Many households have left western metros in favor of those in the South over the past two years. With remote working looking like a permanent fixture of office-based jobs and affordability significantly stretched in the West, we do not expect to see a …
16th July 2024
Overview – We expect mortgage rates to continue falling, but not by enough to fully offset the effects of mortgage rate ‘lock-in’. As a result, although we expect existing home sales to rebound, we forecast that they will still be a muted 4.8 million even …
The downward revisions to global population growth in the UN’s latest projections won’t have a major bearing on our long-term GDP growth forecasts. That’s because a lot of the revision was driven by lower population projections in China, where we had …
This Asset Allocation Focus takes a fresh look at emerging market (EM) equities. Section 1 sets the stage, by briefly reviewing their performance over the past decade. Sections 2, 3 & 4 explore their exposure to three key themes: section 2 examines the …
Odds still favour a July rate cut The Bank of Canada’s preferred CPI-trim and CPI-median measures of core prices rose at an above-target monthly pace for the second month running in June. Nonetheless, with the Bank’s Business Outlook Survey , released …
Strong control group sales ease fears of consumer slump Although retail sales were unchanged in June, the strong 0.9% m/m rise in control group sales should ease concerns about the plight of the consumer in the wake of the renewed slump in sentiment. …
The Bank Lending Survey suggests that there was a pick-up in demand for bank loans in the second quarter particularly for residential mortgages and consumer credit. This is consistent with the consensus and our own view that the economy is recovering and …
The upside surprise to headline consumer price inflation last month has all but ended hopes of a rate cut at the RBI’s August policy meeting. But we think that the conditions will be in place for policy loosening to begin in December. To recap, headline …
Newly-published data show that the Philippines has entered a demographic sweet spot that could provide a big boost to economic growth. But this will only happen if enough new jobs can be created for the wave of young people that will enter the workforce …
Inflation nudges down but a minor bump is on the cards in Q3 Saudi Arabia’s headline inflation rate edged slightly down to a six-month low of 1.5% y/y in June and, while we expect a small increase in the headline rate during Q3, the bigger picture remains …
The Bank of Canada’s business and consumer surveys point to weak GDP growth, show that firms’ wage expectations are now lower than their pre-pandemic peak, and suggest that consumers are increasingly concerned about the health of the labour market. All …
15th July 2024
Recent events have increased the perceived likelihood of another Trump presidency and, in the process, provided a clearer steer on how market participants expect such an outcome to affect key financial markets. Four key points stand out. First, between …
Stronger momentum in manufacturing The continued rise in manufacturing sales and new orders suggests that the sector gained some momentum in the second quarter. However, we expect that strength to fade this quarter. The 0.4% m/m rise in manufacturing …
Inflation at a peak Nigeria’s headline inflation rate edged up to 34.2% y/y in June on the back of the pass-through from previous naira falls. But we think this marks the peak and inflation should start to decline. If right, that’s likely to lend more …
Global Economics Chart Pack (July 2024) …
This page has been updated with additional analysis since first publication. Euro-zone manufacturing still struggling Industrial production in the euro-zone fell again in May and we think the outlook remains poor. The 0.6% m/m decrease in euro-zone …
The latest data indicate that capacity pressures have continued to ease, a trend that should continue over the coming quarters. However, it will be a while before policymakers can be confident that they have broken the back of inflation. Accordingly, we …
While higher interest rates will make owner-occupied housing less affordable, the Bank of Japan will only tighten policy gradually so detached house prices will probably hold up well. By contrast, there’s a risk of a sizeable correction in apartment …
This page has been updated with additional analysis since first publication. Growth slowed last quarter but should regain some ground in H2 Weaker-than-expected official GDP figures show that China’s economy lost momentum in Q2. But we doubt this marks …
The latest housing market data paint an almost ideal picture for the Bank of Canada, with activity improving, but little sign of a surge in house prices that could derail the downward trend in core CPI inflation. Home sales finally turning a corner The …
12th July 2024
CBN hints at rate cuts but inflation risks linger Nigeria’s central bank governor this week hinted that rate cuts may soon be on the cards but there are still upside inflation risks that could scupper those plans. Governor Cardoso’s remarks at an event in …
The US dollar is again ending the week on the backfoot in the wake of yesterday’s softer-than-expected US CPI report and what looks (potentially) like another round of FX intervention from Japan’s Ministry of Finance. Short-term momentum has now shifted …
"More good data" needed There were mixed messages from Fed Chair Jerome Powell this week in his semi-annual testimony to Congress. Powell said in his opening remarks that the “economy continues to expand at a solid pace” and the unemployment rate is …
We think the rally in Treasuries and pullback in the dollar since US CPI data was released yesterday have further to run. But we doubt the big rotation within equities yesterday is a sign of things to come. The reaction to US CPI data , released …
Inflation data not as bad as headline rates suggest At first sight, the raft of inflation data out of Latin America this week made for worrying reading. Inflation rebounded in most countries last month, with the headline rate in Mexico reaching 5.0% y/y …
