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 …
15th July 2025
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 …
The US dollar is ending the week a touch stronger as President Trump continues to ratchet up his tariff threats again and US interest rate expectations edge higher. As widely expected, the 9 th July deadline for the “pause” on the US’ reciprocal tariffs …
11th July 2025
Fiscal tightening to cause inflation spike in Romania Romania’s fiscal tightening measures will add to the country’s inflation problem in the near term, and we’ve significantly revised up our CPI forecast over the next year. While inflation may be lower …
Trump keeps South Africa in his tariff crosshairs South Africa was threatened with a 30% reciprocal tariff again and, while the economic hit should be manageable, the uneasy relationship with the US suggests that an even higher tariff rate remains a …
You've got mail Canada found itself among the unlucky recipients of a letter from President Donald Trump this week, in which a 35% tariff was threatened to come into effect from August 1 st unless more was done to stop cross-border fentanyl flows. Though …
Inflation picture becoming more benign The raft of June inflation figures released across the region this week were encouraging. Headline inflation fell in Mexico , Colombia and Chile (and by more than expected in the latter two) while inflation in Brazil …
Our EM Financial Risk Indicators are a proprietary early warning system for tracking vulnerabilities across the major emerging markets. In this special briefing, our EM team will walk you through the highlights of our latest refresh, showing in which …
31st July 2025
The LDP’s weak performance in the Upper House elections signals pressure for looser fiscal policy, just as the Bank of Japan is constrained from tackling rising inflation in the face of tariff threats. With Japanese government bond yields pushing at …
21st July 2025
The Reserve Bank of Australia has consistently advocated a cautious approach to policy easing. But with economic momentum fading and the labour market showing signs of softening, the case for unwinding its restrictive monetary stance is growing. In that …
22nd July 2025
We warned last year that India’s equities were set to underperform in the near term – and that has proven the case. But the longer-term outlook is more encouraging: market capitalisation is set to rise and foreign ownership to grow as the government …
29th July 2025
Four months after the arrest of opposition leader Ekrem İmamoğlu reignited political risk in Turkey, market conditions have stabilised. The lira has firmed, capital is flowing back in, and reserves are rebuilding. But is the macro adjustment on solid …
President Donald Trump has turned his attention back to trade policy in recent days, threatening to resurrect higher reciprocal tariffs on many countries in another few weeks. He has also indicated that product-specific tariffs on copper, pharmaceuticals …
The further fall in GDP in May provided yet another excuse to talk down the UK economy. But there is some evidence that we are past the worst and the situation will improve from here (or, at the least, become less bad). Coming after the 0.3% m/m fall in …
Strong across the board The strong 83,100 rise in employment and the dip in the unemployment rate in June suggests the labour market is in better shape than we had feared, despite ongoing uncertainty around Canada’s trade relationship with the US. While …
Oil demand will struggle to keep up with OPEC+ The week started with oil traders digesting the news that OPEC+ decided to lift output by 548k bpd in August, putting the group on track to unwind it’s 2.2mn bpd of output cuts by September, one year earlier …
Supply-side approach has its limits Policymakers are becoming increasingly concerned about overcapacity and deflation, and are signalling a stronger intent to tackle the issue. On Wednesday, the People’s Daily ran a front-page commentary criticising the …
Tariffs stormed back into the headlines this week as the pause on ‘Liberation Day’ levies expired with a flurry of warnings about steep rate hikes unless deals are struck by 1st August. Group Chief Economist Neil Shearing unpacks the implications, while …
The media focus this week has continued to be on EU-US trade negotiations as the pause on Liberation Day tariffs was extended beyond the 9 th of July deadline and President Trump threatened to send a letter raising tariffs on the EU again. But in the …
We think the outperformance of Mexican assets and the peso since “Liberation Day”, owing to large tariff exemptions for exports to the US, has largely run its course. Instead, we think the weak economic backdrop in Mexico and the risk of renewed …
Sharp fall in June inflation could spur rate cut talk The major data release next week will be the consumer price inflation data for June – the last set of inflation numbers before the RBI’s next policy announcement on Wednesday 6 th August. We think the …
A damp squib Liberation Day 2.0 was largely shrugged off by investors, with most equity markets in Asia rising over the course of the week. This could be because tariff deadlines were extended by three weeks, giving countries more time to agree deals …
We think concerns about government deficits could put further pressure on long-dated bonds. Tests of investors’ nerves have come thick and fast lately, with the latest being a hike in tariffs in Canada. But, despite some small wobbles, the big picture is …
Deadline for trade deal extended to 1 st August The looming deadline for the imposition of reciprocal tariffs earlier this week proved to be a damp squib as Trump has now given Japan and a range of other countries until 1 st August to negotiate a deal. …
This page has been updated with additional analysis since first publication. Hangover continues, but signs of a recovery building The hangover from the burst of activity in Q1 ahead of rises in US tariffs and UK stamp charges continued in May with GDP …
Rates will bottom out in mid-2026 The RBA’s decision to leave its cash rate unchanged at its meeting this Tuesday shocked not only financial markets, which had fully priced in a 25bp cut, but also the overwhelming majority of economists. Setting aside the …
