Manufacturing sector gaining momentum The jump in the ISM Manufacturing Index to a four-year high in July suggests that the sector gained momentum at the start of the third quarter, despite the rebound in oil prices. Although the prices paid index fell, …
3rd August 2026
We think that strong fundamentals and India’s lower exposure than many to AI stocks will lead the MSCI India to outperform all other markets over the next 18 months. In November 2024, we made the non-consensus call that Indian equity outperformance would …
US economic policy has taken a strange turn but we think the underlying dynamism of the US economy and stock market will win out in the coming months. Events in the Strait of Hormuz continue to be unpredictable, but remain consistent with our view that …
The renewed closure of the Strait of Hormuz is likely to create further strains in Bahrain’s balance of payments. FX reserves provide very limited capacity to sustain the dollar peg and roll over maturing external debt. But our base case is that either …
If last week’s press appearance was meant to be a demonstration of Kevin Warsh’s intent on scaling back the Federal Reserve’s communications and the role of policymakers in shaping market expectations, it was an unedifying one. The Chairman’s muddles …
The early July data for Asia were generally encouraging. Manufacturing surveys remained upbeat and, together with another strong set of Korean trade figures, suggest that booming electronics exports continue to underpin regional activity. At the same …
Data released over the past month showed that Australia's labour market, housing market, and underlying inflation were all softer than the RBA had expected. With domestic demand likely to remain subdued for a while, we now believe the Bank is done hiking …
Australian house prices kept falling at a rapid pace in July. With affordability still very stretched and leading indicators flashing red, the downturn has much further to run. Allowing for seasonal swings, house prices across the eight capital cities …
Kevin Warsh sent financial markets into turmoil with a press conference that muddied, rather than clarified, the Fed's message. But was the confusion all part of a broader strategy from a Federal Reserve chair who takes a dim view of forward guidance? On …
31st July 2026
Global imbalances are back. China's rapidly expanding trade surplus is the clearest manifestation of a renewed widening of external imbalances on a scale not seen since the mid-2000s. But how much of a risk do they pose to global macro stability? How long …
27th July 2026
While investors’ faith in the AI narrative has been shaken over the past couple of months, the fact remains that there is no clear sign of demand for AI faltering. That may help to explain the rebound late this week in the share prices of some of the …
Federal Reserve Chair Kevin Warsh’s muddled July FOMC press conference and the resulting gyrations in financial markets dominated this week’s headlines, diverting attention from data suggesting that underlying demand is strengthening. Bond market tells …
Carney puts the “sign back in the window” We weren’t as convinced as some that the recently announced Section 338 tariffs on US imports from Canada were solely a means to force Ottawa to the negotiating table, so much as a test to see if the …
Homegrown hardware still lags far behind News that a Chinese firm has started to mass-produce immersion deep ultraviolet lithography (DUV) machines added to broader market jitters around AI this week. Lithography machines are essential tools for …
Squeeze on Russia’s economy intensifies The challenges facing Russia’s economy increased further this week amid reports of more restrictive fuel export bans, spillovers from Ukraine’s drone attacks on logistics firm Wildberries and further evidence of a …
While the Bank of England retained its hiking bias as it kept Bank Rate at 3.75% on Thursday, it feels as though the Bank is edging further away from interest rate hikes than it was at the last policy meeting on 18 th June. One hawkish development was …
We recently hosted an online Drop-In to review the latest Fed, Bank of England and ECB decisions and what their communications imply. (Recording here .) This Update provides answers to the questions that we received. Our central view remains that the …
Low water levels in the Danube are forcing Hungary to take its nuclear power plant offline, prompting officials to urge cuts in energy consumption. The scale of the macroeconomic effects will, of course, depend on the length of disruptions to power …
Ghana can use fiscal space to boost growth further Ghana secured the final disbursement ($371mn, 0.3% of GDP) of its IMF program this week, and Ghana’s success in meeting the program’s targets now provides room for fiscal support to growth. The program …
Reports suggest that OPEC+ will agree to a fourth consecutive 188,000 bpd increase to its oil production quotas at its forthcoming meeting on 2 nd August. The same reports indicate that this will be the group’s last quota increase of the year and that it …
One thing which may have gone under the radar amid this week’s many data releases is the revisions to the back series of GDP by Germany’s Federal Statistics Office. Growth was revised up for both Q4 2025 and Q1 2026 (to +0.3% and +0.4%) meaning that GDP …
Peru and Colombia shifting to the right Keiko Fujimori, Peru’s ninth president in a decade, was sworn on Tuesday. In her inauguration speech, she pledged a shift towards more conservative policymaking, including a crackdown on crime, cutting red tape and …
Strong Q2 brings rate hikes slightly closer The preliminary estimate of a 3.2% annualised rebound in GDP growth last quarter was even stronger than the Bank of Canada’s latest projection from the July Monetary Policy Report and suggests there is some …
