We spent last week in Beijing and Shanghai visiting clients. The mood in China was not as downbeat as a year ago and our sense is that many companies and residents have adapted to the new normal of slower growth. President Trump was widely perceived as …
29th July 2025
India is now home to some of the world’s largest financial markets, but foreign access remains limited. That will change over time as policymakers continue to liberalise the capital account, but it is likely to be a gradual process. The growth of India’s …
It’s increasingly looking as though the S&P 500 will continue to power ahead. At the time of writing, S&P 500 futures were pointing to fresh all-time high at Tuesday’s open. But even if it slips a bit, the index has probably already surpassed an …
Net lending to property rises to 17-year high Net lending to commercial property is showing no signs of slowing down, with a total of £2bn advanced in June. And in the three months to June, net lending totalled £5.6bn, the highest amount since 2008. Both …
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST on Thursday 31 st July. (Register here .) Households becoming …
The recovery in euro-zone investment paused in Q2 against a backdrop of trade policy and economic uncertainty. While the trade deal means some of that uncertainty has reduced, we expect that the recovery in investment in H2 will still be gradual given …
Euro-zone equities have, in general, already given back much of their gains after this weekend’s trade deal between the US and the EU. And we don’t foresee a new wave of euro-zone exceptionalism. One reason is our view of the euro, which fell quite …
28th July 2025
The use of the exchange rate as a nominal anchor for prices – as is currently the case in Turkey and Argentina – has a broadly successful track record in bringing down inflation in the emerging world (particularly in the 1980s and 1990s). But past …
At 1.2% q/q, second quarter returns were roughly in line with expectations. But the data support our view that appraisals don’t fully reflect the drop in values needed for assets to transact. While a reckoning can’t be put off forever, this could prove to …
There have been renewed calls for a wealth tax recently as a means of narrowing budget deficits. However, experience suggests that most countries would struggle to raise more than around 0.1% of GDP from such a tax. Moreover, the countries which are most …
The recent rout in superlong JGBs mainly reflected waning demand from within Japan. Although that trend may not reverse because it is partly structural, we doubt the slump will continue for four reasons. While superlong government bonds have typically had …
The trade agreement confirmed yesterday by Presidents Trump and von der Leyen could result in the average tariff on US imports from the EU rising from 1.2% last year to about 17%. We think this will reduce EU GDP by about 0.2%. While the deal has avoided …
The US dollar is set to end the week lower against most other G10 currencies, with progress on US trade deals with Japan and Europe, a relatively hawkish ECB meeting, and continued headlines around Fed independence all contributing to downward pressure on …
25th July 2025
The combination of some relatively hawkish signals from the ECB yesterday and some more soggy data out of the UK has sent the euro to its strongest level against sterling since late 2023. We think there is more to come on that front as the BoE continues …
15% is the new 10% With a major tariff reset looming on August 1 st –when most countries’ rates will jump from the 10% baseline back to roughly “Liberation Day” levels – the Trump administration promised a slew of trade deals before the deadline. They now …
Here for a good deal, not a quick deal Little was divulged following the First Ministers’ meeting in Huntsville, Ontario this week, other than that officials appear to be in general agreement that Canada should prioritise a beneficial trade deal with the …
Cuts in the Andes, Copom to hold Next week will be a busy one for central banks across the region, with those in Brazil, Colombia, and Chile all set to hold meetings. In Colombia, the fall in inflation in June, to 4.8% y/y, combined with the recent …
Some (relatively) positive news on tariffs ... The tariff saga took another twist this week with the EU and US reported to be approaching an agreement which would see a US tariff of 15% applied to most EU goods. We commented on the implications for the EU …
Hydro project is a drop in the fiscal ocean A fanfare about work beginning on a huge hydropower project in Tibet sent infrastructure stocks soaring this week. The series of dams will produce 300TWh of electricity annually once complete – enough to power …
Public borrowing may have been bang in line with the Office for Budget Responsibility’s forecast for the first three months of the 2025/26 fiscal year. (See here .) But the underlying upward trend looks worrying. Having reached a cumulative total of …
Up to now there has been only limited passthrough from tariffs into final consumer prices, but we still expect the impact to gradually mount in the second half of this year. Many retailers appear to have been willing to absorb the initial hit via lower …
The start of construction on the vast Motuo Hydropower Station in China has understandably got its fair share of media attention this week. When completed, the set of dams along the Yarlung Tsangpo river are expected to generate three times as much …
Signs of resilience underneath the headline weakness Ignore the large 9.3% m/m drop in durable goods orders in June, which reflects a reversal of May’s surge of aircraft orders from the Qatar Airways Boeing deal announced during President Trump's visit to …
SA: subdued inflation, weak economy = rate cut The weak June inflation figure out of South Africa strengthens the case for the SARB to cut interest rates next week. And further out we think that rates will be lowered by more than the consensus and …
