Growth pick-up to extend into Q1, fade by year-end The Q4 GDP data due on Wednesday are likely to show that China’s economy ended 2023 on a more positive note. Our GDP tracker points to y/y growth of 5.5%, up from 4.9% in Q3. That partly reflects a weaker …
12th January 2024
We think that most major currencies in Latin American will fall against the US dollar this year. As a result, the relatively poor returns that we expect from equities in the region in local-currency terms are likely to be even worse in US dollar terms. …
China’s commodity imports were generally strong in 2023 and while growth rates will probably slow this year, we expect volumes to remain high in the coming months. China’s export volumes edged up in December and remained close to a record high fuelled …
This page has been updated with additional analysis since first publication . Broad credit growth hits 7-month high, but bank lending still weak The rebound in broad credit growth remained on track thanks to a step up in government borrowing. But growth …
This page has been updated with additional analysis since first publication. Stagnation in Q4, but recovery in sight The 0.3% m/m rebound in real GDP in November (consensus and CE forecast 0.2%) increases the chances that the economy escaped a recession …
This page has been updated with additional analysis since first publication . Export volumes still due for a pullback China’s export values rose y/y at the fastest rate since April. And while export volumes only ticked up slightly, they remain near a …
This page has been updated with additional analysis and charts since first publication. Deflation set to ease gradually Smaller y/y declines in food and energy prices meant that both CPI and PPI deflation eased last month, a trend that we think will …
Inflationary pressures moderating The economic data released this week all suggest that the case for tighter monetary policy is diminishing. For a start, the Tokyo CPI showed that inflation excluding fresh food fell to just 2.1% in December, within …
Inflation could start with a 3 in December We explained last week why we expect the RBA to cut interest rates earlier than most anticipate and the sharp fall in inflation in November supports our view. The available data suggest that the Q4 inflation …
Air pollution a modest headwind Air pollution in India has been a growing problem for several decades – on some measures air pollution has almost doubled from the levels at the start of the century. (See Chart 1.) Chart 1: India Annual Average PM 2.5 …
This Update discusses how we think Taiwan’s election this weekend – which could be another flashpoint in Taiwan-China relations – might affect global equity markets, in aggregate and across some key sectors that look particularly exposed. Saturday’s …
Consumer spending continued to tumble in Q4 The continued slowdown in household spending in November further cements our view that the RBA won’t lift rates any higher. The ABS’ monthly indicator suggests that household spending rose by 3.1% y/y in …
Egypt’s policy shift and IMF deal edging closer Meetings this week between Egypt, the IMF, and the US took place following the release of a draft economic plan, which points to the expansion of the current IMF deal and a renewed shift towards economic …
11th January 2024
Note: This is an updated version of an Update first published on 11 January following the belated release of government statistics on housebuilding for Q3 2023. Barring Q2 2020, when lockdown caused construction activity to cease temporarily, housing …
We wouldn’t be surprised if US bonds and equities fell a bit further in the near term. But, in our view, the Fed remains on track to start easing in March, pointing to renewed gains in US asset prices. December core CPI data out of the US, released …
In contrast to most of the past 20 years, RoUK industrial rental growth has almost matched the South East over the past couple of quarters. But that is unlikely to last. The boost to demand for big sheds in the Golden Triangle thanks to the surge in …
We think that global growth will undershoot consensus expectations in 2024 as various props to growth from 2023 fade and as the lagged effects of past rate hikes continue to feed through. Among the advanced economies, the US will continue to outperform …
Much has been talked about a ‘flight to quality’ in the office sector given the structural shift to hybrid working. However, while there is evidence of this in relative rental performance, a look at the yield data suggests that the opposite has been true …
Core prices boosted by used vehicles & shelter The slightly bigger 0.3% m/m increases in both headline and core CPI would seem to justify the stance of Fed officials that the road back to target could be a little bumpy, but we’re not convinced. The annual …
This page has been updated with additional analysis since first publication . The renewed fall in Brazil’s headline inflation rate in December, to 4.6% y/y, paves the way for another 50bp cut to the Selic rate (to 11.25%) at the central bank’s next …
The IMF’s approval of the next disbursement of Argentina’s current deal will provide the government with the necessary funds to make upcoming repayments (due to the Fund itself). And the fact that the Fund endorsed the new administration’s policies marks …
Economic growth in Jordan has been sluggish for the best part of a decade and the outlook doesn't look much brighter. While the renewed IMF programme will help to contain external strains, the Israel-Hamas conflict will weigh on the crucial tourism sector …
The Bank of Korea left its policy rate on hold today (at 3.5%), but struck a more dovish tone than after previous meetings. With inflation on the way down and growth likely to struggle over the coming months, we expect the central bank to start cutting …
On hold again, rate cuts in Q2 The Bank of Korea (BoK) left its main policy rate on hold today (at 3.5%), but with inflation cooling and growth set to struggle, we think the central bank will cut interest rates sooner than most expect. The decision was …