More evidence of consumers struggling The further decline in the University of Michigan consumer sentiment index in July adds to the evidence that consumers are increasingly struggling with high interest rates. Although the link between confidence and …
Disinflation in the services sector seems to have stalled in several advanced economies this year. That’s partly because the easiest wins related to food and energy effects are behind us and also reflects some temporary factors. Much now depends on the …
Surprise inflation jump scuppers August rate cut hopes The surprise jump in headline consumer price inflation last month will be enough to convince any MPC members who may have been leaning toward rate cuts at the August policy meeting that conditions are …
PPI a lot better than it looks Ignore the fact that core PPI increased by a slightly bigger-than-expected 0.4% m/m in June and that May was revised to a 0.3% rise from unchanged. The PPI components that feed into the Fed’s preferred PCE deflator inflation …
Gold prices are going for gold…again The ~18% rise in gold prices seen this year has largely defied the traditional logic of demand drivers. Indeed, the surge in gold prices between February and April took place against a backdrop of a stronger dollar. …
We presume there isn’t a statistical relationship between economic performance and success on the football pitch (although we haven’t tested it). But perhaps comparing the economic performance of Spain and England (we use the UK as a proxy) over the next …
Other than the European Championship, the key event this week was the second round of the French legislative elections. The left-wing New Popular Front (NFP) and President Macron’s Ensemble group both did better than expected and the right-wing National …
Narrowing in Hungary’s budget deficit may not last Hungary’s government announced a new set of measures this week to increase tax revenues and to avoid the budget deficit slipping below its target this year. The government said that firms that have …
PBOC tweaks policy framework The PBOC expanded its toolkit this week to help strengthen its day-to-day management of interbank rates. In addition to the repo operations it conducts each morning, mostly at 7-day maturities, the bank will also perform …
The valuations of “risky” assets have continued to rise, both in absolute terms and relative to “safe” asset yields. We think that reflects the inflation of a bubble in stock markets, itself a consequence of growing enthusiasm about AI technology. But our …
We think Spain’s economy will grow strongly over the next few years, substantially outperforming the euro-zone. This is partly due to strong domestic demand which has been supported by the rapid expansion of the labour force driven by high immigration. …
Korea strike highlights inflexible labour market A trade union representing approximately 30,000 workers at Samsung Electronics this week urged its members to take part in an indefinite strike. The announcement was made on Wednesday, which was supposed …
Credit growth hits a new low Both bank loan and broad credit growth hit a record low in June. While further fiscal loosening may provide some support to credit growth in the near-term, the continued weakness of the property sector means that any increase …
Recent protests in Kenya have dealt a heavy blow to President Ruto’s fiscal consolidation plans and, with the president dismissing the cabinet yesterday as he tries to cling on to power, it looks increasingly likely that the government will struggle to …
Full Budget a key test for new government The Finance Ministry confirmed this week that the full Union Budget for FY24/25 will be unveiled on Tuesday, 23 rd July (recall that during election years, an “interim” Budget is held in February). We’ll be …
Inflation drops sharply and will remain below 2% over coming months The Riksbank’s target measure of inflation, CPIF, dropped to just 1.3% in June, almost half the level in May and the lowest level since the end of 2020. This was far below the consensus …
RBA will be content to play the waiting game Financial markets have increasingly been paring back their interest rate expectations for the RBA. They are now pricing in a roughly 20% chance that the Bank will hike rates by 25bp this year, down sharply from …
This page has been updated with additional analysis since first publication Tailwind from strong exports set to persist Export values grew y/y at the fastest pace in 15 months, with export volumes hitting record highs. We think exports will stay robust in …
Goods inflation set to remain strong Data released this week showed that producer price inflation has jumped from 0.3% in January to 2.9% in June, though the bulk of that increase is due to a rebound in electricity & gas inflation. Producer prices of …
GDP growth in Singapore remained below trend during the second quarter and we expect this to persist in the near term as the cooling labour market, elevated interest rates and weak global growth curtail activity. According to the first estimate of Q2 GDP …
Still elevated wage growth is partly due to earlier large gains in public sector pay, which are unlikely to be repeated. There are tentative signs that private sector wage growth is slowing, and the wider evidence suggests this process should gather pace …
11th July 2024
It is not clear that Donald Trump, if elected, would gain much from trying to force Fed Chair Jerome Powell out of the role only a year before his term expires anyway. Trump might instead focus his efforts on securing Senate approval for future …
Senior economists from across our macro services held their regular dive into the latest policy meetings from these major DM central banks. During this 20-minute briefing, shortly after the Bank of England’s August decision, the team gave their insight …
Net capital inflows into EMs remained positive over the past month, largely reflecting continued strong inflows into EM bonds, particularly Turkey, while there were out flows post-election in Mexico and South Africa. Policy turnarounds in some EMs and …
