As expected, the July 1 st deadline to renew CUSMA has come and gone thanks to the holdout of the US administration. This changes little in the near term, as the agreement will remain in place until 2036, subject to annual joint reviews. (See here .) And …
3rd July 2026
Colombia: finance minister pick points to austerity Investors are likely to take comfort from Colombian president-elect de la Espriella’s choice of Miguel Gómez Martínez as finance minister. He is an economist by training who served as Colombia’s …
Nigeria fiscal credibility needs to be prioritised The IMF warned this week that Nigeria’s budget deficit is wider than officially reported due to off-balance sheet spending, which comes on the back of recently-raised concerns about the use of total …
In their panel discussion at Sintra this week, Christine Lagarde, Kevin Warsh, Andrew Bailey and Tiff Macklem were all concerned that anything they might say could be misconstrued as forward guidance, so they gave little away. But President Lagarde did at …
Refining troubles put the brake on price falls Crude oil prices have remained under pressure with flows through the Strait of Hormuz picking up and Brent crude is now trading at $72pb, close to pre-war levels. (See here .) Much to the ire of President …
China’s powerful yet cheap models gain ground In mid-June, Chinese firm Z.ai launched an AI model – GLM 5.2 – that came close to matching the top US models on public benchmarks. Its intelligence score (a metric produced by Artificial Analysis that …
99 problems, but the £4.7bn “black hole” ain’t one The £15bn rise in defence spending announced by outgoing Prime Minister Keir Starmer in the long-awaited Defence Investment Plan may sound substantial, but it only amounts to an average of £3.8bn extra a …
Vietnam’s economy brushed off the impact of the energy shock in the second quarter. Data published today showed GDP growth accelerating from a revised 7.9% y/y in Q1 to 8.4% in Q2, comfortably beating the consensus expectation of a 7.6% rise. This was the …
The scale of Spain's migrant regularisation scheme, for which 1.2 million people have applied, highlights the role that immigration is playing in Spain’s economic outperformance. We expect continued high levels of immigration to keep Spain’s growth rate …
Sowing conditions have deteriorated India has just recorded its driest June in over a decade. The Indian Meteorological Department (IMD) is forecasting weaker-than-normal rainfall for the rest of the season too, on account of El Niño weather conditions. …
CEE activity holds up well in Q2 The latest survey data out of Central and Eastern Europe (CEE) this week painted a mixed picture for June, but the overall story is one in which growth looks to have strengthened over Q2 as a whole. The weakness was …
The tech sell-off doesn’t necessarily herald the imminent end of the AI bubble. Indeed, volatility could pick up quite a bit more, perhaps resulting in further sharp (but short-lived) drawdowns even if the S&P 500 ultimately continues to rise on net. …
RBA not out of the woods yet While we would broadly characterise the minutes of the RBA’s June meeting as somewhat hawkish, further policy tightening is far from guaranteed. One reason is that the Board sees tighter financial conditions as already …
Strongest increase in Tankan output prices ever The data released this week suggest that Japan’s economy has shrugged off the hit from the energy shock. While retail sales haven’t been a reliable guide to consumer spending in the national accounts, they …
A softer US non-farm payrolls report pours a bit of cold water on the idea that the US economy is overheating. However, we continue to think that the FOMC will stick to its hawkish stance, and that the US yield curve will resume flattening and the dollar …
2nd July 2026
FOMC hawks bruised but not broken June’s Employment Report was not exactly what the hawks on the FOMC would have been hoping for. The headline 57,000 rise in non-farm payrolls was almost exactly half the consensus expectation and, concerningly, basically …
Overview – The rise in gilt yields following the Iran war has so far not led to any increase in property yields, and we expect investors will largely look through what will be a temporary spike in risk-free rates. That said, we also doubt the fall in …
The recent heatwave is further evidence that Europe is heavily exposed to climate change. We do not think this will impact GDP significantly this year. But over the long run it will dampen GDP growth and may have more substantial implications for …
The Orbán administration’s pre-election spending splurge is likely to push the Hungarian government’s budget deficit towards 6.5% of GDP (on an ESA basis) by the end of this year. Our judgement is that Tisza will aim to bring the deficit down to 3%. But …
All of our coverage on the Middle East conflict can be found here . Strait of Hormuz picks up, oil prices fall further While the US-Iran deal has been under strain over the past week, traffic through the Strait of Hormuz has continued to pick up. …
Labour market stable but not yet reaccelerating The much weaker-than-expected rise in non-farm payrolls in June sows some doubt in our view that the Fed will reverse all three of its “insurance cuts” over the next three quarters. Nonetheless, with the …
This Focus answers some of the key questions clients have been asking us recently about the economic implications of AI, from the sustainability of the investment boom to when and where productivity gains are likely to appear. The report is organised …
Andy Burnham’s plans to deliver a big increase in council house building to post-Second World War levels will be expensive and would almost certainly require a chunky rise in public borrowing. The tight fiscal backdrop suggests this could be yet another …
