Downside inflation surprise gives NBP room to hold off hiking The fall in Polish inflation to 3.1% y/y in May – when most had expected a rise above 3.5% - suggests that underlying price pressures are softer than we had thought. In the last couple of …
29th May 2026
China’s government bonds – unlike those almost everywhere else – have largely shrugged off the conflict. We think their medium-run prospects are bright even if a US-Iran deal renders obsolete their status as one of the war’s best hedges. At the time of …
Economy shrugging off energy shock At first glance, the Bank of Japan’s measures of underlying inflation suggest that the Board’s recent hawkishness is detached from reality. Indeed, all of those measures were well below the Bank’s 2% target in April and …
RBA has not tamed inflation yet Financial markets have continued to dial back their expectations for further tightening by the RBA. That should come as no surprise, given the slew of soft data released this week. To start with, we learnt that headline …
Resilient activity data lock in June rate hike The April activity data show that Japan’s economy is shrugging off the energy cost shock and cement the case for a BoJ rate hike next month. Taking industrial production first, the 0.8% m/m increase was much …
The latest surveys for Central and Eastern Europe (CEE) for May point to resilience in the face of the energy shock caused by the Iran war, with overall economic sentiment holding up well across sectors. Selling price measures point to a rise in …
28th May 2026
Soft data and (another) potential US-Iran deal offer hope that the US is not set for sustained bout of high inflation. But if inflation does stay higher for longer, history suggests that would be a major headwind to equities, especially in the tech …
The May RE:UK consensus forecasts showed that higher risk-free rates due to the Iran war are expected to hit commercial property capital values in 2026, and all-property total returns for the year have been cut from 8.2% to 5.8%. While we are more …
Past form suggests that a sustained period of high inflation would be a headwind to the US stock market and the outperformance of the so-called ‘big tech’ sectors. But inflation would probably need to be considerably higher and more sustained than …
The South African Reserve Bank hiked its policy rate by 25bp to 7.00% today as expected and, while it acknowledged that inflation risks are firmly to the upside, the Reserve Bank still looks likely to keep this tightening cycle brief. For now, we expect …
The part of the reported US-Iran deal that will be of most interest to energy watchers is the agreement to "open" the Strait of Hormuz. The Axios report suggests that shipping flows will be "unrestricted" with "no tolls and no harassment" and that Iran …
While some leading indicators point to a sharp slowdown in house price inflation in the coming months, the smaller rise in mortgage rates since the start of the Iran war than in past shocks and the more favourable economic backdrop mean the risk of big …
Russia is one of the main beneficiaries of the energy shock and we expect a smaller budget deficit, a larger current account surplus and a stronger ruble than we forecast before the Iran war started. But the economy entered the conflict with binding …
Asia Chart Pack (May 2026) …
What can investors expect from Kevin Warsh’s first meeting as Chair of the Federal Reserve Open Market Committee? How will the start of his term influence the internal debate about the path of interest rates? And how could the Chairman’s reform ambitions …
We expect the RBI to hike the repo rate by 25bps to 5.50% next week; 50bp a possibility Inflationary pressures are building, but concern over INR weakness is the key factor Other measures including revival of FCNR deposits may accompany tighter policy …
We estimate that non-farm payrolls rose by a smaller 65,000 in May, with the unemployment rate edging up to 4.4%. Cyclical hiring likely to slow The recent pick-up in hiring, with monthly payrolls growth averaging 76,000 so far this year, has been …
Softer gain in core PCE deflator buys the Fed some time The softer-than-expected 0.24% m/m gain in the core PCE deflator in April buys the Fed a bit of time as it waits to see how higher oil prices will feed through to broader inflation pressures. …
Italy’s unemployment rate has fallen to its lowest level since the mid-1970s, but recent declines have been driven by young people leaving the labour force rather than rising employment. Even if the labour force does not keep shrinking, it is likely to …
While the Iran war does not appear to have pulled the plug on the carry trade yet, the risk of a sudden unwind may continue to build for as long as the Strait of Hormuz remains closed. But even if it reopens quickly, we think conditions for the carry …
All of our coverage on the Middle East conflict can be found here . Progress towards re-opening the Strait? Peace talks between Iran and the US have provided a glimmer of hope that global energy markets could begin to normalise. The price of Brent crude …
Europe Commercial Property Valuation Monitor (Q2 2026) …
Weak activity, high price pressures Although the EC Economic Sentiment Indicator (ESI) rose slightly in May and selling price expectations fell back a touch, the big picture is unchanged: the euro-zone has suffered a significant stagflationary shock since …
The Bank of Korea today left interest rates unchanged at 2.50%, but clearly signalled that rate hikes were coming amid concerns about the inflationary impact of higher energy prices. We have adjusted our forecast and now expect two 25bp increases this …
