The 10-year JGB yield climbed to a fresh 29-year high of 2.69% today. One reason is hawkish signals by the Bank of Japan. The Summary of Opinion of the Bank’s last meeting in April showed that nearly all Board members were more worried that the Iran War …
15th May 2026
Inflation risks are mounting Having lifted the cash rate back to its 2024 peak of 4.35%, the RBA believes that it has space to “sit and see what happens” before moving again. At face value, that suggests the Board isn’t in a rush to hike again. However, …
In this Update , we explore an extreme scenario in which the Iran war escalates beyond the assumptions in our published baseline and adverse scenarios. With Brent crude jumping higher and staying at around $150pb into 2027, we estimate that inflation …
14th May 2026
All of our coverage on the Middle East conflict can be found here . Hopes this time last week that the US and Iran might strike a deal to end the war quickly unravelled once the US received the latest proposal from Iran. Trump labelled it as “totally …
The Israeli shekel has been one of the world’s best-performing currencies this year, hitting a 33-year high against the dollar. Further gains are possible provided geopolitical risks remain contained, global equity markets continue to rally and …
The Iran war poses two key threats to the global economy – higher inflation and weaker growth. Up until now, the markets have responded to the first but seemingly ignored – or at least ‘looked through’ – the second. That could change if the Strait of …
Inflation data for April released across EMs suggest that the energy price shock has pushed fuel inflation up materially and that surveys of firms’ inflation expectations are rising sharply. So far, most EM central banks have been in wait-and-see mode and …
Colombia’s presidential election on 31st May offers a stark choice for voters between the left and the right. And whoever wins faces the daunting challenges of reviving growth, stabilising the fragile public finances and repairing tense relations with the …
Consumers buckling but not yet breaking The April retail sales data were a little softer than we expected but still lead us to estimate that real consumption edged up by 0.1% m/m last month. Moreover, the upward revisions to control group sales in …
Collapse in bank lending extends further The net increase in new credit slumped in April. While that partly reflects the usual seasonal pattern, year-on-year growth in aggregate financing to the real economy (AFRE – the PBOC’s preferred measure of broad …
If disruption to energy imports resulted in power shortages in South Korea or Taiwan, governments in both places would prioritise chipmakers over households so that chip production could continue to run. Lengthy disruption to trade flows through the …
Economy came into the energy shock with relatively strong momentum Polish GDP growth in Q1, of 0.5% q/q, was a bit softer than expected, but it still looks like the economy weathered the first few months of the energy shock reasonably well. The outturn …
This page has been updated with additional analysis since first publication. The high before the war GDP rose by a bumper 0.6% q/q in Q1 (consensus and CE forecast 0.6%), but this will be the high point for the year given the effects of the war in Iran …
Buyer sentiment stabilising, but housing market outlook remains weak The recent plunge in buyer sentiment triggered by the rise in mortgage rates since the start of the Iran appeared to stabilise in April. Even so, April’s RICS survey continues to suggest …
A look under the hood of the US stock market suggests that the ongoing rally has been accompanied by some unusual dynamics. That doesn’t mean the rally is unsustainable, but it suggests some near-term caution may be in order. Despite oil prices rising …
13th May 2026
A resumption of oil flows through the Strait of Hormuz this month, as assumed in our baseline scenario, could limit the extent of inventory draws and lead to prices falling back by end-26. But if the Strait remains effectively closed and commercial oil …
Tight supply means residential assets will see the strongest rental growth of all sectors over the next few years. And, with the costs of maintaining a home rising, house price expectations subdued and the rental market professionalising, we doubt higher …
The commercial property landscape is shifting. As returns in traditional sectors soften, investors are moving toward alternatives – from senior living to self-storage to data centres – drawn by stronger risk-adjusted returns, greater diversification and …
11th May 2026
The euro-zone’s declining reliance on fossil fuels – driven by lower overall energy demand and a shift towards renewables – means that the economy is becoming less sensitive to higher fossil fuel prices. Data on energy consumption are not very timely, but …
A victory for left-wing Iván Cepeda in Colombia’s presidential election would probably continue the Petro government’s track record of running large budget deficits, causing Colombia’s sovereign risk premia to rise further. Right-wing candidates de la …
Not quite as bad as it looks April’s stronger-than-expected PPI figures have little bearing on our estimate for a 0.30% m/m rise in the core PCE deflator in April. While still above the target-consistent pace, that is not as concerning as the strong CPI …
Prospects for the euro-zone economy are very sensitive to the severity and duration of the increase in energy prices. Our baseline forecasts are based on an assumption that the price of Brent crude peaks at a quarterly average of $95pb in Q2 then …
Despite its recent resilience, house price growth will probably slow over the coming months as the drag from higher mortgage rates triggered by the Iran war continues to grow. But big outright falls in nominal prices are unlikely. Housing activity and …
The combination of an increased focus on capital discipline among major oil firms, and a reduction in the number of drilled but uncompleted wells in recent years, will limit the extent and pace of any pick-up in US oil output in response to higher prices …
