So much for the labour market slowdown Even the most committed dove would struggle to find much in the August employment report to justify keeping interest rates unchanged, with the surge in payrolls driven by strength across the non-health private …
4th September 2026
Nigeria and Angola GDP: strongest growth in years The Q2 GDP releases from Nigeria and Angola suggest that growth this year will be the strongest in some time. Nigeria’s smaller reliance on the oil sector and greater scope for policy support mean that it …
In case you missed it: new energy price forecasts The lack of diplomatic progress between the US and Iran to reach a deal means that energy flows are set to remain constrained for longer than we previously envisaged. We now assume that energy exports …
Is China’s cost advantage also starting to waver? The release of several new US AI models in recent weeks has pushed China’s top models further away from the cutting-edge. Kimi K3 which, when first released in late July, was ranked third globally on model …
Since Prime Minister Burnham entered Number 10 Downing Street, a lot of his ambitious plans, which we estimate would cost over £45bn (1.5% of GDP) if implemented in full, have either been reined in or delayed beyond this year’s Budget. (See our Key Themes …
The ECB looks set to raise its policy rates by 25bp next week (see here ), and Christine Lagarde is likely to face questions about the sell-off in bond markets. This Weekly addresses some of the key issues regarding what rising yields mean for the Bank. …
We doubt the Treasury market will be the straw that breaks the US stock market’s back. Admittedly, higher government bond yields started to weigh on equities there earlier this week. But the S&P 500 has since recovered. And, provided there isn’t another …
With inflation rising, the yen weakening and JGB yields surging, the consensus has moved towards our view that the BOJ will hike rates at its September meeting. But what will the Bank signal about further rate rises? Our Japan and Markets economists ran a …
The export bonanza in Korea is showing no sign of losing momentum, with year-on-year growth accelerating from 63% in July to 69% in August. Once again, the increase was driven by strong demand for electronics linked to the AI boom. Electronics now account …
On Thursday 17th September , our senior economists from our US, Europe and UK teams, dived into the latest decisions and communications from these leading monetary authorities. In this 20-minute online briefing, the team answered your questions as they …
Large decline in sales at the start of Q3 The fall in euro-zone retail sales in July was the largest monthly decline in over a year and suggests that consumption made a weak start to Q3 following what looks like a decent rise in Q2. July’s 0.6% m/m fall …
Construction sector struggling for discernible improvement The headline construction PMI nudged slightly lower in August following its strong bounce in July. At 44.3 it remains deep in contractionary territory, where it has languished since December 2024. …
GDP data beat forecasts but court controversy The national accounts data for Q2 (Q1 of FY26/27) triggered a war of words among prominent policymakers after their release this week. The data showed that the economy grew by 7.8% y/y. While that was a …
BoJ remains on track to hike We got further confirmation this week that the Japanese economy has been able to take energy supply disruptions on the chin. To start with, corporate profit margins rose to an all-time high in Q2. To be clear, that partly …
Spare capacity not diminishing In its August Statement on Monetary Policy, the RBA predicted that GDP growth will be subdued over 2026. The Q2 GDP figures released this week call that assessment into question as the economy expanded by a robust 2.1% over …
While the Fed’s inflation misses over the past two years are primarily due to unanticipated shocks, the FOMC has arguably also become more accepting of above-target inflation as it seeks to balance the full employment side of its mandate. Nonetheless, …
3rd September 2026
The yen’s sharp rebound over the past couple of days may not last any longer than similar rallies in recent years. But a more proactive approach, which the Bank of Japan may now (finally) be adopting, stands a better chance of reviving the yen than yet …
Poland’s economy is likely to remain a star performer in the EU this year and next, and our GDP growth forecasts are above the consensus. But the growing need for fiscal tightening after next year’s election will present a headwind to growth further …
We'll be discussing the Brazil’s election in an online Drop-in on Thursday, 24th September. Register here. Brazil’s presidential election race has tightened sharply, with polls now pointing to a close run-off between Lula and Flávio Bolsonaro. The …
Services sector going strong, while inflation pressures remain intense The rise in the ISM services index in August suggests that the prior strength in July was not only due to temporary effects from the FIFA World Cup, and leaves our weighted-average ISM …
The whole economy PMIs for August, released today, suggest that a recovery in the Gulf’s non-oil sectors is taking hold. The UAE and Kuwait saw the strongest increases, and non-oil activity in Saudi Arabia also improved, albeit modestly. There were also …
Sharp fall in exports brings trade balance to five-month low The sharp narrowing of the goods trade surplus in July was not only a price effect from lower energy and metal prices, as export volumes fell too, implying that net trade was a drag on GDP at …
