Measures of fiscal risk premia have generally eased across Central and Eastern Europe (CEE) over the past few months, but the region’s public debt dynamics remain a point of concern. Budget deficits are wide and pressure for higher government spending – …
17th July 2025
Is South Africa on the brink of a major shift in its inflation targeting framework? How might an overhaul reshape the country’s inflation outlook and debt profile – and what would this all mean for bond investors? Our EM team hosted this special briefing …
With President Trump’s 1 st August deadline for high “reciprocal” tariffs fast approaching, recent weeks have seen a flurry of deals around the world. But where does all of this leave us and are markets right to be relieved? Our senior economists hosted …
24th July 2025
President Trump’s flurry of new trade deals with Asian economies is starting to reshape the region’s trade architecture. But what are the implications for supply chains, global fracturing, economic growth, and financial markets across Asia? Our Asia …
23rd July 2025
The market reaction yesterday provided a taste of what might be to come if President Trump followed through his threat to fire Fed Chair Jerome Powell, with the dollar, equities and short rates likely to fall but long rates potentially surging. Whether …
The economy faces a prolonged period of weak growth as US tariffs and uncertainty over the future of the USMCA weigh on exports and investment. We forecast quarterly GDP growth at or below 1% annualised over the rest of the year. Canada’s retaliatory …
Solid retail sales show consumer still in good shape The solid 0.6% m/m rise in retail sales in June and similar-sized gains in core (ex. autos) and control group sales should dispel any fears that overall consumer spending is faltering in response to …
Headline inflation in the euro-zone was at the 2% target in June, with the core rate a little higher. We forecast core inflation to decline to 2% by the end of the year, and if oil prices fall as we expect, headline inflation could be as low as 1.5% by …
The early evidence suggests that EM exports have held up well, despite higher US tariffs. That’s partly because exporters have front-loaded shipments to the US or (in China's case) have avoided high tariffs by shipping via third countries. So long as this …
This page has been updated with additional analysis since first publication. Fallout not as big, but payroll employment still falling The fallout in the labour market from the hikes in National Insurance Contributions and the minimum wage is not as big as …
Labour market starting to turn The sharp rise in unemployment in June makes the RBA’s decision to leave rates on hold earlier this month look like a policy error. We’re increasingly convinced that the incoming data flow will prompt the Bank to cut rates …
Japan’s exports should soften a bit further While overall exports are still holding up well, those to the US are plunging and we think soft global demand will result in a further decline over the coming quarters. The 0.5% annual fall in export values was …
Yesterday’s further ‘narrowing’ of the US stock market will have left it increasingly ‘concentrated’. But we don’t think these trends will reverse any time soon. And they may strengthen next year. To re-cap, more than 90% of the stocks in the S&P 500 fell …
16th July 2025
A tentative improvement The third consecutive rise in home sales in June lends some support to our view that house prices will soon stabilise, even if mortgage rates do not decline by quite as much as we expect. Elsewhere, developers continue to shrug off …
Based on the tariffs that are currently in place, the average US tariff rate is now about 15%, compared to 2.3% in 2024. Recent letters sent to US trade partners threaten to hike reciprocal tariff rates to near April 2nd levels in most cases, which would …
The tension inherent in the Milei administration’s goals of using a strong exchange rate to lower inflation while trying to improve Argentina’s external balance sheet is becoming increasingly apparent. We think the peso will need to weaken a lot further …
Tariffs neither boosting nor suppressing production The small rise in both industrial production and manufacturing output in June suggest that reciprocal tariffs are neither providing a boost nor suppressing domestic production. Industrial production rose …
PPI brings slightly better news on core PCE inflation There were fewer signs of tariff effects in June’s PPI data, meaning our estimate for core PCE prices now points to a trivially smaller 0.27% m/m rise last month. While prices are rising at slower pace …
May’s activity figures suggest that South Africa’s economic recovery remains slow and bumpy. While industry appears to have fared better recently, consumer-facing sectors appear to be losing steam. For now, though, tailwinds from looser monetary policy, …
Data published today showed euro-zone exports fell for a second successive month in May but there was evidence of continued front- running in sectors that have not yet been hit by tariffs. And even in sectors which have been hit by tariffs, exports were …
BI cuts rate, Trump touts trade deal with Indonesia Bank Indonesia (BI) resumed its easing cycle with a 25bp cut to its benchmark 7-day reverse repo rate, to 5.25%, today and, with inflation subdued and GDP growth likely to slow, we think there’s scope …
This page has been updated with additional analysis since first publication. Unexpected rise in inflation probably won’t prevent further rate cuts The unexpected rise in CPI inflation from 3.4% in May to a 17-month high of 3.6% in June (consensus & BoE …
We aren’t convinced that a pick-up in demand in response to looser monetary policy will unleash a wave of price hikes that firms were previously holding back. Accordingly, we’re sticking to our forecast that the RBA will loosen monetary policy a bit …