BI resignation – all eyes on permanent replacement The unexpected resignation of Bank Indonesia Governor Perry Warjiyo this week has brought concerns about the central bank’s independence back into focus. While the official explanation was that he …
Growth slows, but recovery isn’t over Hong Kong’s economy expanded by 4.3% y/y in Q2. While strong on paper (the economy grew by 3.5% last year), that simply reflects flattering base effects and the impact of last quarter’s bumper growth. In q/q terms, …
Uneven rains as much of a threat as total shortfall After the driest June in over a decade, India received heavy rain in July. Cumulative monsoon rainfall (up to the 30 th ) was only 14% belong the long-run average, putting it only just outside the band …
Little change in underlying inflation The small increase in headline inflation in July was largely due to higher energy inflation and is unlikely to change policymakers’ thinking significantly ahead of the ECB’s September policy meeting. The rise in …
Strong, and better balanced growth Taiwan’s economy recorded another quarter of very strong growth in the second quarter of the year, and encouragingly there are signs that it is becoming more balanced – although exports were very strong, there was a …
In response to Governor Ueda’s hawkish comments, we’re bringing forward our forecast for the next rate hike from October to September. That would imply a marked acceleration in the Bank’s tightening cycle and is consistent with our view that the Bank will …
This page has been updated with additional analysis since first publication. High mortgage rates continue to weigh on the housing market The small 0.1% m/m rise in the Nationwide measure of house prices in July shows that higher mortgage rates since the …
Takaichi risks squandering fiscal sweet spot A renewed round of FX intervention shortly after midnight Tokyo time succeeded in strengthening the yen and we explained here why we expect the yen to avoid another major leg downward. But the more important …
Hawkish BoJ will lift rates to neutral levels next year While the BoJ left interest rates unchanged as widely anticipated, the accompanying Outlook report was hawkish and we’re sticking to our non-consensus view that the Bank will lift interest rates to …
Firms expect July weakness to be temporary This report was first published on Tuesday 31 st July, covering the official PMIs. We added commentary on the RatingDog manufacturing PMI on Monday 3 rd August and the RatingDog services and composite PMIs on …
Next move will be a cut in H2 2027 There was plenty for the RBA to like in this week’s inflation numbers . We learnt that trimmed mean CPI rose by 0.8% q/q for the second consecutive quarter, well below the 1% q/q increase baked into the RBA’s May …
Energy-intensive sectors recovering further The June activity data suggest that GDP rose at a robust pace last quarter, while there are early signs that higher energy costs are feeding through to consumer prices. Taking the preliminary industrial …
Intervention in support of the yen may not work any better now than it has previously, but the persistence of the Japanese authorities suggests to us that the yen will remain around the 160 level this year before staging a more sustained rebound next …
We’ll be discussing our latest EM Financial Risk Indicators in an online briefing at 10:00 ET / 15:00 BST on Wednesday 5th August. Register here . Currencies in Latin American have fared better than those of other EMs over July, but we expect that …
30th July 2026
China Chart Pack (July 26) …
Market participants gave Fed Chair Warsh’s second press conference two thumbs down. If he is serious about taking guidance from market prices rather than dishing it out, a course correction is in order. That would point to rate hikes this autumn, leading …
Sub-Saharan Africa has come out of the latest round of US tariffs in a better position relative both to last year and to many other EMs. That will provide opportunities for some countries. But even so, the US re-engagement the continent has seen in recent …
The wildfires that have been raging in France and Spain have already had a devastating effect on many businesses and there may be worse to come. However, their aggregate impact on GDP and the associated fiscal costs are likely to be small. And even the …
The Q2 RICS survey showed little change from the previous quarter, although a rise in capital value expectations suggests the impact of the Iran war on yields is now projected to be smaller. Overall, the survey points to a market grinding along with …
A significant appreciation of the renminbi would narrow China’s enormous trade surplus but it would also make the domestic deflation problem worse. This trade-off can only be addressed if a stronger currency is paired with forceful efforts to boost …
Global growth appears to be regaining momentum, led by the US among advanced economies. We expect this trend to continue, supported by strong AI investment despite the risk posed by renewed hostilities in Iran. Assuming the conflict abates, inflation …
We’ll be discussing our latest EM Financial Risk Indicators in an online briefing at 10:00 ET / 15:00 BST on Wednesday 5th August. Register here . Our proprietary EM financial risk indicators show that the majority of countries have been well placed to …
We expect non-farm payrolls to have risen by a stronger 90,000 in July, but the risks lie toward the unemployment rate ticking back up to 4.3%. Leisure & hospitality payrolls unlikely to rebound The 57,000 rise in payrolls in June was weaker than …
Even though the Bank of England again talked up the possibility of interest rate hikes while leaving rates at 3.75% today, we think rates are more likely to stay on hold this year and be cut to 3.00% next year. The main hawkish development was that …
14-month streak of above-target core PCE gains finally ends The smaller-than-expected 0.13% m/m gain in the core PCE deflator in June will be a welcome sight for Fed officials, though that still only translated to small decline in the annual rate to 3.3%, …