Copom to hold next week The stable Brazilian mid-month inflation reading for July (of 5.3% y/y), signs that underlying core inflation is easing, and the resilience of the real all but confirm that Copom won’t hike rates again at its meeting next week. The …
Reports this week suggest that the EU and US are on the brink of agreeing a trade deal with a 15% baseline tariff on US imports. ( See here. ) It’s hard to spin it as a good deal, but it would at least avoid much higher US tariffs and retaliation from the …
CBR steps up easing as economy slows The decision by the Central Bank of Russia (CBR) to accelerate it is monetary easing cycle today with a 200bp cut to its policy rate, to 18.00%, signals that policymakers are becoming more concerned about the slowing …
We will be holding an online Drop-In next week to discuss the implications of recent US trade deals for regional supply chains, global fracturing, economic growth, and financial markets across Asia. To register click here . Limited impact from …
We will be holding an online Drop-In next week to discuss the implications of recent US trade deals for regional supply chains, global fracturing, economic growth, and financial markets across Asia. To register click here . China’s hydropower project a …
German economy resilient to tariffs, but activity still weak The Ifo survey for July confirms that the German economy has been resilient to tariffs so far but that underlying growth remains weak. With tariffs likely to weigh on activity even if a EU-US …
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST on Thursday 31 st July. (Register here .) Disappointing end to Q2 …
Slow and steady The minutes of the RBA’s July meeting shed more light on the Bank’s surprise decision to leave rates on hold earlier this month. A majority of the Board believed it would be premature to lower the cash rate for a third time within the span …
Japan plays its hand well in US trade negotiations A turbulent week started with the loss of the ruling LDP/Komeito coalition’s majority in the House of Councillors in Sunday’s election . PM Ishiba pledged to stay on and with the Upper House election out …
History shows that there are no debt or deficit thresholds beyond which a fiscal crisis is inevitable. Rather, crises stem from a mix of high debt, poor debt dynamics, and weak fiscal credibility, which erode investor confidence and raise vulnerability to …
24th July 2025
The ECB has left rates unchanged and, with inflation at target, we now suspect its monetary easing cycle is over. So bond yields are unlikely in our view to fall much, particularly at the short end. We still expect the euro to fall, but that reflects our …
Changes to clean energy tax credits in the One Big Beautiful Bill Act will slow the renewable rollout in the US and make it more challenging to meet the renewed upward trend in electricity demand. However, there are some silver linings that will keep …
We expect the recent boost from state & local government hiring to fade, resulting in a smaller 130,000 gain in non-farm payrolls in July. The immigration crackdown likely kept the unemployment rate at 4.1%, while average hourly earnings growth likely …
With the euro-zone economy holding up relatively well in the face of tariff uncertainty, inflation likely to stay close to the target and President Lagarde adopting a slightly more hawkish stance at today’s press conference, we think the ECB will leave …
Although a forecast global real estate return of sub-6% p.a. over the next decade appears disappointing, compared to other assets it stacks up well. We expect sub-4% total returns for both global government bonds and equities over our 10-year forecast. …
We think Colombia’s fragile fiscal position – which could get even worse ahead of next year’s election – and a likely deterioration in the current account deficit will cause the peso to fall by more than most currently anticipate, to 4,600/$ by end-2026 …
Drop in sales reflects end of tariff front-running rather than marked downturn The flash estimate showing a solid rise in retail sales in June, paired with the recent rebound in consumer confidence, suggests the decline in sales in May was more a …
Our China Activity Proxy shows that China’s activity growth remains well below what official figures suggest. While industrial activity has held up surprisingly well in the face of US tariffs, the services sector has weakened substantially since the start …
Chances of further rate cut diminishing The ECB’s decision to leave its deposit rate unchanged at 2.0% today and offer no guidance on future rate decisions was in line with expectations. While we are currently forecasting one more 25bp rate cut in this …
Sharp fall in inflation paves the way for further easing The drop in Mexican inflation to 3.5% y/y in the first half of July means that Banxico is all but certain to deliver the clearly-signalled 25bp cut next month. It also lends support to our …
CBRT delivers dovish surprise, but easing likely to slow down from here The decision by Turkish central bank to cut its one-week repo rate by 300bp today, to 43.00%, was a slight dovish surprise, but the accompanying communications remained hawkish and we …
India’s economy has had a strong first half of the year and is poised to grow by 7% in both 2025 and 2026, making it a global outperformer. While inflation has continued to fall sharply, we expect it will rise steadily towards the RBI’s 4% target over the …
Rise in Saudi public debt ratio has further to run Saudi government debt has risen sharply over the past decade and, while officials are already taking steps to tighten fiscal policy, we doubt that they will do enough to prevent it climbing further. A …
Yields for the main commercial property sectors have been remarkably stable over past 18 months, and we expect that stability will continue. That means capital value growth will average under 3% p.a. over 2025-29. Thanks to stronger rental growth the …
