This analysis has been edited to reflect the influence of the Q4 2024 GDP data released two days after the initial analysis was published. Higher taxes for businesses, a lingering drag from the previous interest rate hikes and softer overseas demand …
11th February 2025
Although the 10-year TIPS yield has fallen on net since the start of this year, we doubt it will drop to an even lower level by the end of 2025. That’s because we don’t expect the slight further policy easing discounted in money markets to materialise. …
Powell gives little indication of rate cuts this year Fed Chair Jerome Powell stuck to the line that the Fed was in no hurry to adjust its policy stance in his semi-annual testimony to Congress today. Given that inflation remains above target and the …
The end of the de minimis tariff exemption for US imports of low-value goods from China will be a major blow to Chinese e-commerce giants like Temu and Shein. They’re likely to lose market share to foreign competitors like Amazon. But unless tariffs …
After a strong Q4, a shaky start to 2025 has highlighted the fragility of the recovery in euro-zone commercial real estate investment. We still expect transaction volumes to rise over the remainder of the year, but tight lending conditions, refinancing …
We expect equities in Germany to underperform those in other major developed markets in the coming year or so because German firms are more exposed to the increase in protectionism which appears to be gathering pace. This will probably be more important …
While it is possible that a fall in mortgage rates will trigger a modest increase in the number of rental properties over the next two years, we doubt this will offset the weakness in rental supply over the past decade. Our forecast is for tight supply to …
Fall in inflation won’t stop Copom from hiking again in March The fall in Brazil’s headline inflation rate in January, to 4.6% y/y, was mainly due a drop in housing inflation and is unlikely to prevent the central bank from delivering another 100bp hike …
Saudi Arabia’s economic growth will accelerate this year as the Kingdom starts to unwind oil production cuts from April. But while the Kingdom’s non-oil sector started the year on a strong footing, tight fiscal and monetary policy will weigh on growth …
Labour market remains tight and there are signs of green shoots in the economy But with inflation slowing markedly, RBA will cut by 25bp next Tuesday Scope for further policy loosening remains modest We expect the Reserve Bank of Australia to cut rates by …
Gold has soared to another record high today amid a further ratcheting up in trade tensions. However, we think the rally may falter before too long . Gold has climbed by ~1.5% so far today, which has taken it over the $2,900/oz mark for the first time …
10th February 2025
The newly-announced 25% tariffs on all steel and aluminum imports entering the US will have a limited impact on the Canadian economy given that exports of these products account for just 1% of GDP. With President Trump also beginning to change his tune on …
The Trump administration’s 25% tariffs on steel and aluminum come at a time when domestic capacity utilisation and import intensity are low, implying they will have less of an impact on overall prices than was the case during Trump’s first term. The …
While 2024 was the first year in which inventory removals outpaced completions, we expect strong conversions activity to make it the first of many. Indeed, thanks to further declines in office occupancy and capital values over 2025-2030, we expect US …
The direct impact on the global economy of President Trump’s latest proposed tariffs would be small since steel and aluminium account for a very small share of world trade. Canada’s economy is relatively exposed and it is likely that US steel prices would …
Trump’s curveballs have limited sway in oil markets With oil prices back to where they were at the start of the year, the oil market has offered a collective shrug to the geopolitical curveballs thrown its way. Although Canada and Mexico have been granted …
We expect the euro-zone economy to grow at only a sluggish pace this year, with southern economies outperforming the core. Germany’s election will lead to only a modest loosening of its restrictive “debt brake”. France’s budget deficit will remain very …
The Central London office pipeline looks set to go from feast to famine over the next few years, with a sharp drop in planned completions from 2027. But we doubt new office supply will run dry. Constraints on development are easing and demand for new, …
Less than a month into the new Trump administration and already it feels as though enough has been written about trade, tariffs and US foreign relations to last four years. With events moving quickly – the president’s latest comments suggest steel and …
Inflation nudges lower as first rate cut edges closer Egypt’s headline inflation rate only slowed a touch to 24.0% y/y in January. But with earlier falls in the pound now starting to fall out of the annual price comparison, we expect Egypt’s headline …
Rise in inflation likely temporary Headline CPI inflation rose to a five-month high last month, driven by the lagged effect of stronger demand last quarter on the back of government efforts to boost consumption. But with the boost from stimulus likely to …
It’s been a drama-filled week in Trumpland and Group Chief Economist Neil Shearing is on The Weekly Briefing from Capital Economics to take stock of what happened, what didn’t happen, and the implications for macro and markets. As well as discussing the …
7th February 2025
January’s strong US employment report supports our view that the Fed will stay on the sidelines during the rest of 2025, as well as our forecast that the 10-year Treasury yield will end the year higher. The employment report pointed to the labour market …
Do not write off tariffs President Donald Trump’s U-turn on 25% tariffs for Canada and Mexico this week, seemingly in exchange for a few trivial concessions from both countries, has reignited speculation he is using the threat of trade barriers as a bluff …
The announcement and subsequent postponement of tariffs on Canada by President Donald Trump has sprung politicians into action. On Wednesday, Liberal Party leader hopefuls Mark Carney and Chrystia Freeland set out their economic policies. Today, Prime …
