All of our coverage on the Middle East conflict can be found here . There’s been no let-up in the exchange of strikes between the US and Iran in the past week, whilst the US has reimposed its naval blockade on Iran. At this stage, our central scenario …
16th July 2026
The housing market continued to slowly improve in June and the recent rebound in government bond yields is unlikely to be large enough to trigger any renewed near-term weakness. Meanwhile, the government’s plan to convert some unsold condos into …
Indonesia is likely to break its 3% of GDP legal ceiling for the fiscal deficit this year. Still, given the low public debt level today, so long as the deficit stayed close to this level it would take until well into the 2030s before fiscal sustainability …
Real consumption gaining momentum The moderate gains in headline and control group retail sales in June are much better than they look considering the softness of price growth last month. Indeed, we estimate that real consumption growth picked up to 0.4% …
While headline growth disappointed, the detailed breakdown of China’s Q2 GDP data points to a sharp upswing in activity linked to the AI boom. On a q/q basis, over half of last quarter’s expansion came from electronics manufacturing and IT & …
Russia’s fiscal strains are rightly receiving more attention, but we think the more alarmist commentary out there misses the key story. The problem is not that Russia cannot finance the war, but that doing so is now becoming increasingly distortionary, …
The global economy has so far weathered the energy shock created by the war in Iran, but a sharp drawdown in oil inventories has left stocks close to critically low levels. The oil market therefore has much less capacity to absorb another supply shock. …
This page has been updated with additional analysis since first publication. Economy reasonably resilient to high energy prices The 0.1% m/m rise in real GDP in May (CE -0.2%, consensus +0.1%) is not a bad welcome gift for incoming Prime Minister Andy …
The Bank of Korea today kicked-started its tightening cycle by raising rates by 25bps to 2.75%, and the tone of the central bank’s statement makes clear that further tightening is likely. We now expect a further 50bps of hikes this cycle. Today’s decision …
BoK hikes, further tightening likely The Bank of Korea today raised interest rates by 25bps (to 2.75%), and with inflation likely to remain above target for the rest of the year and growth expected to remain strong, further tightening is likely. Today’s …
The Bank's messaging accompanying its decision to leave interest rates unchanged at 2.25% in July suggests it has no intention of responding to energy-driven inflation with higher interest rates, given its continued concerns about the economy, with the …
15th July 2026
Bank content to “look through” energy-driven inflation The Bank's messaging accompanying its decision to leave interest rates unchanged at 2.25% in July suggests it has no intention of responding to energy-driven inflation with higher interest rates, …
Andy Burnham is unlikely to significantly boost the economy’s sustainable growth rate, partly because it is hard to do and he’s unlikely to have long to do it, but also because his diagnosis of the economic problem is incomplete which means his solutions …
The renewed rise in oil prices has cast fresh uncertainty over the outlook for interest rates in EMs. But one thing that emerges from the latest CPI data is that there are a handful of countries where strong inflation pressures could prompt interest rate …
Strength of new orders suggest recovery has further road ahead The rise in manufacturing sales in May was accompanied by a surge in new and unfilled orders, confirming that the sector remains in a cyclical upswing despite punitive US sector-specific …
Producer price data confirm core PCE rose at a target-consistent pace The producer price data lead us to estimate that the core PCE deflator rose at a target-consistent pace of 0.16% m/m in June. Nonetheless, that would still leave the three-month …
While the weakness of the yen remains a puzzle, we still expect the currency to rebound by the end of next year. Our end-2027 forecast for USD/JPY is 150, which compares to a current rate of ~162. The yen’s decline against the dollar since April 2025 …
India’s services exports have long been associated with low-cost call centres and business process outsourcing (BPO). But in recent years, multinationals have been building product development, engineering and research capabilities in India – including in …
Industrial production has held up well since the Iran war began and output in the most energy-intensive sectors has risen. The bigger picture is that industry is in structural decline, but its performance is “K-shaped”: output in high-tech and defence …
China’s weaker-than-expected Q2 GDP isn’t a reason, in our view, to throw in the towel on its markets: we remain fairly positive on the country’s equities, bonds, and currency. At the time of writing China’s markets were generally on the front foot , and …
Household borrowing slump deepens Year-on-year growth in aggregate financing to the real economy (AFRE – the PBOC’s preferred measure of broad credit) fell sharply from 7.7% in May to a fresh record low of 7.4% in June. Both bank loan growth and non-bank …
Official growth takes a step down The official GDP figures showed a sharper-than-expected slowdown in Q2, bringing them closer in line with our China Activity Proxy (CAP). This may largely represent a greater willingness to acknowledge pre-existing …
Australia’s data centre boom has yet to generate a broad-based inflationary impulse. But by adding demand to an already stretched construction sector, it risks prolonging capacity constraints and keeping shelter inflation elevated for longer. The boom is …
Despite some better news on US inflation, we continue to think the FOMC will raise the fed funds rate later this year. In turn, that points to a flatter US yield curve and a stronger US dollar. The US inflation data for June released today delivered one …
14th July 2026