The latest US CPI report showed limited sign of any tariff impact but we continue to think that a rebound in inflation remains a headwind to US stock and bond markets this year – though it would probably help to drive a rebound in the US dollar. US CPI …
15th July 2025
The retail sector was suffering before the rise in tariffs as consumers were hit by higher costs and interest rates. But digging deeper exposes a divergent picture between higher and lower-earning households, which we expect to persist. As a result, while …
The pace of the increase in continuing jobless claims would have to accelerate significantly to present a risk to our forecast that the unemployment rate will only edge higher this year. The sheer number of labour market indicators out there means it is …
Experience from Ireland suggests that a ban on upward-only rent reviews will weigh on future rental growth and widen property yield spreads to risk-free rates. While the overall impact is unlikely to be large, if the proposed ban in England and Wales goes …
This webpage has been updated with additional analysis since first publication. Signs of tariff-induced price hikes still limited The 0.2% m/m rise in the core CPI in June indicates that the Fed’s preferred core PCE deflator rose by 0.3% last month, with …
Underlying inflation too strong for July cut and September looking shaky too The above-target monthly gains in CPI-trim and CPI-median in June leave the three-month annualised pace of those averaged measures holding uncomfortably high at 3.5%, meaning the …
A lowering of the South Africa’s inflation target is being hotly debated among policymakers and we are now factoring in a change to the target, from 3-6% now to 3±1%, into our forecasts. The Reserve Bank is unlikely to have a problem meeting the new …
Despite some weakness on the back of the latest tariff threats, emerging market currencies have broadly appreciated against the US dollar this year, mostly due to greenback-specific headwinds. We think most EM currencies will give back some of those gains …
European natural gas stores are low and efforts to refill them will support prices over the rest of this year. Further ahead, increased supply should bring prices down to a below consensus €25 per MWh in 2026. Since hitting a post-energy crisis high of …
Industry still resilient to US tariffs The increase in euro-zone industrial production in May confirms that the sector has been resilient to US tariffs so far and that may remain the case in the near term if, as we expect, Trump’s threat of a 30% tariff …
Inflation ticks up, but will start to ease before long Saudi Arabia’s headline inflation rate edged up from 2.2% y/y in May to 2.3% y/y in June and, while it is likely to rise a little further the coming months, we think there will be a return to …
New Zealand’s housing market is still struggling to recover from its steep post-pandemic downturn. Although we still expect it to turn the corner in the coming months, the risk is that it will remain a drag on the broader economy for longer than we …
This page has been updated with additional analysis since first publication. Growth is weaker than official figures suggest Official GDP data came in a touch weaker in Q2. But the figures still overstate the strength of growth by around 1.5%-pts. And t …
If President Trump follows through on his threat to impose secondary tariffs on buyers of Russian energy, leading to a sharp drop in Russian energy flows, it would invariably lead to higher global energy prices. The impact would probably be greater on …
14th July 2025
The Trump administration’s continued re-escalation of tariffs threats have so far made limited impact on financial markets, but one key difference in the way market participants have digested the recent flurry of threats is that the dollar has …
Although estimates of the 10-year Treasury term premium vary, most approaches suggest that it currently sits at around its highest level in a decade or so. We expect it to remain elevated over the coming years. The first and perhaps most widely used …
Mexico’s government seems confident that it can negotiate an agreement to stave off President Trump’s threat of a 30% tariff that was delivered over the weekend. And even if the tariff came into force, so long as carve-outs for USMCA-compliant goods as …
The public finances of several key advanced economies are, to put it mildly, in a mess. Recent attention has been on the United States, where the ‘One, Big, Beautiful Act’ has entrenched large federal budget deficits and reinforced concerns that the …
While the interest-rate-differential-defying strength of EUR/USD may be partly explained by increased currency hedging, it also reflects shifting expectations for economic growth. We think those will be dashed, even if the US doesn’t end up imposing a …
Saudi Arabia’s inflation rate has been remarkably soft relative to most of the emerging world in the post-pandemic era and we think it will slow further – and be weaker than most expect – over the coming years. Given the constraint of the dollar peg, this …
Larger-than-expected drop in inflation puts August rate cut back on the table The larger-than-expected fall in India’s consumer price inflation to 2.1% y/y in June raises the prospect of the RBI cutting interest rates further at its policy meeting next …
Credit growth nearing a cyclical peak The acceleration in broad credit growth last month, to a 16-month high, is a positive sign for the outlook and reduces the risk of a sharp declaration in near-term economic activity. But this tailwind looks set to …
Exports set to slow again before long Growth in export values rebounded somewhat last month, helped by the US-China trade truce. But tariffs are likely to remain high and Chinese manufacturers face growing constraints on their ability to rapidly expand …
Singapore’s economy rebounded sharply during the second quarter, but we doubt this resilience will last. We expect a broad-based slowdown in the coming quarters and continue to expect the central bank to loosen monetary policy further. According to the …
