New fiscal rules mooted in Brazil and South Africa could, if implemented, make significant inroads into their public debt problems by reducing high borrowing costs. But the devil will lie in the detail. Brazil’s recent experience with fiscal rules …
20th October 2026
The recent pick-up in core inflation in Korea is less concerning than may first appear. A large chunk of it can be attributed to the indirect impact of the energy shock and to the global AI boom pushing up prices for electronic components. But these …
In two 20-minute online sessions, we’ll be previewing what the Budget could mean for the economy and markets at 3pm BST on Thursday 22 nd October (register here ) and discussing what was announced in the Budget at 3pm GMT on Wednesday 28 th October …
The Bank of Canada’s latest quarterly surveys show renewed trade tensions have disrupted the recovery, with a stark contrast in sentiment between firms surveyed before and after new tariffs were imposed. Simultaneously, a combination of tariffs and higher …
19th October 2026
EM public finances have become more vulnerable to higher interest rates in recent years. Some major EMs with underlying fiscal vulnerabilities – including Brazil, South Africa and Hungary – have benefited from a decline in bond yields this year as fiscal …
Softer core reading should keep the Bank from hiking next week The easing in core price pressures back to a roughly target-consistent rate, paired with recent weak Labour Force Surveys, should keep the Bank of Canada from hiking next week despite Governor …
The further sell-off today in Indonesia’s financial markets following MSCI’s latest threat to downgrade the country’s stock market means that a 25bp interest rate hike, to 6.00%, at Bank Indonesia’s meeting on Wednesday now seems more likely than not …
France appears to be heading for a fiscal crisis which could lead to contagion and potentially a recession in the euro-zone. However, several factors mean the contagion risks to other countries’ bond markets and economies are lower than they were during …
Two themes have dominated markets over the past few weeks: the sustainability of the AI investment boom, particularly the debt financing behind it, and the sell-off in bond markets, which at one point earlier this month pushed 10-year US Treasury …
We don’t think the AI bubble has burst yet, but if tech does come under further pressure it might not immediately spread to the rest of the market. Meanwhile, we remain upbeat on Treasuries. AI equities in trouble again Tech stocks were back under …
Official GDP growth accelerates in Q3 The improvement in official GDP growth last quarter is at odds with the slowdown shown by our China Activity Proxy (CAP). But the September data do suggest that the economy regained momentum at the end of Q3 and we …
The evidence that the neutral rate of interest has continued to rise is mixed. And with excess demand now clearly diminishing, we’re not convinced that further monetary tightening is warranted. The minutes of the RBA’s September meeting noted that the …
The September CPI and PPI data delivered a decidedly “discouraging” message for the Fed, to use Chicago Fed President Austin Goolsbee’s words, with core inflation on both measures surprising to the upside. While comments from officials suggest that an …
16th October 2026
Anything you can do… Data released on Thursday showed manufacturing sales volumes were flat in August. (See here .) Given that industry has generally performed well this year – and not solely due to the boost from higher oil prices – it is tempting to …
So far this year, long-dated Treasuries have been a poor hedge against AI wobbles when this has coincided with rising oil prices. But we think they would fare well if the AI boom turned to bust as we expect, even if that coincided with higher oil prices. …
Despite the rise in long-term risk-free interest rates, UK commercial property capital values have remained broadly resilient. While leading indicators point to a modest decline of around 1% in 2026, with valuation pressures contained we think the risk …
Following 0.4% m/m gains in both June and July, the 0.1% m/m rise in GDP in August showed that the economy continued its remarkable resilience to higher energy prices and borrowing costs. (See here .) This resilience has surprised us. Some of it is …
What to make of Banxico’s dovish tilt The minutes to the last Banxico meeting caught many (ourselves included) off guard, with three of the five Board members open to an interest rate cut. This was quite a shift. The minutes to the August meeting didn’t …
SA MBTPS to reaffirm fiscal discipline as risks rise We expect South Africa’s Finance Minister Enoch Godongwana to reaffirm the Treasury’s commitment to fiscal discipline at Wednesday’s Medium Term Budget Statement (MTBPS). The debt-to-GDP ratio looks set …
Industry still coping with higher energy prices The rebound in manufacturing output in September will ease jitters around August’s unexpected fall. While the strength of the AI buildout looks to be masking weakness in other areas feeling the bite of …
One step forward, two steps back for the housing market The rise in mortgage rates has sent the housing market into reverse, with sales and prices both falling in September. The near-term risks to mortgage rates lie to the upside, which means prices could …
Are higher energy prices finally taking a toll? August’s official activity data suggest that euro-zone GDP growth slowed in Q3. Admittedly, some one-off factors weighed on industrial output in July and August, including temporary auto plant closures. …
China's economy is slowing, but not collapsing. Domestic demand remains weak, the property downturn continues to weigh on growth, and deflationary pressures persist. Yet exports remain remarkably strong, helping to drive a growing trade surplus and …