We think that the boost to demand from the AI investment boom is outweighing the disinflationary effects of any AI-driven productivity gains. Any suggestions that AI paves the way for near-term interest rate cuts are therefore misplaced. That said, the …
The escalation of the US-Iran war over the last week has caused investors to rapidly adjust their views of the upside risks in the oil market. If conditions continue to deteriorate, the lesson from earlier phases of the war suggest that there is plenty of …
Unchanged core CPI buys the Fed time The unchanged core CPI in June is not quite as good as it looks for the Fed’s preferred core PCE measure, but the latter should still have risen at close to a target-consistent rate last month. That would all but rule …
Global Commercial Property Chart Pack (July 2026) …
Despite incoming PM Burnham facing the tricky task of maintaining investor confidence against a fragile fiscal backdrop and the potential for a prolonged US-Iran conflict, we expect Gilt yields to fall over the next year as weak economic activity prompts …
The announcement of a new US naval blockade on Iranian oil – and the suggestion that the US will charge a toll on shipping through the Strait – has upended the MoU and poses risks to our view that energy flows will gradually normalise into 2027. This …
A range of reforms agreed in the past few weeks may shore up confidence in Germany’s government but they will not have much impact on economic growth. We are forecasting GDP to increase by around 0.7% per year in the coming years but, if anything, the …
Energy prices are surging and interest rate expectations are being aggressively repriced after renewed fighting between the US and Iran stifled energy flows through the Strait of Hormuz. But has the market reaction been justified? How likely is a …
From "the biggest council housebuilding programme since the post-war period" to "the biggest rebalancing of power our country has seen", Andy Burnham, the UK's next Prime Minister, has proclaimed ambitious plans to remake the economy. But will policy …
A strong El Niño has brought food price risks in South Africa into focus, but we think it unlikely that this could extend the Reserve Bank’s tightening cycle beyond the one 25bp hike this year in our profile. The energy shock pushed up inflation in South …
Japan’s economy isn’t benefitting much from the surge in demand related to artificial intelligence. While higher electronics import prices should result in faster price increases for household appliances over the coming months, the impact on overall …
AI boom continues to propel trade Trade values took another big leg up in June. This predominantly reflects the recent surge in semiconductor prices on the back of the AI boom. But even putting that aside, foreign demand for Chinese goods remains robust, …
Inflation has further to rise India’s headline consumer price inflation picked up to an 18-month high of 4.4% y/y in June and further rises are going to follow over the coming months. We think the RBI will start hiking interest rates before long, perhaps …
13th July 2026
Solid CRE lending volumes consistent with investment holding up At $9.1bn, net lending by banks to commercial real estate in June slowed slightly from a downwardly-revised May figure. Slower net lending against both multifamily and other commercial …
The US dollar is still a beneficiary from US-Iran hostilities, but it won’t necessarily fare as well as it did earlier this year even if the situation worsens. Meanwhile, Chinese tech stocks could pick up further, but will probably still lag their global …
A committee divided The minutes from the Fed's mid-June policy meeting echoed the message from the dot plot by showing a committee divided. What all 19 participants could agree on was that the balance of risks had shifted somewhat since April's meeting …
10th July 2026
It's far too soon to be worrying about another spike in inflation from renewed fighting in the Middle East. That's one of the key messages from Capital Economics' Global Chief Economist Jennifer McKeown, who joins David Wilder on The Weekly Briefing with …
In a week in which we were reminded that the US-Iran “ceasefire” remains on shaky grounds, Carney used the annual NATO summit in Ankara to announce Canada’s latest steps towards expanding its defence capabilities. Among the initiatives was the …
The S&P 500 has held up reasonably well in recent weeks despite a correction in semiconductor stocks, helped by a nascent recovery in software equities. But we doubt the index would be able to achieve the ~10% rally we forecast in it over the remainder of …
Municipal fiscal mismanagement to shape SA polls South Africa’s Treasury has withheld funding from a swathe of municipalities to force tighter spending control, reaffirming its commitment to fiscal discipline. But, with most run by ANC, the move could …
Inflation worries in the Andes, good news elsewhere I nflation data released this week painted a mixed picture across Latin America. Headline rates rose in Peru, Colombia and Chile – and by more than expected. In all three countries, inflation is above …
Soft inflation gives relief for CEE central banks Inflation data released this week for Czechia and Hungary surprised again to the downside, in what has become a growing theme for the economies of Central and Eastern Europe. Czechia’s flash CPI data …
Labour market recovering The modest rise in employment in June, following the bumper rise in May, will provide further reassurance to the Bank of Canada that the economy is recovering from its weak start to the year. The 18,200 rise in employment in June …
To paraphrase Coldplay , nobody said that normalising energy output/exports from the Middle East would be easy, and so it is proving. We discussed the implications of the latest exchanges of military strikes between the US and Iran in more detail here and …
Downward inflation surprise leaves the door open to August rate cut The small fall in Brazilian inflation to 4.6% y/y in June means that another 25bp interest rate cut at Copom’s August meeting is still in play. The outturn was down from 4.7% y/y in May …
