We have not changed our view that inflation and interest rates will fall further than most expect. (See here and our UK Data Dashboard .) But the data released over the past week raises the chances that inflation will remain higher for longer and rates …
18th July 2025
Signs of thaw, but risks remain A little over three weeks before the 90-day tariff pause agreed in Geneva is due to end, the US-China relationship is warming. Trump on Wednesday sounded positive about the prospects of an agreement on fentanyl – the …
Sentiment remains weak but improving The small rise in the University of Michigan consumer sentiment index in July and further drop-back in inflation expectations shows that, while overall confidence remains weak, households are less worried than they …
Regulators will be pleased with the increase in the number of takeover bids in the European banking sector over the past couple of years as they would like the EU to have fewer but larger and more competitive banks. However, interventions by several …
CBRT may opt to tread more cautiously The big macroeconomic event in the region next week is the Turkish central bank (CBRT) meeting, at which it’s likely to resume its easing cycle. There is a wide range of forecasts as to the size of the interest rate …
Tariff impacts tangible but localised The June data released this week showed that, while tariff effects are crystallising in particular industries, broader impacts have so far been avoided. Both the CPI and PPI releases showed heightened price pressures …
301 investigation gives Brazil little wiggle room Actions and words from both the US and Brazilian governments this week make it increasingly difficult to see an off-ramp in which Brazil avoids the punitive 50% tariff that President Trump threatened last …
Group Chief Economist Neil Shearing sifts through a deluge of DM inflation data to highlight where tariff effects are coming through, where price pressures look too hot and which central banks are best positioned to press on with policy easing. He also …
Attention returns to sanctions on Russia One of the key themes that developed in the oil market this week was the prospect of additional and tightening sanctions on the Russian energy sector. Indeed, the week began with President Trump threatening on …
Overall outlook remains poor The pick-up in housing starts in June is less encouraging than first appears, as it is narrowly concentrated in both the volatile multifamily sector, and in the Northeast of the country. Single-family housing starts declined …
The latest news on trade negotiations between European countries and the US are increasing concerns around future tariffs. US President Trump has said that a 200% tariff on pharmaceutical products and related goods will “probably” be announced by the 1st …
Indonesia joined Vietnam this week in securing a trade deal with the US. The deal, based on Trump’s Truth Social post, will see US imports from Indonesia subject to a 19% tariff (compared to a tariff of 32% announced on “Liberation Day” in April which was …
India wants better deal than Indonesia & Vietnam President Trump’s comment this week that a trade deal with India was “close” but that it would be along the “same line” as the one announced on Wednesday with Indonesia raises the prospect that India could …
Taiwan’s gridlocked government could secure a legislative majority and freedom to enact its policy goals if recall votes next week go its way. The immediate implications for the economy are limited – inflation could end up a little lower. But a concerted …
The current narrow spread between property yields and financing costs, combined with bullish lender capital value expectations, might be seen as an indication that a credit cycle is brewing and capital values are about to take-off. But other market …
We don’t think worries about Japan’s fiscal position are too severe, and expect the country’s equities and exchange rate, at least, to recover by the end of the year. At face value, concerns about Japan seem to be building again. The yen, for example, has …
Broad based softening in growth likely GDP growth in Malaysia picked up during the second quarter but we expect this strength to fade and continue to expect the central bank to cut interest rates later this year. According to the advanced estimate …
Indonesia’s government is cutting spending and considering new taxes as it tries to prevent the budget deficit breaching the 3% of GDP legal limit. An alternative for President Prabowo Subianto would be to ditch, or at least find a workaround for, the …
This week’s Central Urban Work Conference didn’t deliver the revival of the shantytown redevelopment scheme that helped stabilise China’s housing market a decade ago and that some had been hoping for. Policymakers appear to have concluded that any …
But tariff uncertainty could still delay rate hikes The economic data released this week leave the case for tighter monetary policy firmly intact. For one thing, export volumes rebounded in June and were nearly as strong as they were in February. …
RBA can pivot back to an easing bias The ABS’ monthly labour force survey published yesterday increasingly suggests that the Australian labour market is going through something of a soft patch. Indeed, the modest rise in employment in June just barely …
Price pressures remain firm, but tariff uncertainties could still delay next rate hike Underlying inflation remains elevated and is almost certain to overshoot the Bank of Japan’s forecasts. However, with trade tensions looming large over the economy, the …
Yesterday’s reports that President Trump is considering firing Fed Chair Powell imminently were quickly denied and most key market prices have reverted to roughly where they were before the news broke. But the sharp price swings in the hour or so between …
17th July 2025
Tariff negotiations rumble on, but our base case remains that the tariffs ultimately imposed will not cause a recession – though we expect growth to slow. We forecast GDP growth of 1.6% this year and 1.5% in 2026. Price effects have been limited so far, …
IMF lays out Egypt’s path for next stage of reforms In the wake of the delay to Egypt’s latest IMF review, the Fund this week published its latest Article IV and ‘ Selected Key Issues ’ reports on the country. While the IMF reaffirmed its praise for the …
The ECB looks set to leave its deposit rate at 2.0% next week. We are forecasting a 25bp rate cut in September, but a prolonged pause is possible. Tariffs will dominate the conversation but not yet affect ECB policy. The ECB looks set to leave rates …
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 – …
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
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
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 …
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