Houthi strikes on Riyadh (see here ) and Saudi Aramco’s headquarters, more Iranian attacks on ships in the Persian Gulf, and the end of the short-lived “energy ceasefire” between Russia and Ukraine all add to the sense that there is no decisive end to …
Weak fundamentals keep yields falling The 10-year yield on Chinese government bonds (CGBs) hit a 15-month low of just 1.64% this week. Its decline contrasts sharply with rising yields in other major economies, particularly since the global bond sell-off …
The constraints on diesel supplies from Russia and the Middle East risk causing the energy supply shock to morph into an agricultural commodities supply shock too. While we already expect agricultural prices to rise a bit further over the next few …
September’s euro-zone inflation data highlight that the energy shock is still much smaller than that in 2022, and the indirect effects of higher energy costs have so far been negligible. We suspect that these indirect effects will start to feed through in …
US sanctions relief offers Russia limited respite The US appears to be moving towards easing sanctions on Russia, partly in an effort to alleviate strains in global oil markets. But the economic benefits for Russia – and the impact on oil supply – will …
RBI spurs rupee recovery The rupee has strengthened by around 2% against the greenback this week (see Chart 1) following a package of measures from RBI aimed at curbing dollar demand and deterring speculative bets against the currency. Chart 1: Indian …
BI on hold, but MSCI threat raises chances of hike MSCI’s proposal to downgrade Indonesia from emerging market status to a standalone index has dealt a fresh blow to investor confidence. (See here .) The stock market has fallen by 11% today meaning that …
We think the selloff in French OATs has further to run over the coming year and spreads could conceivably rise much further, perhaps to around 200bp, given that attempts to put France’s public finances on a more sustainable appear half-hearted. And even …
Malaysia continues to benefit from AI boom GDP figures released today show that Malaysia’s economy slowed from 6.0% y/y in Q2 to 5.3% in Q3, according to advance estimates. While this was a marked slowdown, growth remained pretty decent. Manufacturing …
MSCI’s proposal to downgrade Indonesia from emerging-market to standalone-market status is a further major blow to the country’s standing among international investors. The index provider said reforms to improve market transparency and trading practices …
Case for tightening remains intact September’s 0.3% m/m fall in the PPI paints a misleading picture of underlying price pressures. For one thing, the preliminary reading is likely overstating the weakness: initial PPI readings for January-August were …
Unemployment rate surpassing RBA’s forecasts The minutes of the RBA’s September meeting were quite hawkish, with the Board debating “tentative signs” that the neutral rate of interest had risen further. As a result, the Board argued that monetary …
Hot US inflation data over the past couple of days have been overshadowed by renewed questions around the sustainability of the AI boom. With both equities and Treasury yields dropping sharply for the first time since the US-Iran war began, the mood music …
15th October 2026
Concerns about soft activity partly explain the dovish tilt by Mexican policymakers shown in the latest Banxico minutes, but this downbeat view looks hard to square with the recent improvement in the latest data and an easing drag from fiscal policy. We …
The blow to GDP from the loss of Quebec industry and Alberta’s oil and gas sector could be mitigated somewhat by continued free trade, firms relocating from the seceding provinces to the rest of Canada (RoC), and a weaker loonie boosting export …
Saudi Arabia on edge as Houthis step up attacks The Iran-backed Houthis in Yemen launched fresh attacks on Saudi Arabia over the past week or so. Strikes on Riyadh’s King Khalid International Airport grabbed headlines. We looked at the implications in …
Israel’s upcoming election is unlikely to have a major impact on the country’s near-term growth outlook or fiscal trajectory, but it will have significant medium-term implications. An opposition-led government would probably ease diplomatic risks, reduce …
Strong headline number masks underlying weakness The muted rise in control group retail sales suggests that real consumption was little changed in September. While that still leaves real GDP growth on track to rise to a little over 3% annualised in the …
Rebound in manufacturing sales not as good as it looks The rebound in manufacturing sales in August was purely down to price effects, with volumes unchanged as new Section 338 tariffs began to weigh on the factory sector. Combined with a sharp contraction …
PPI adds a bit more pressure on the Fed The upside surprise in producer prices in September was driven in part by the components that feed directly through to the core PCE deflator, with our estimate now pointing to a 0.35% m/m gain. That makes an October …
Overview – Our latest deep dive into the drivers of inflation reinforces our view that markets are overstating the risk of persistent price pressures and pricing in too many interest rate hikes. After rising in the near term, inflation should fall in …
Medium-term outlook still downbeat After making a slow start to Q3, we expect euro-zone industrial production to have picked up in September. But the medium-term outlook remains poor due to pressure from China and rising wholesale natural gas prices which …
In two separate 20-minute online sessions, we’ll be previewing what the Budget could mean for the economy and markets at 3pm BST on Thursday 22 nd October (register here ) and discussing what was announced in the Budget at 3pm GMT on Wednesday 28 th …
Cooling labour market should keep RBA on the sidelines The clear deterioration in labour market conditions should give the RBA greater confidence that policy settings are adequately restrictive. The 39,000 fall in employment in September was a markedly …
