Manufacturing recovery falls flat The sharp decline in manufacturing sales volumes in December suggests that the earlier recovery in the sector has hit a wall. New orders rose only modestly, by 1.3%, confounding hopes that the sector might benefit from …
14th February 2025
A weak start to the year The large fall in control group retail sales in January, together with the timelier data showing a slump in vehicle sales, suggests that real consumption fell last month. While weather effects were probably partly to blame, that …
Trump-Putin call could ease upside risks for energy President Trump was at the centre of another whirlwind week in commodity markets, with his “lengthy and highly productive” phone call with President Putin giving energy traders in particular plenty to …
NBR leaves rates on hold, scope for cuts looking increasingly limited The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, and we think there is limited scope for interest rate cuts this year. Our forecast for the policy …
Drop in marriages worsens demographic woes The number of marriages in China dropped by a fifth last year, more than reversing the immediate post-zero-COVID bounce that happened in 2023. Half as many weddings took place as a decade before. The decline …
CBR leaves rates on hold, loosening still some way off The decision by the Central Bank of Russia (CBR) to leave interest rates on hold at 21.00% today was widely expected, and the hawkish communications suggest that policymakers are not going to bend to …
Productivity problems The euro-zone economy performed a little better than previously thought in Q4, but growth was still extremely weak and the early signs are that it got off to a slow start to 2025. There is also little evidence of a turnaround in the …
India most vulnerable to reciprocal tariff President Trump looks to have abandoned the idea of imposing a flat universal tariff of 10%-20% on all imports to the US, and now appears to be favouring new reciprocal tariffs that will be imposed on a …
Policy support still struggling to provide much uplift to broad credit growth Bank loan growth continued to slide to record lows, but this was offset by a pick-up in non-bank credit growth. Robust government bond issuance should continue supporting credit …
Economy enters a softer patch Malaysia’s economy contracted in Q4 but that comes after a very strong run in recent quarters. We think growth will ease slightly this year due to tighter fiscal policy and a moderation in investment growth. According to the …
China is among a minority of countries that apply lower tariff rates on the US than vice versa, so it is not as obviously exposed to reciprocal tariffs as many others. But President Trump’s latest announcement underscores just how serious he is about …
Tax cuts could kickstart the recovery With the New Zealand economy plainly in dire straits , the government is reportedly considering slashing the corporate income tax (CIT) rate in the upcoming May budget. There is certainly a compelling case for the …
10-year JGB yield climbs to 14-year high Even though the 10-year US Treasury yield has been little changed, the 10-year JGB yield rose to a 14-year high of 1.35% this week and we think that it will climb further to 1.75% by year-end. See our Global …
Our base case is that Treasury term premia – and yields – rise only a little further. But we think disruptive US trade policy, among other things, poses a threat to that view and, relatedly, to Treasuries’ broader use as a hedge against any downturns in …
Reciprocal tariffs a bigger deal than universal tariff President Trump appears to have abandoned the idea of imposing a flat universal tariff of 10% or 20% on imports from all other countries. But the broad criteria that will be used to assess his new …
13th February 2025
Booming demand for housing has led to huge price rises in southern Europe over the past few years and will support rapid construction growth for some time to come. Moreover, there is little risk of a bubble forming because mortgage borrowing has been …
President Trump’s push for a peace agreement in the Russia-Ukraine war would affect major financial markets mainly through lowering energy prices, especially in Europe. In turn, that would be a boost for equities and currencies in the region. But, unlike …
How is emerging market risk holding up in the face of Trump’s tariff threats, higher Treasury yields and a stronger dollar? With EMs facing challenges abroad and tight policy at home, a timely view of the risks facing these economies is more important …
GDP growth in Russia came in stronger than most expected last year at 4.1%, but this was accompanied by significant overheating and policymakers lost control of inflation. We think the period of rapid growth will give way to a slowdown in 2025, but the …
Property valuations worsened in Q4 as alternative asset yields rose and property yields essentially held steady. With the 10-year gilt yield now falling back, and property yields set to for a period of stability, we expect property valuations will …
PPI brings better news on core PCE inflation Final demand PPI increased by a bigger-than-expected 0.4% m/m, but the components that feed into the Fed’s preferred PCE price measure were, on the whole, very tame. As a result, we now estimate that core PCE …
Gaza will remain key sticking point for MENA President Donald Trump’s doubling down on the future takeover of Gaza and displacement of the Palestinian population has continued to spark backlash from governments across the Middle East and could derail …
President Trump’s push for an early peace agreement in Ukraine raises the prospect of higher defence spending in Europe and increases the chance of a fall in European natural gas prices. But it does not dramatically shift the outlook for the European …
