Economic data released this week cast some doubt on our forecast that euro-zone GDP growth will start to accelerate in the latter part of this year. Admittedly, the Composite PMI for the euro-zone rose again in August. However, it pointed to only a small …
22nd August 2025
Kenya’s scramble for finance and China alignment This week brought fresh details about Kenya’s strategy to deal with its fiscal problems, which appears increasingly reliant on liability management operations. This may alleviate short-term liquidity …
Though future changes to US tariffs could still cause some volatility in equity markets, we think other factors will mean equities outside the US continue to make decent gains for the rest of this year and next. It has generally been a good few weeks for …
July’s better-than-expected public borrowing figures did little to brighten the gloomy outlook ahead of the Autumn Budget. (See here .) The 44 basis point rise in 20-year gilt yields since the Spring Statement suggests the Chancellor’s headroom against …
Social security tweak will hurt near-term activity From 1 st September onwards, companies in China and their employees will no longer be able to avoid making social security contributions. This will pave the way for higher pay-outs over the medium-term …
EU natural gas: a brief climb before the steep drop The Trump-Putin summit in Alaska, as well as the subsequent meeting between President Trump and European leaders, didn’t deliver a breakthrough towards reaching an end to the war in Ukraine. In fact, it …
Korea – central bank to resume easing cycle After lowering interest rates by a full 100bps between October 2024 and June 2025, the Bank of Korea hit pause at its July meeting. Now, attention turns to Thursday’s decision – and it looks set to be a close …
The sharp rise in euro-zone negotiated wage growth to 4.0% in Q2 was entirely due to base effects. In the coming quarters the labour market should continue cooling, causing negotiated wage growth (and other measures of wages) to fall to a level consistent …
Overview – UK commercial property rental growth continues to surprise on the upside, but the capital value recovery is already running out of steam. Looking ahead, weak economic growth, a narrow spread between property yields and risk-free rates, and …
Tariff threats jolt policymakers into action Time is running out for India to secure a reduction to the 50% tariff on exports to the US ahead of the 27 th August deadline. Last week’s summit between Presidents Trump and Putin did not move the needle for …
RBNZ concedes more stimulus is needed The main event this week was the RBNZ’s meeting on Wednesday. Although the Bank’s move to cut rates by 25bp was widely anticipated, markets were caught wrongfooted by its overtly dovish pivot. Indeed, the Committee …
Tariffs starting to bite, but economy resilient The economic data released this week were a mixed bag. The doves on the BoJ Board will feel vindicated by the 4.3% m/m plunge in real exports in July. (See Chart 1.) And while that still left them above …
October rate hike still in play for BoJ Although inflation is likely to cool a bit further in the months ahead, it shouldn’t prevent the Bank of Japan from resuming its tightening cycle in October. Headline inflation fell from 3.3% in June to 3.1% in …
US interest rate expectations and the dollar are edging higher ahead of Fed Chair Powell’s much-anticipated final Jackson Hole speech tomorrow. Given the extent of policy easing still discounted in the US money market, the risks arguably are still skewed …
21st August 2025
India is not anywhere near as dependent on final US demand as many other EMs are but a total tariff of 50% would be large enough to have a material impact on GDP growth. If it sticks, the resulting drop in exports to the US could reduce GDP growth by …
Egypt: the door’s open for rate cuts to resume Egypt’s President al-Sisi this week renewed Hassan Abdalla’s term as Acting Governor of the Central Bank of Egypt (CBE) for another year in a sign that the government remains committed to macro orthodoxy. In …
Small improvement in sales doesn’t change the narrative Despite a small uptick in July, home sales have held in a narrow 3.9-4.1 million annualised range since mid-2023, a historically weak level that highlights the lack of momentum in the struggling …
This page has been updated with additional analysis since first publication. Activity rebounds, upside risks to inflation remain The rises in August’s composite activity PMI and services output prices balances marginally increase the chances that the Bank …
Slow growth and slight increase in price pressures August’s flash Composite PMI suggests that the euro-zone economy and manufacturing in particular have continued to be fairly resilient in the face of tariffs but that overall economic growth remains weak. …
Undershoot not as good as it looks July’s undershoot in government borrowing continued the decent start to the fiscal year and leaves borrowing broadly in line with the Office for Budget Responsibility’s (OBR) 2025/26 fiscal year forecast of £177.7bn. …
