The Iran war has (already) lasted longer than we initially assumed in our base case but the disruption to energy markets and hit to the global economy have been more limited. This resilience will be tested if agreement to reopen the Strait of Hormuz …
21st July 2026
The Polish government’s budget deficit, of ~7% of GDP, isn’t going to trigger near-term sovereign debt problems. But there’s little chance of the deficit narrowing significantly in the coming years and the public debt-to-GDP ratio will remain on an …
Our Emerging Markets Chart Pack has been updated to focus on the implications for EMs of the latest developments in the Iran war. The renewed US-Iran attacks and closure of the Strait of Hormuz will, if sustained, prolong recessions in the Gulf economies …
The outlook hinges on the outcome of CUSMA negotiations, with the Trump administration’s latest 50% tariff announcement underscoring the risks. For now, we still think an agreement will be reached at some point in the next year to keep US-Canada trade …
CBN holds but rate cuts not far away The Central Bank of Nigeria’s decision held its policy rate at 26.50% today as expected but, provided hostilities in the Middle East ease soon and disinflation in Nigeria resumes, the monetary easing cycle is likely to …
Demographics are less favourable for active adult communities than care homes. However, high net housing wealth among older households will support demand, especially in markets with more older people living alone in under-occupied homes like the UK, …
Soft inflation keeps the door wide open to further easing Hungary’s central bank (MNB) cut its policy rate by another 25bp today, to 5.75%, and we think a backdrop of below-target inflation will allow the MNB to continue easing over the coming months. Our …
Overview – We suspect house prices will rise only gradually over the rest of 2026 and end up around 1.5% higher in Q4 2026 than a year earlier. But our view that Bank Rate, and therefore mortgage rates, will fall further than most expect next year …
The ECB’s Q2 Bank Lending Survey (BLS) was quite downbeat, but we suspect that both bank lending and GDP growth will continue to be stronger than this survey implies. This would be consistent with the business and consumer surveys, which in recent months …
Construction output dropped to its lowest level since the COVID-19 lockdowns in the first quarter of 2026, with housing and commercial development both dropping back. With the Iran war set to lead to another jump in construction costs, will the UK even …
20th July 2026
This page has been updated with additional analysis since first publication. Limited scope for borrowing, labour market not conducive of second-round effects June’s public finances were a rare piece of good news for the PM Burnham and Chancellor Healey, …
The advances in China’s AI sector and the authorities’ constructive attitude towards it are reason for optimism on the country’s equities, in our view, even if the apparent “national team” boost fades. China’s equities have started the week well . On …
50% tariff does not appear to be as broad as feared President Trump’s set of proclamations imposing 50% tariffs on goods imported from Canada are not as broad as the initial media reports suggest, with the included item codes covering only 5% of goods …
Still-contained underlying inflation gives RBNZ some breathing room The pickup in price pressures last quarter was not particularly broad-based, with measures of core inflation still well behaved. Accordingly, we don’t think there’s a strong case for the …
Iranian attacks have increasingly targeted Jordan and are likely to set back the economy’s recovery from a decade of negative spillovers caused by the civil war in Syria. Jordan’s balance of payments and sovereign debt risks are heavily mitigated by …
A divergence in risk-free interest rates in the UK and US since the end of 2024 has led to a marked difference in the level of commercial property investment between the two countries, in part because of the impact on capital value expectations. But we …
We expect GDP growth to average 2.2% and 2.3% this year and next, driven by strong AI-investment and a rebound in consumption growth. The labour market appears to be stabilising, and we expect the unemployment rate to fall further as employment growth …
We expect the spread between 10- and 2-year Treasury yields to narrow further over the coming months, and we think that continued escalation in the Strait of Hormuz could lead to the curve inverting outright. The 10-year/2-year yield curve has flattened …
Core inflation below target for first time in five years The Bank of Canada will be pleased to see core price pressures remained subdued last month, even with some FIFA World Cup-related boost. With Governing Council reiterating their willingness to look …
Last week saw a flurry of macro developments including the renewed closure of the Strait of Hormuz, a series of speeches from Fed officials and the first signs of the UK government’s new economic team . This might explain why one of the more significant …
Gold has arguably behaved more like a “risky” asset than a “safe” one lately, but we think it could still be a useful hedge against falls in equity prices under important, if limited, circumstances. Gold has been on the back foot over the past few months. …
The return to war in the Strait of Hormuz may start to weigh more heavily on financial markets before too long, especially if even strong tech earnings reports continue to be met with scepticism. And resurgent energy prices will probably keep central …
The collapse of the US-Iran ceasefire has triggered another spike in oil prices and put markets back on edge. Neil Shearing joins David Wilder to discuss whether the world is heading for another oil shock and what it would mean for growth and inflation. …
17th July 2026
Overview – Real estate returns over the coming years will be dominated by the income component, as an increase in cap rates to fully reflect the higher yield environment offsets support for values from rising rents. As a result, all-property total …