*Note: this primer has been updated with additional analysis since first being published in February 2026.* This Update answers key questions on the ongoing joint review of the USMCA (a.k.a. CUSMA/T-MEC). We think the popularity of the trade agreement …
AI-related equity markets may be approaching a point where earnings expectations and capital expenditure assumptions become difficult to sustain. A correction in these expectations could trigger a broader equity market pullback and mark the peak of the …
1st July 2026
The Treasury yield curve has flattened over recent weeks despite an offsetting fall in inflation expectations. We wouldn’t be surprised if this curve inverted, but we don’t think a US recession is likely. Short-dated Treasuries have rallied today, …
ISM points to easing price pressures The slight fall in the ISM Manufacturing Index in June doesn’t change the fact that the sector has generally been resilient since the start of the Iran war. And with oil prices back around their pre-Iran war levels, …
We think Brazilian equities will underperform most other EM equity indices this year as commodity prices fall back and political risk remains a problem. In our view, Brazil’s equity market does not look significantly undervalued considering sector …
Headline inflation may already have peaked The substantial fall in headline inflation in the euro-zone in June left it below the ECB’s forecast, and if energy prices remain around current levels it will fall again in July. This makes us more confident in …
Overview – The limited hit to economic activity from the Iran war and our expectation that risk-free rates will fall back mean we forecast only a temporary slowdown in European commercial property value growth this year. Nevertheless, the narrow spread …
While any boost from higher energy costs to consumer prices will be short-lived, the continued weakening of the yen will provide a more longer lasting boost to consumer prices in Japan. Accordingly, we’re sticking to our above-consensus interest rate …
The markets would probably tolerate a rise in borrowing provided it is not too big (perhaps of up to about £15bn or 0.5% of GDP), it is primarily to invest, and it comes alongside a credible commitment to fiscal prudence. A bigger rise in borrowing and a …
This page has been updated with additional analysis since first publication. Housing market still weak, but falling mortgage rates pave way for recovery The stagnation in the Nationwide measure of house prices in June shows that the rise in mortgage rates …
Australian house prices continued to decline in June, and we think they won’t bottom out until early next year. Although much ink has been spilt about recent housing tax changes, they have yet to have a significant impact on house prices. Instead, …
We expect the RBNZ to begin its tightening cycle next week with a 25bp hike. With firms’ pricing intentions elevated, the Bank will want to guard against higher near-term inflation becoming embedded. Even so, the decision is likely to be finely balanced …
Tankan survey adds to case for rapid rate hikes The strength of the Q2 Tankan survey is consistent with our view that the Bank of Japan will tighten policy more aggressively than most expect. The headline index for large manufacturers jumped from +17 to …
De la Espriella opens the door to rate cuts in 2027 The Colombian central bank's (BanRep's) decision to hike its policy rate by 75bp, to 12.00%, probably marks the end of the tightening cycle. With a tighter fiscal stance likely under President-elect de …
30th June 2026
Table of Key Forecasts Global Overview – With risks surrounding the Iran conflict receding, the focus is shifting back to domestic economic fundamentals, which point to widening growth and policy divergence across the major economies. The US is set to …
With the USD/JPY rate edging its way through another “line in the sand”, a further round of intervention from the Japanese authorities may well be in the offing. As the past few years have demonstrated, that alone is unlikely to generate a sustained …
While the rise in Treasury yields over the past four months could increase the US government’s interest costs by about 0.3% of GDP over the next year, it is unlikely on its own to shake investor confidence in the government’s debt-servicing capacity, at …
Asia Chart Pack (June 2026) …
Africa Chart Pack (Jun. 26) …
Pause in house price falls will be temporary The unchanged level of house prices in April was a slightly better result than we had been predicting and reinforced our view that a sustained downturn in prices this year remains unlikely, despite a string of …
Broad-based strength confirms economy far from recession The stronger-than-expected 0.5% m/m rise in GDP in April extended beyond solely the oil and gas sector and, paired with the advance estimate of a 0.1% rise in May, leaves second-quarter GDP growth …
Lower inflation weakens the case for another ECB rate hike The national HICP data for June suggest that euro-zone headline inflation fell from 3.2% in May to 2.8% in June. That would leave it below the ECB’s forecast, making it less likely that the Bank …
The energy shock has weighed on India’s economy but GDP growth should still average 6.5% in 2026-27, an enviable rate by global standards. Rainfall in the early stages of the monsoon has been weak, and if this remains the case it would add to upside …
Moves in relative interest rates have contributed to the euro weakening against the US dollar since early May. We think that it will fall to around $1.10 by the end of the year as the Fed hikes twice (with another to follow in early 2027) and the ECB …
Downside inflation surprise strengthens case for prolonged rate pause The larger-than-expected fall in Polish inflation, to 2.5% y/y in June, will remove any lingering pressure on the central bank to raise interest rates. But with core inflation still …
