Today’s further, oil-price-driven, sell-off in global sovereign bonds has seen the 10-year US Treasury yield rise to almost 5%, which is seen by some as a threshold above which financial markets might go into meltdown. While we aren’t convinced that 5% is …
10th September 2026
There was no surprise at today’s rate hike by the ECB, but the Bank’s forecast revisions and President Lagarde’s remarks in the press conference suggest that policymakers are minded to raise rates further. We now forecast one more hike, in December, but …
This Focus updates analysis first published in January 2025, before the start of President Trump’s second term. It forms part of our China Shock 2.0 series. Concerns abroad about China’s surging exports have largely focused on “strategic sectors”. Less …
Higher rates point to housing activity coming to a standstill The fall in existing home sales to 3.98m annualised in August will likely be followed by further declines over the next few months, as mortgage rates look set to climb above 7% amid a further …
The stunning surge in Chinese exports bears comparison with what happened during the first China shock of the early 2000s. But this time is different: the scale is much larger, the goods being exported are much more advanced and the geopolitical …
Saudi energy at greater risk as Iran escalates The step up in attacks in the Strait of Hormuz and by the Houthis against Saudi Arabia suggests that Iran and its proxies are trying to regain the initiative in the war. This could set back the recovery in …
BoE to keep interest rates at 3.75% even as other central banks hike Most MPC members bet on second-round inflation effects being muted Pace of QT to slow, but more to come than some realise Even though the ECB has raised interest rates again and the …
PPI data bring September rate hike one step closer The key components of the PPI that feed into the core PCE deflator were fairly strong in August, raising the chance of the Fed hiking interest rates next week. Admittedly, that still depends on the more …
ECB hikes again, another hike now likely The ECB’s decision to raise its policy rates by 25bp was not a surprise, but the forecast revisions and statement that inflation “is set to remain well above target for an extended period” are somewhat hawkish. We …
Rates cuts are approaching The Turkish central bank (CBRT) opted to keep its benchmark one-week repo rate at 37.00% unchanged today, but we think it will begin cutting the policy rate at October’s meeting with a 100bp reduction. While the decision to hold …
Looking across a range of equity market “bubble” indicators supports our view that while the S&P 500’s rally has further to run this year, its medium-term prospects are poor given how frothy the market looks. Our forecasts for US equities have been a bit …
Ghana’s economy slowed in Q2 on the back of weakness in the cocoa sector and we expect the effects of the energy shock to dampen growth over the rest of the year. But looser policy should help to sustain strong GDP growth of 6% over 2027-28, which is …
Downside surprise keeps rate cuts in play The surprise fall in Egypt’s headline inflation rate in August, to 14.5% y/y, means the Central Bank of Egypt (CBE) could still cut rates in Q4 (as we currently expect) but the latest pick up in global energy …
Spanish residential property looks set to outperform the other larger European markets over the next five years, as still-strong demand on the back of high levels of immigration and tight supply boost residential rental growth. Residential investment in …
The September RE:UK consensus forecasts showed further downgrades to property returns in 2026, as higher gilt yields from the Iran war put upward pressure on property yields. Revisions to other years are smaller, but overall the consensus view on …
Although the housing market wasn’t quite as weak in August as in recent months, the risk is that a further rebound in mortgage rates and/or speculation of tax rises ahead of the Budget dampens demand in the coming months. Either way, it’s looking …
The Nordics and Switzerland stand out amongst a set of 19 global self-storage markets for their potential growth over the next 5-10 years. These markets will see a reasonably high rate of home-moving and growing external storage needs, while self-storage …
9th September 2026
MPC communications may shift hawkish, but rate hikes unlikely The decision by the National Bank of Poland to keep its policy rate unchanged at 3.75% may be followed by communications that take a more cautious line, reflecting the strength of the latest …
Rebound in inflation has further to run The rebound in Mexican inflation (to 3.3% y/y) has further to run in the coming months and we think the headline rate will end this year above Banxico’s projections this year. Combined with the Fed shifting towards …
A severe El Niño and the lagged effects of the energy shock are likely to push EM food inflation up from current lows. Food is unlikely to be as important as core or energy prices in determining the shape of EM monetary cycles, but higher food inflation …
President Trump’s import ban covers only 0.25% of Canada’s exports to the US and will have little effect on either economy. Nonetheless, Trump’s willingness to impose an import ban is further evidence, if it were needed, that these latest measures are …
It’s unusual for the renminbi to gain against the US dollar while China’s domestic bond yields are falling, as has been the case lately. But the latest economic data add to the case, in our view, that the dual rally has further to run. At the time of …
Oil gives inflation another lift Inflation picked up again in August, largely reflecting renewed upward pressure from global oil prices. But the increase was concentrated in some energy-related sectors, while underlying domestic price pressures remained …