The dollar’s boost from tariff announcements last weekend proved short-lived and, despite rallying a bit in response to the latest Employment Report , the greenback is set to end the week lower against most currencies. It’s clearer than ever that …
President Ramaphosa used his State of the Nation Address (SONA) yesterday to recommit to fiscal discipline and investment-led growth. The rebuke of the US in his speech was noticeable, suggesting Trump’s recent actions could act to push South Africa …
The overall message from the Bank of England this week was decidedly dovish, raising the risk that interest rates will be cut further and faster than our forecast of a fall from 4.50% to 3.50% by early 2026. But as we unpacked in our reaction to the …
Inflation expectations surge due to tariffs The University of Michigan Consumer Sentiment Survey for February showed a decline in the headline index alongside a sharp rise in inflation expectations, suggesting that consumers are increasingly concerned …
Hawks fly in CEE, but further rate divergence likely The communications from policymakers following central bank meetings in Poland and Czechia this week struck a hawkish tone. After leaving rates on hold , Poland’s central bank Governor Glapinski focused …
Mexico dodges tariffs… for now The world was convulsed at the start of the week by President’s Trump’s tariff threats on Canada and Mexico, which were postponed for 30 days through last minute deals whereby both countries pledged to beef up border …
Due to an error in the figures mentioned in the original, we are re-sending this Canada Economics rapid response. We apologise for any inconvenience caused. Strong across the board A further strong rise in employment and tick down in the unemployment rate …
The softer 143,000 gain in payrolls in January is nothing to be concerned about following the upward revisions to payrolls in November and December, which left the three-month average gain at a near-two year high of 237,000. That strength, together with a …
Note: Join us as we discuss how Donald Trump's moves to build out his policy agenda will affect energy, soft commodities, and metals markets in a Drop-in on Thursday 13th February 15:00 GMT/10:00 EST . Register here for the 20-minute online briefing. …
Tariffs on energy suppliers. Tariffs on metals suppliers. A push to end the Ukraine war. A National Energy Emergency. Less than one month in. Donald Trump has roiled commodities markets with a slew of orders in the opening phase of his administration. …
While there is currently a lot of focus on r* at the ECB (which we wrote about earlier today ), the outlook for wage growth may prove to be more important in guiding monetary policy. And the ECB’s wage tracker, released on Wednesday, suggests that wage …
Comparing the ECB’s deposit rate to estimates of its equilibrium level suggests that monetary policy will soon be only slightly restrictive. But there is a huge amount of uncertainty around these estimates. With the economy struggling and underlying price …
Donald Trump has sent shockwaves through European corridors of power with his moves to re-engage with Vladimir Putin, his efforts to end the war in Ukraine, and his threats to withdraw the US as the backstop of the continent’s security. But how much of …
20th February 2025
Imagine a world after Donald Trump. The returned president’s rapidly unfolding policy agenda will have bearing on the US and global economies in the near-term. But could forces like shifting demographics and AI play a greater role in shaping long-term …
18th February 2025
Senior economists from across our Macro and Markets teams hosted this special online briefing all about how economies throughout Asia, Europe and the Americas are faring in the shadow of the Trump trade agenda. During the session, they answered questions …
31st March 2025
The ECB’s April meeting comes amid falling inflation – but also rising global risks, not least the potential growth shock from Trump’s aggressive tariffs. How will heightened macro uncertainty shape the Governing Council’s decision and communications? …
7th April 2025
Rising risks to the UK economy present a challenge to the recovery in housing transactions. But will they be enough to dampen demand – and what could that mean for our above-consensus forecasts for house price growth beyond 2025? Our UK macro and property …
24th April 2025
Our senior economists hosted a wrap-up of the latest policy decisions from the Fed, the ECB and the Bank of England, to answer questions from the audience about how the strategy of these banks is evolving in the face of acute global uncertainty. … …
The US-China trade war has put ‘friendshoring’ firmly back on the agenda. US tariffs on Chinese goods remain well above 100% – and are unlikely to fall significantly – creating opportunities for some emerging market economies while also adding new layers …
29th April 2025
The tradition of gauging a president’s progress by their first 100 days began with FDR’s whirlwind start in 1933 – but it’s the opening stretch of Donald Trump’s second term that is proving one of the most consequential yet. From challenging norms around …
17th April 2025
Argentina's President Javier Milei has made impressive progress in turning the economy around, but the key question now is whether these achievements can be sustained. Our EM team held this online briefing to discuss the work Milei still needs to do and …
6th March 2025
The escalation of tariffs by the US and China now threatens to rupture the flow of trade between the world’s two largest economies. In this special 30-minute briefing , our economists discussed the economic and market repercussions, with a particular …
8th April 2025
The chaos over US tariffs – and the subsequent fallout in financial markets – has raised fundamental questions about the role of the US dollar within the global economy and international financial system. Our senior economists addressed this and more …
16th April 2025
How should central banks calibrate policy in a time of acute global uncertainty? It’s a challenge that the Federal Reserve and Bank of England face at their upcoming May meetings, and one that our senior economists will address in this online briefing on …