Surge in imports points to acceleration in investment The sharp widening of the trade deficit in July was primarily due to sharp rebounds in AI-related goods imports, pouring cold water on the idea that the AI buildout may already be losing momentum and …
With inflation and the resulting drag on households’ real incomes yet to peak, we doubt the surprising resilience of activity in the first half of the year will continue in the second half of this year. The tight fiscal backdrop, which has been compounded …
ECB to hike again, growing chance of more to come Policymakers set to increase the deposit rate to 2.5% next week. For now, we are forecasting no more rate hikes after that. But higher gas prices have raised the chances of more tightening further ahead. …
Brazil’s presidential election on 4th October could set the country on a markedly different economic and geopolitical path. The result will have important implications for the direction of reforms and fiscal policy at home, as well as Brazil’s …
Higher energy prices alongside renewed fiscal concerns have pushed Gilt yields to multi-decade highs, but we continue to think they will fall back over the next year or so. Gilts have been hit much harder than other DM sovereign bonds this week, which was …
With a swift resolution to the Hormuz crisis looking unlikely, our new working assumption is that energy flows from the Middle East only return to pre-war levels early next year. While we still forecast energy prices to fall back in 2027, we now expect …
One step forward, one step back There are growing signs that the US blockade on Iran is proving effective. The rial has fallen by close to 15% against the US dollar on the parallel market since President Trump announced in August that he would focus on …
BNM set for prolonged hold The decision by Bank Negara Malaysia (BNM) to leave interest rates unchanged at 2.75% today comes as no surprise and, with inflation set to remain low, we are comfortable with our view that rates will be left on hold throughout …
Despite falling back a bit today, the dollar generally seems to have benefitted from the recent rout in bonds. Its fortunes could change eventually, though, after the bubble in AI bursts. Gaps between government bond yields in the US and other major …
2nd September 2026
Tunisia’s fragile external position has deteriorated further since the onset of the Iran war and the dinar appears increasingly overvalued. Officials have tightened access to foreign currency in a bid to preserve depleted foreign exchange reserves, but …
The Bank of Canada delivered a more hawkish message today, saying “the upside risks to inflation have increased” and that it is “prepared to adjust monetary policy as needed”. We do not view this as a signal of an imminent move but, with oil prices …
Apartment markets have started to fare slightly better this year as inventory growth has eased, and we expect this trend to continue. We expect absorption to outpace new supply by a wide margin in Southern cities such as Houston, Atlanta and Austin, …
Bank’s hawkish message brings 2026 rate hike into play The Bank of Canada delivered a more hawkish message alongside its policy rate announcement today, noting that “the upside risks to inflation have increased” and it is “prepared to adjust monetary …
Continued strength in services exports will help to mitigate much of the impact of elevated oil prices and a slowdown in remittance inflows from the Gulf on India’s current account position. We think the deficit will come in at around 1.0-1.5% of GDP over …
The increasing frequency and intensity of extreme weather events will be a greater source of economic volatility than in the past and could hit some sectors particularly hard. The changing nature of the climate will be a bigger headwind to growth in …
Growth in several Asian economies is running well above previous estimates of trend, driven by a surge in demand for semiconductors and other AI-related products. Yet inflationary pressures remain contained. For now, the best response is for central banks …
The Reserve Bank of New Zealand hiked rates as expected, but struck a more balanced tone on the risks to its outlook. Although another hike this year seems likely, we continue to expect the OCR to peak at 3.25% this cycle, below market expectations. The …
Further hikes are on the way, but tightening cycle will be shallow The RBNZ hiked rates as expected, but tempered expectations for further tightening. Accordingly, we still think the OCR will peak at 3.25%, below market expectations. The decision by the …
Resilient GDP growth strengthens case for another rate hike With GDP growth and inflation holding up better than the RBA had anticipated, the Bank will probably hike rates again before long, perhaps as soon as this month. The 0.4% q/q rise in Q2 GDP was a …
Fiscal concerns, rising energy prices and AI-related investment have lifted long-term government bond yields across major economies to multi-decade highs. Our base case remains that these yields will generally fall slightly over the next six months or so. …
1st September 2026
The small rise in the emerging market manufacturing PMI in August looks encouraging, but masks the fact that the surveys declined in most EMs last month. Encouragingly, the prices components remained relatively subdued, despite the rise in oil prices …
The big revisions to Colombia’s fiscal projections reflect the previous government’s fiscal slippage and imply an even larger squeeze is needed to stop the public debt-to-GDP ratio from rising. And it’s difficult to see the de la Espriella administration …
Manufacturing firms report broadening cost pressures The ISM Manufacturing survey pours some cold water on the idea that the manufacturing sector is beginning to boom, but it does at least remain consistent with growing output. The commentary …