The strong performance of semiconductor stocks since OpenAI’s announcement of GPT-6 last week hasn’t lifted the S&P 500 index much, partly because of offsetting weakness in software stocks. But a resurgent semiconductor sector may drive the stock market …
8th September 2026
Q3 26 PREA consensus for 2027 shows little sector variance There was another cut to the PREA consensus forecast for 2026, led again by residential. But the all-property forecast for 2027 saw no change and there is very little differentiation between five …
The recent patch of soft inflation in Mexico is unlikely to be sustained and the headline rate will follow a higher path than the central bank (Banxico) anticipates. With Banxico …
The Korean won has rallied recently as some of the factors that had previously weighed on the currency, such as foreigners’ selling of Korean equities, have started to unwind and major Korean firms have started to repatriate profits that were previously …
This report is part of our new series on China Shock 2.0. Explore the series and follow the latest publications on this dedicated page . Overcapacity in China and the trade surplus that it feeds are sustained by policy choices made in Beijing. These …
Conditions for the long-awaited resurgence in private corporate investment in India are now largely in place, but tracking in real time whether it is getting under way is tricky. In this Update we highlight the key measures to watch and why there is …
Trade growth remains strong China’s trade growth remained robust in August, with both exports and imports continuing to grow at a rapid pace. Strong global demand for electronics remained an important support for exports. Import momentum weakened, …
GDP data weakness arrives The South African economy’s contraction of 0.2% q/q in the second quarter may not have been as bad as it first appears but, even so, it is likely to put an end to any talk of further rate hikes from the SARB. Q2’s outturn was …
A further slowdown of Quantitative Tightening (QT) may relieve some of the recent upward pressure on gilt yields, but only temporarily. And although QT is making the public finances less sensitive to future rises in interest rates and bond yields, this is …
China’s dominance of large swathes of global manufacturing will be one of the defining forces shaping the world economy over the coming decade. Over the next few weeks, Capital Economics will publish a new series of analysis examining what is being …
Headline employment data are giving an overly weak impression of China’s labour market. Our Labour Market Indicator points to still-firm cyclical conditions, while a structural shift in labour demand towards high-tech, high-skilled sectors is also …
Opinion polls suggest that New Zealand’s Labour party has a path back to power in November’s general election. Labour’s plan to introduce a capital gains tax on residential investment property risks delaying a recovery in an already sluggish housing …
Wage data clear the path for September BoJ hike With wage growth going from strength to strength, the case for the Bank of Japan to hasten the pace of tightening is becoming increasingly compelling. According to today’s preliminary estimate, annual growth …
Europe Chart Pack (Sep. 2026) …
7th September 2026
Student accommodation has taken an increasingly important share of European investment portfolios in recent years, supported by attractive income returns and favourable supply and demand dynamics. But how durable are these advantages, and where are the …
Ignore the upward revision: “underlying” growth is 0.3% q/q The upward revision to euro-zone GDP growth in Q2, taking it to a four-year high of +0.6% q/q, was due to another massive revision in Ireland. This tells us nothing about the underlying health of …
This page has been updated with additional analysis since first publication. Surprise fall highlights downside risks to our house price forecast The surprise 0.2% m/m drop in house prices in August on the Lloyds measure (consensus and CE +0.1% m/m) raises …
We expect German bunds to fare well in the medium term, almost regardless of what the ECB says this week. But US Treasuries aren’t likely to get the same relief. Rays of hope for bonds, but plenty of gloom too Last week was another tough one for …
That was a much hotter payrolls report than the market had expected, but how will it influence this month’s Fed decision? With inflation risks still prevalent, how will the ECB and Bank of England approach their September meetings? And what does the surge …
4th September 2026
The sharp rebound in US non-farm payrolls in August means that FOMC rate hikes may come sooner rather than later. In turn, that points to a rebound in the US dollar and further upwards pressure on US Treasury yields in the near term, especially at the …
Bank’s hawkish posturing not yet convincing The Bank delivered a hawkish message alongside its decision to keep the policy rate at 2.25%, stating that “the upside risks to inflation have increased” and it is “prepared to adjust monetary policy as needed”. …
Data dependent or forward-looking? The surge in payrolls in August has done relatively little to alter the implied probability of a hike this month, currently at 60% and therefore a touch lower than the peak of 65% after Chair Warsh’s hawkish Jackson Hole …
Investors ratchet up expectations for rate hikes The strength of the GDP and inflation figures out of Poland this week, alongside rising energy prices, have led investors to price in 75bp of interest rate hikes over the next year. Our base case remains …
The “biggest oil deal in world history” The agreement between the Trump administration and Venezuela entails the US taking a 35% stake in private company, North American Blue Energy Partners, which Venezuelan authorities have granted a 100-year concession …
Curb your enthusiasm The sharp 41,700 fall in employment in August and further slowdown in wage growth pushes back against the idea that the economy has decisively turned a corner, and leaves the Bank of Canada’s hawkish shift this week looking somewhat …