Communications from the governor of the National Bank of Poland (NBP) today suggest to us that policymakers could cut interest rates again at the central bank’s March meeting. But we think core inflation will remain above the central bank’s target until …
10th January 2024
The lagged effects of the weak economy and high interest rates may mean that loan default rates rise in the coming months. But the prospect of interest rate cuts later this year will mean they won’t rise much. Higher interest rates and the weak economy …
We still think that China’s equities could fare well relative to others in the near term, but also that their longer-run prognosis is fairly bleak. The challenging times for China’s stock market have continued today, with the country’s major indices …
Note: W e held a client briefing straight after the election weekend to discuss what the vote means for Taiwan and the global economy. View the on-demand recording here . China may respond to a victory for Tsai Ing-wen’s chosen successor in Saturday’s …
The surge in Italian prime retail rents over the past year is likely to give way in 2024, as inflation falls back and consumer spending stagnates. But the strong fundamentals that have supported this outperformance are still in place and will help rent …
The surge in Chapter 11 business bankruptcy filings last quarter is not as bad as it looks, as many of them related to the WeWork failure. Excluding those, bankruptcies trended lower at the end of 2023 and, with corporate bond yields falling sharply in …
Some ECB Governing Council Members have called for an increase in reserves requirements, primarily in order to reduce the Eurosystem’s interest expenditure. If implemented – which we think is likely – this would have the effect of tightening monetary …
The surge in US exports of energy over the coming five years will ensure that the US remains a major supplier of fossil fuels to the rest of the world. A large proportion of these exports will be LNG, as new export terminals come online. But exports of …
ECB policymakers still insist that monetary policy will remain tight throughout the first half of the year, if not longer. But we think that weakness in economic activity and lower inflation will prompt them to start cutting in April. And in contrast to …
Inflation slowing, but will remain above target until mid-2025 Egypt’s headline inflation rate eased for a third consecutive from 34.6% y/y in November to 33.6% y/y in December. Comments last night suggest that an enhanced IMF deal is near, which is …
This page has been updated with additional analysis since first publication. Fall in core inflation confirms Norges Bank is finished with rate hikes The fact that core inflation fell and the headline rate was unchanged in December confirms that Norges …
This page has been updated with additional analysis since first publication. Disinflation will pave the way for policy loosening before long With price pressures cooling in earnest, we’re growing increasingly confident in our call that the RBA will start …
This page has been updated with additional analysis since first publication. Virtuous cycle will get renewed boost this year Wage growth slowed sharply in November, driven by a plunge in bonus payments. While we expect the labour market to soften in the …
Our total returns forecasts for 2024 are significantly below consensus, as we predict that value falls will reach double digits for the second consecutive year. Retail stands out as the only sector where we expect positive returns, but distress in the …
9th January 2024
A continued pull-back in the spreads of US private-label commercial mortgage-backed securities (CMBS) since the start of 2024, at a time when those of US high-yield corporate bonds have edged up (see Chart 1) and “risky” assets in general have come under …
The surge in spending by state & local governments has boosted economic growth over the past year but, with tax revenues falling back in recent quarters, that boom is now set to fade. While there has been plenty of commentary on the support to the economy …
Aggregate EM GDP growth is set to slow in 2024, but as important as the overall story is understanding the different cycles that are playing out at a country level. We think some countries that performed surprisingly well last year (notably Mexico and …
Tougher times ahead for exporters Export volumes were little changed in November but the surveys suggest that tougher times lie ahead, with export orders seemingly falling fast in December. The trade surplus halved to $1.6bn in November as exports …
Falling imports and exports suggests demand softening at home and abroad The weakness of both exports and imports in November suggests that weaker growth overseas is now being matched by a softening in domestic demand too. The trade deficit shrank …
NBP has limited scope for rate cuts in 2024 The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and we continue to think that the scope for monetary loosening ahead is relatively limited. While the consensus view in recent …
Sharper-than-expected rise in inflation leaves February rate cut in balance The larger-than-expected rise in Mexico’s headline inflation rate to 4.7% y/y in December was mainly due to higher non-core inflation but, even so, the odds of Banxico beginning …
The sharp drop in net foreign direct investment (FDI) inflows into India over the past year was in part a consequence of the rise in global interest rates and the worsening global economic backdrop. But it was also due to a clampdown on the roundtripping …
Industrial output in Germany is likely to follow November’s decline with further falls this year. While the recent fall in natural gas prices could help to stem the bleeding in the near term, energy costs are still high. And weak demand will compound …
This page has been updated with additional analysis since first publication. RBA will look past Black Friday spending spree Although retail sales bounced back with a vengeance in November, that result largely reflected a one-off boost from Black Friday …