Chinese policymakers have already improved rural migrants’ access to urban public services considerably over the past decade. The latest State Council plan is a continuation of those efforts rather than a dramatic shift. The latest proposals are positive …
Despite the continued rise in JGB yields, we don’t think global markets have much to fear from a rush of Japanese capital repatriation. The further surge in the yields of long-dated JGBs has resurfaced the question of whether Japanese investors might …
Weakness in consumption will keep RBA on the sidelines for now The fall in household spending in April will give the RBA pause for thought, raising risks to our view that it will deliver one final 25bp hike in Q3. The ABS’ monthly household spending …
BoK on hold, focus now on new Governor The Bank of Korea kept its policy rate on hold today at 2.50%, a decision that was widely expected and correctly forecast by 30 of the 32 economists polled by LSEG, including ourselves. The other two had expected a …
Within a sluggish national picture, metro jobs performance has varied widely with some cities – notably Washington – seeing big contractions, while others grew strongly – such as Las Vegas and San Jose. But while Southern metros have been less dominant in …
27th May 2026
High energy prices have given a boost to terms of trade in many Latin American economies, in particular Brazil. But we expect most of the windfall to be saved and have therefore only nudged up our growth forecasts slightly. Inflation across the region has …
Concerns that this administration’s anti-immigration push would trigger a sharp national slowdown in apartment demand have been misplaced. While unauthorised immigration has turned deeply negative, legal inflows – which are what matter for professionally …
The Bank of Japan looks set to raise rates at its June meeting in the face of an acute, energy-imposed shift in the country’s inflation dynamics, but how much further could the BOJ go to tighten policy, and what would that mean for financial market …
Not all high-profile US initial public offerings (IPOs) have presaged major corrections in the S&P 500. Nonetheless, this year’s hotly anticipated ‘AI’ deals – from SpaceX, Anthropic, and OpenAI – are likely to be a big test of the stock market’s …
Colombian assets would rally in the event of a victory for a right-wing candidate in the presidential election. Local currency bond yields appear to have the greatest scope to stage a post-election rebound. Sustaining the rally, though, would require a …
Our China Activity Proxy suggests that China’s economy slowed in April. However, this looks to have been entirely driven by weaker domestic demand on the back of a pullback in fiscal spending. Exports continued to expand at pace last month, and we are …
Note: Jennifer McKeown and Simon MacAdam answered clients' questions about the global inflation outlook and central bank responses in an online Drop-In briefing on Tuesday, 2nd June . Watch the recording here . Overview – Fears that the Iran conflict …
Even as the US and Iran seek a deal that would reopen the Strait of Hormuz and lower energy prices, investors are increasingly focused on the risk of higher inflation and tougher central bank responses. But how serious is the threat of a renewed inflation …
Higher energy prices will boost Angola and Nigeria’s economies. With elections on the horizon, governments are likely to spend their windfall. Most others in the region are having to manage worse terms of trade. Few will be spared from higher inflation, …
The RBNZ’s decision to leave rates on hold today came down to the wire, and it signalled that it would need to unwind its accommodative stance sooner rather than later. Accordingly, we’re bringing forward our forecast for the first 25bp hike to July, from …
RBNZ hands down a hawkish hold The RBNZ narrowly voted to leave rates on hold today and it seems like a hike could come sooner than our current forecast of Q4. That said, with the output gap still deeply negative, the Bank doesn’t seem inclined to lift …
Softer-than-expected inflation print gives RBA breathing room With price pressures somewhat contained for now, the RBA is all but certain to pause its tightening cycle in June. However, if we’re right that the rise in underlying inflation has further to …
Even after their recent rebound, long-term government bonds arguably have more room than equities (and most currencies) to stage a further recovery from the energy price shock if there is a sustained re-opening of the Strait of Hormuz and energy prices …
26th May 2026
Oil market options data suggest that investors expect oil prices to ease lower over the next three months, but given uncertainty around the Strait of Hormuz they have unusually low conviction. Oil prices have whipsawed in recent weeks, as they have been …
Capital outflows from EMs have generally eased over the past month. Further progress in talks between the US and Iran to re-open the Strait of Hormuz would help outflows to decline further. But even if talks fall apart, many EMs look well placed to …
While the long-run impact of AI should be positive, the transition to widespread adoption could prove economically disruptive. This risk is greater if AI adoption accelerates and workers, firms and policymakers prove slow to adapt. In an adverse scenario, …
A week spent visiting clients and contacts in Delhi and Mumbai has underscored the extent to which the Middle East conflict is reverberating through the economy. Several of our discussions were centred on the weakness of the rupee and the RBI’s next moves …
A rate hike is priced in for its June meeting, but how will the ECB balance the growth-inflation trade-off into the second half of 2026? Our Europe economists hosted this special briefing on how the latest energy shock is influencing the debate with the …