Even though direct government spending now accounts for the largest share of GDP on record, we aren’t convinced that this explains the prolonged weakness in productivity growth . The conventional wisdom is that an unbridled post-pandemic expansion in …
Early signs that US tariffs are starting to bite While the strength in the composite PMI in August confirms that Japan’s economy is proving resilient to global trade tensions, there are early signs that external demand is weakening in earnest. According …
Only limited support for Fed rate cut at July FOMC meeting The minutes of the Fed’s late-July FOMC meeting reveal that there was no broader support for a rate cut beyond the two formal dissenters – Trump appointees Michelle Bowman and Christopher Waller. …
20th August 2025
The actual tariff rate on US goods imports was only 9% in June, far below most estimates at the time of about 15%. This reflects a shift in the composition of imports towards countries and goods with relatively low tariffs. The actual tariff rate is …
Rising delinquency rates among typically lower-income FHA borrowers hint at stress in riskier segments of the residential mortgage market. But since most FHA borrowers remain in decent financial shape and FHA loans make up only a small share of …
Our EM interest rate forecasts generally lie on the dovish side. But, in particular, we think that investors are underestimating the scale of interest rate cuts that will be delivered in Brazil and South Africa over the next 18 months or so. In contrast, …
Rates left on hold, but window for cuts is opening The Bank of Israel (BoI) left its policy rate on hold again today, at 4.50%, and the accompanying communications continued to highlight concerns about the inflationary risks stemming from the ongoing war …
A year ago, our clients were citing geopolitical risk and the second Trump term as their key blind spots going into 2025. Those factors have indeed buffeted the commercial property recovery to some degree, but the dominating narrative is one of …
23rd September 2025
Will the Chancellor’s second Budget be as big and as bad for the economy as her first? Will it dampen or ignite the gilt market’s fiscal fears? Ahead of the Budget on 26th November, our economists will tackle these questions and more in a special …
7th October 2025
Will the US economy continue to outperform on the back of the AI boom? How will trade tensions shape global macro outcomes? Should investors expect further highs in equities – and brace for more bond market jitters? The World in 2026 is our definitive …
27th October 2025
2026 promises to be a transformative year for emerging markets. China's next Five-Year Plan will signal Beijing's development priorities through the end of the decade, elections across key economies could trigger sharp policy shifts, and supply chains …
10th December 2025
The opening months of the Trump administration have generated plenty of noise about a remaking of the global order – but how much is actually changing? Is the breakdown in US–China relations still the defining challenge for the global economy? And what …
18th August 2025
July’s increase in core goods inflation in the euro-zone looks like a one-off, whereas services inflation is likely to keep falling. We forecast core inflation to fall from 2.3% in July to 2.0% by year-end. Data published this morning confirmed that both …
Despite signs of weakness in the broader trade data, China’s New Three export volumes reached a record high in July. This was mainly driven by a rise in exports of lithium-ion batteries. And while some of this may be due to tariff front-running, other …
Weak core inflation keeps door open to more rate cuts The jump in South Africa’s headline inflation rate to 3.5% y/y masked continued weakness in core inflation, which leaves the door open for the Reserve Bank’s easing cycle to continue. We remain …
BI cuts, a bit more easing on the cards Bank Indonesia (BI) cut its benchmark 7-day repo reverse repo rate by 25bp to 5.00% today and, with inflation subdued and GDP growth likely to slow, we think there’s scope for more easing over the rest of this year. …
Europe Commercial Property Chart Pack (Q3 2025) …
We think Chinese government bond (CGB) yields will be on the way back down before long, despite the PBOC’s apparent caution around rate cuts. At first glance, the PBOC’s decision to keep its Loan Prime Rate on hold today looks like another nail in the …
This page has been updated with additional analysis since first publication. Riksbank holds policy rate at 2% and will do so over the next couple of years The Riksbank left its policy rate unchanged today, judging that the recent deterioration in the …
This page has been updated with additional analysis since first publication. Rise in inflation won’t move the dial on interest rates much While the rise in CPI inflation from 3.6% in June to 3.8% (consensus and Capital Economics forecast 3.7%) will fuel …
When the RBNZ slashed rates by 25bp today, it effectively endorsed our long-held forecast for a below-consensus terminal rate of 2.5%. However, with the Bank judging the balance of risks to the outlook as tilted to the downside, we now expect the trough …