Industry held up well at the start of the energy shock, but that’s unlikely to last The euro-zone economy grew around its trend pace in Q1 and March’s industrial production data show that higher energy prices did not take an immediate toll on output. Our …
Equity markets remain gripped by the AI rally, with related stocks powering gains across global indices. But as valuations climb ever higher, questions are growing about the sustainability of this momentum. Can earnings continue to drive prices? Is the …
The Dangote oil refinery has materially improved Nigeria’s energy security, leaving it better insulated from oil price shocks than before. Nigeria is not immune from the inflationary pressures from the war. But the economy is likely to see a much more …
Despite high global energy prices, China’s economy is stronger now than at the start of the year. An AI-related boost to investment and electronics exports is playing a role. But China has also emerged as a net economic beneficiary of the Iran War, with …
Wage growth likely to remain sticky Although wage growth eased a touch in Q1, a look under the hood suggests that wage pressures could soon bubble up again. As a result, we still think the RBA has more work to do. The 0.8% q/q rise in the wage price index …
The Australian government’s 2026/27 Budget does little to move the needle on fiscal policy. Although Commonwealth coffers will benefit from a windfall driven by higher commodity prices, much of this additional revenue will be used to fund increased …
12th May 2026
The surge in long-term Gilt yields over recent weeks owes as much to the rise in energy prices as it does to the UK’s latest political melodrama. On both fronts, it looks increasingly as though things may get worse before they get better. Long-term Gilt …
Property valuations saw little movement in Q1 with property and alternative asset yields holding steady. Looking ahead, the Iran war has pushed up yields on alternative assets so valuations will worsen in Q2. However, assuming the conflict is resolved …
The marked increase in inflation across advanced economies has yet to cause real spending to contract, but the widespread decline in consumer sentiment and hiring intentions points to worse to come. While there is evidence in the US and UK that AI …
In our baseline scenario, WTI averages $80pb over the second half of the year. This will boost GDP growth slightly and keep headline inflation above 2.5% in the coming months. But the backdrop of weak underlying activity, limited risk of second-round …
The data for March and April seem to confirm that Brazil’s economy is one of the few economies benefitting from the energy price shock. As things stand, the risks to our 2026 growth forecast of 1.5% now look tilted to the upside. This comes against a …
While Gulf economies have already taken a big hit from the Iran war, the effect on activity in major economies seems to have been limited so far. Inflation has begun to rise and will continue to do so as it broadens out to non-fuel categories such as …
The 0.4% m/m gain in core CPI in April was largely due to the expected jump in owners’ equivalent rent and another gain in airfares, rather than reflecting a significant broadening of inflation pressures. That said, core inflation pressures elsewhere are …
Inflation ticks up, cautious easing to continue The rise in Brazilian inflation to 4.4% y/y in April shouldn't prevent the central bank (BCB) from continuing with its cautious monetary easing cycle. We expect 25bp interest rate cuts at each of the …
The war in Iran has reinforced a narrative that was already well established in our research: China is emerging as one of the principal beneficiaries of global energy disruption. The closure of the Strait of Hormuz and the resulting spike in hydrocarbon …
Bigger inflation rises are coming India’s headline consumer price inflation remained below the RBI’s 4% target in April as administered fuel prices continued to shield consumers from the jump in global oil prices. But this can’t continue for much longer …
Governments in developed economies have so far been circumspect in providing fiscal support to households to cushion the impact of higher energy prices. This is likely to remain the case given that most governments have still done little to improve the …
Higher mortgage rates and war uncertainty weighing on homebuying sentiment The barely changed level of existing home sales in April shows how elevated mortgage rates and economic uncertainty are dissuading homebuying. With the full impact of the recent …
Neither US-Iran negotiations nor the Trump-Xi summit appear to offer much cause for cheer, and UK politics are inching towards another precipice, but equity markets appear determined to party on. Tech boom still outweighs continued SoH closure Another …
The euro-zone has been one of the biggest losers from China eating up a larger share of the global export market. It has lost market share across a wide range of industries including vehicles, machinery and metals, prompting targeted policy responses from …
There's a good chance that this week's meeting between Donald Trump and Xi Jinping in Beijing will generate far more attention than substance. The optics of the leaders of the world's two biggest economies meeting face to face are powerful. But the …
A sustained reflation still looks unlikely The fallout from the Iran War pushed up inflation again in April but price pressures remain narrow in scope and aren't likely to build into a wider reflationary impulse. Inflation looks set to climb a bit more …
Trade values have soared on higher oil and chip prices Higher oil prices pushed up import values last month. But soaring chip prices are having an even bigger impact on China’s trade data, pushing up both exports and imports. Price effects aside, the …
This Weekly Roundup highlights the potential challengers to Keir Starmer and their market implications, rising risks to Italian stability, a key election victory in India, Chinese green tech exports and more. 1. Speculation is mounting that Keir Starmer …
8th May 2026
Section 122 tariffs ruled illegal President Trump’s tariff agenda faced fresh setback on Thursday, when the US Court of International Trade (CIT) ruled that the 10% global tariff imposed under Section 122 of the Trade Expansion Act of 1974 was …