If the Trump administration pursues a reciprocal tariff strategy rather than a 10% universal tariff, then it could result in a smaller rise in the overall effective tariff rate than we have assumed. But while most DMs would come out relatively unscathed, …
Africa Chart Pack (Feb. 2025) …
December even worse than it looks and the outlook remains bleak The fall in euro-zone industrial production in December means that the sector contracted again in Q4. Surveys suggest that production will remain subdued in the coming months and we think …
This publication has been updated with additional analysis. Swiss inflation to stay very low this year The fall in inflation in January was a little smaller than we had anticipated and perhaps reduces the risk of Switzerland falling into deflation later …
BSP to resume easing cycle soon In a surprise move the central bank in the Philippines (BSP) left its policy rate on hold at 5.75% today, but we think this represents a pause, rather than a halt to the easing cycle. The announcement was predicted by just …
This page has been updated with additional analysis since first publication. Higher taxes and weaker global demand hold the economy back The 0.1% q/q rise in real GDP in Q4 (consensus, CE and BoE forecasts all -0.1%) leaves the economy all-but stagnating …
Higher mortgage rates and weak activity starting to weigh on housing demand January’s RICS survey suggests that the recent rises in mortgage rates and the downbeat economic outlook weighed on housing demand at the start of this year. But bigger falls in …
Soaring food inflation has been the key driver behind the recent strength in headline inflation. Processed food inflation will remain high for a while yet but that won’t prevent overall food inflation from falling sharply as the surge in rice and fresh …
Any attempt by the EU to impose tariffs on imports of US services would be controversial and difficult to implement. It is more likely that the EU links regulation and domestic taxation of digital services to trade relations with the US – but probably by …
12th February 2025
Another January price surge has sparked a sell-off in US stocks and bonds, and supports our view that further Fed rate cuts are off the table this year. While we think US equities will resume their rally soon , we expect Treasury yields to rise a bit …
Five years ago, the retail sector was staring at the abyss, as lockdowns and virus-related restrictions worsened what was already a crisis in demand. The turnaround since has been dramatic. But while the sector has now re-priced and is set to perform …
Keeping track of “cost and chaos” in metals markets …
The latest CPI data out of Central and Eastern Europe (CEE) have been stronger than expected, and leading indicators suggest that inflation across the region may be higher than we previously anticipated this year. We have revised up our interest rate …
Ford Chief Executive Jim Farley has poetically described the impacts in metals markets so far of President Trump’s 25% tariffs on steel and aluminium as “a lot of cost and chaos”. Our new Metals Tariff Impact Tracker gives you a ringside view of how this …
Another big Jan price surge takes rate cuts off the table this year The 0.45% m/m increase in core CPI in January will, after the spike at this time last year, add to the impression that the price data have a residual seasonality problem. Assuming the …
China added five critical minerals to its export control list last week but stopped short of banning their sale. The move was intended as a warning to the Trump administration and to increase China’s leverage during future negotiations. If the US …
GDP growth in the Middle East and North Africa will accelerate in 2025 on the back of higher oil production in the Gulf. The UAE will be the Gulf’s top performing economy and, elsewhere, we think that growth in Egypt and Morocco will strengthen on the …
Inflation falls sharply, more rate cuts on the cards The sharp fall in Indian headline consumer price inflation in January reinforces our view that the RBI will continue to loosen monetary policy over the coming months to support the economy. The headline …
Prospects for Greece’s economy are brighter than for the core euro-zone economies over the next year or two, but a shortage of labour will keep growth lower than in fellow “peripheral” economies, notably Spain. It could also cause growth in Greece to slow …
The Reserve Bank of New Zealand will almost certainly cut rates by 50bp, to 3.75%, at its meeting on 19 th February. Although the Bank is likely to revert to 25bp cuts thereafter, we think it has much more work to do to reduce excess capacity in the …
Our Japan Chart Pack has been updated with the latest data and our analysis of recent developments. With real household incomes rising the most in years and the savings rate rather high, the rebound in consumer spending will continue in 2025. And with …
A slowdown in the economy, alongside an unfavourable external environment, have contributed to declines in the Indian stock market and the rupee. We continue to expect the stock market to fall further and we now expect a further decline for the Indian …
Due to the relatively small size of the federal workforce and the large number of exempt positions, the federal government hiring freeze should have only a modest impact on payroll employment. More pain would be felt if the President follows through on …
11th February 2025
The latest opinion polls suggest that a CDU-SPD coalition is the most likely outcome of the German election. Such a coalition would be less likely to pursue labour market reforms and activist industrial policies than a CDU-Green coalition. But we think it …