Price pressures softening… Data this week showed inflation pressures eased by more than expected in June. The 0.02% m/m fall in the core CPI brought the annual rate down to 2.6%, from 2.9% in May. (See here .) The details were fairly encouraging. Core …
Venezuela’s heavy crude is a close substitute for that from Canada’s oil sands. Since the US military incursion in Venezuela, US imports from Venezuela have surged, rising to almost 600,000 barrels per day (bpd), up from an average of 140,000 last year. …
Financials have been the best-performing ‘cyclical’ sector of the S&P 500 since the ongoing rotation out of information technology began on 2 nd June. Indeed, they have been the second-best performer overall , trumped only by ‘defensive’ health care. …
CBN to hold, SARB to deliver a final hike The central banks of Africa’s two largest economies meet next week. We expect South Africa to hike again given upside risks to the inflation outlook, whereas Nigeria is a beneficiary of higher oil prices so is …
Brazil hit with Section 301 US tariffs The US announced an additional 25% tariff on imports from Brazil this week, following a year-long Section 301 investigation into alleged unfair trade practices. The tariffs take effect on 22 nd July and apply to a …
Manufacturing output flat, but AI-driven output keeps growing Despite the unchanged reading in June, second-quarter manufacturing output expanded at a solid 4.7% annualised pace, supported by booming production of hi-tech inputs for the AI buildout. The …
The rise in energy prices this month means that, rather than falling in July as seemed likely a fortnight ago, euro-zone inflation now looks set to remain unchanged at 2.8%. But the absence so far of any indirect effects of higher energy prices on core …
Inflation rises, rupee weakens, RBI set to hike The stars appear to be aligning for the RBI to begin a hiking cycle at the next policy meeting on Wednesday 5 th August. We learnt this week that headline consumer price inflation rose to an 18-month high of …
Rebound in homebuilding not as good as it looks The strong rebound in housing starts in June wasn’t quite as promising the headline number suggests, as it was entirely driven by a surge in the volatile multifamily sector. Moreover, the fall in building …
Singapore benefiting from booming AI demand Singapore’s economy remained in rude health in Q2, with figures published this week showing GDP expanding by 5.7% y/y, following 6.3% growth in Q1, as it largely shrugged off the impact of the energy price …
Economy weathering the storm The revision to euro-zone Q1 GDP this week might have snuck under some Europe-watchers’ radars, as there was no accompanying press release. Due to an earlier revision to Ireland’s data, euro-zone GDP is now estimated to have …
When Andy Burnham becomes Prime Minister on Monday he will take over an economy that has been surprising resilient to the rise in energy prices since the Iran war started. Real GDP rose by 0.6% q/q in Q1 and this week’s release of May’s data (see here ) …
After targeting two oil tankers operated by the UAE’s state-owned oil company with cruise missiles, Iran has successfully throttled traffic through the Strait of Hormuz once again. Meanwhile, the US has re-imposed a blockade on Iran’s oil exports, a …
Beijing outpolls Washington even among US allies Public opinion of China is improving globally, according to survey data from the Pew Research Center published this week. Across the 36 countries included in the survey, respondents in only nine had a more …
Amid renewed fighting in the Middle East and volatile energy prices, policymakers are grappling with inflation risks that have by no means receded. How will major central banks respond in their July meetings? Our economists assessed the latest decisions …
Support for tighter Russia sanctions grows Renewed momentum in the US to pass the Sanctioning Russia Act of 2025 has raised the prospect of a tougher sanctions regime, which could add further pressure on Russia’s economy and complicate the continued …
Another strong quarter Malaysia’s economy grew by 5.8% y/y in Q2 (up from 5.4% the previous quarter), according to advance estimates published today. The initial estimate is based on data for the first two months of the quarter, but it has proved to be a …
Crude oil imports will remain depressed for longer Press reports at the beginning of the week suggested that the Bank of Japan’s Board will revise up their forecasts for GDP growth and lower their forecasts for inflation at the upcoming meeting on 31 st …
Lithium mining main beneficiary from AI boom We think that major productivity gains from the usage of artificial intelligence will only materialise towards the end of this decade. (See here .) But the AI investment boom is already starting to affect …
Pending home sales and purchase mortgage applications both point to existing home sales falling back below a 4m annualised pace in the coming months. With higher Treasury yields likely to put further upward pressure on mortgage rates, this leaves our …
16th July 2026
The rupee has been one of the worst performing emerging market currencies over the past year. But it now looks undervalued, and we think that a hawkish RBI combined with falling energy and gold prices mean that the rupee will fare better than most other …
While investors seem more relaxed about the economic damage of rising oil prices than they were during the initial outbreak of the war, a prolonged closure of the Strait of Hormuz would probably cause a major reassessment of that view. The rise in oil …
ECB rates on hold despite higher oil prices Policymakers will leave the deposit rate at 2.25% next week. Oil prices are still lower than in the ECB’s baseline scenario. Absence of second-round effects will take pressure off ECB later in year. It is highly …
Given reports of Houthi threats to close the Bab el-Mandeb passage to the Red Sea and to attack Saudi oil infrastructure, we are publishing an updated version of this note originally sent on 31 st March. Attacks on Saudi oil infrastructure and/or the …
