts based on different scenarios for how the Iran war develops. In this week’s note, I answer the key questions we have been asked in subsequent client briefings. 1. What is the likely impact on …
The energy shock accompanying renewed conflict in the Middle East has had an outsized impact on emerging markets. With a ceasefire holding but supply constraints still in place, the key questions are when and how far growth, inflation and financial …
ESI suggests economic impact of higher energy costs very limited so far March’s EC survey suggests that the jump in energy prices has had a very limited impact on activity so far, while services firms’ selling price expectations are little changed. The …
Iran war set to compound an already-slow start to the year Net lending secured against commercial property reached £1.2bn in February, marking an improvement on January’s weak outturn, but still substantially weaker than the months preceding that and 25% …
This page has been updated with additional analysis since first publication. Subdued money supply not supportive of long-lasting rise in inflation The subdued growth rates of the money supply ahead of the Iran war suggest the burst of inflation triggered …
The war’s effects on markets may continue to elude an easy solve, but at least investors aren’t too concerned, yet, about fiscal and inflation risks. War in its second month The sell-off in bond and equity markets intensified at the back end of last week, …
The interest receipts of Japan’s government have risen faster than its interest payments in recent years and we think that will continue even as the 10-year JGB yield has climbed to a 29-year high. In fact, we expect interest revenue to surpass interest …
This Weekly Roundup highlights our latest key analysis, along with insights from our new Global Economic Outlook, which updates our forecasts under a baseline scenario of a short-lived Middle East conflict, alongside an adverse scenario featuring …
27th March 2026
LFS and SEPH heading in opposite directions January’s Survey of Employment, Payrolls and Hours (SEPH) – Stats Can’s less closely-watched monitor of payroll employment – showed employment rose by 46,000 at the start of the year. By contrast, the timelier …
US tech sectors have been on the back foot over recent days, with valuations falling towards those of the rest of the market. While this echoes the final months of the dotcom bubble, we think these sectors will generally outperform again before long. The …
Manufacturing offsetting data centre buildout Non-residential construction spending values fell for the eight consecutive month in January. Data centre spending jumped by another 2.3% m/m, with the annual rate north of 30%, but that strength has been more …
News of a ceasefire in the Middle East has sparked a strong positive response in commodity markets, but there is no shortage of uncertainty about what comes next. In this special online briefing, our economists addressed those uncertainties as they …
Our China Activity Proxy suggests that economic activity picked up at the start of the year on the back of stronger fiscal spending and export growth. But the Budget for this year implies that the pace of fiscal spending growth seen in January and …
All of our coverage on the Middle East conflict can be found here , but we have highlighted some key pieces below. Absorb higher fuel prices or pass them on? African governments have begun reacting to rising international fuel prices. Responses are …
Evidence of how the Middle East conflict is affecting the euro-zone economy has begun to trickle in. March’s falls in the euro-zone PMI and German Ifo BCI suggest that growth may slow. And the increase in the input price components of the PMIs points to …
This Update considers the broader implications of the Middle East war on the crude oil and petroleum product supply chain from the Middle East onwards. At the very end of the supply chain, Oceania and swathes of Asia including the Philippines, Japan and …
All of our coverage on the Middle East conflict can be found here , but we have highlighted some key pieces below. Governments turning their back on fuel subsidies In a piece a few weeks ago we noted that dealing with the energy price shock would be the …
High frequency data point to resilience It has been almost one month since the US and Israel launched strikes against Iran, triggering a surge in global oil and gas prices. For now at least, China’s economy appears to have weathered the shock well. …
Fuel export duties hiked, domestic duties cut After initially moving quite slowly, India’s government has stepped up its response to the impact of the Middle East conflict over the past few days. On Thursday, export duties on diesel and jet fuel were …
All of our coverage on the Middle East conflict can be found here . Key pieces are below. Commentators have spoken about fiscal support to counter the energy shock in terms of how much headroom the Chancellor, Rachel Reeves, has against her fiscal rules. …
