While overall surveyor sentiment remains negative, the Q1 RICS survey appeared to show a divergence in views between respondents of where in the cycle the market currently is. We think the apparent differences in views stem from the growing discrepancy …
26th April 2024
The continued decline in core inflation will make it difficult for Norges Bank to stick to its current guidance that it will leave interest rates unchanged until Q4. We suspect that the Bank will change its forward guidance next week to acknowledge the …
The Bank of Japan is getting more confident in meeting its inflation target on a sustained basis and signalled that inflation wouldn’t have to overshoot for policy to be tightened further. Nonetheless, policy rate hikes will become difficult to justify …
Wage increases becoming more widespread The Bank of Japan’s measures of underlying inflation suggest that the case for further policy tightening is diminishing as two out of three indicators fell below the Bank of Japan’s 2% target in March. (See Chart …
Surprise hike by Bank Indonesia Bank Indonesia surprised financial markets (and ourselves) when it raised interest rates at its scheduled meeting on Wednesday. The hike was a direct response to the increased uncertainty in global financial markets …
Bank of Japan will hike rates further in July The Bank of Japan signalled growing confidence in meeting its inflation target at today’s meeting and we’re sticking to our forecast that it will increase its policy rate further to 0.3% in July. As widely …
The plunge in inflation in Tokyo in April was mostly due to a sharp fall in high school tuition fees and the provision of free school meals. The impact of those policy changes on nationwide inflation will be much smaller and they won’t affect the Bank of …
The last mile will be the hardest The release of Australia’s quarterly CPI data this Wednesday made for grim reading. With price pressures proving more stubborn than most had anticipated, markets have now given up any hopes that the RBA will cut rates …
The US dollar would have to appreciate a lot further before having significant effects on the global economy and financial system. A key risk to watch for is the widening policy divergence between the US and Asia leading to a major depreciation in the …
25th April 2024
Hikes are back on the agenda at some central banks and core PCE data for Q1 added to the hawkish mood in US markets. But we don’t think the Fed will feel the need to start hiking again. Indeed, given the path of underlying inflation, we continue to think …
Africa Chart Pack (Apr. 2024) …
The fading of weather-related support and broader evidence of easing labour demand lead us to expect a smaller 200,000 rise in non-farm payrolls in April. We expect the unemployment rate to be unchanged at 3.8%, while average hourly earnings growth should …
The latest RICS survey suggested that there was a further improvement in occupier and investment demand at the beginning of 2024. However, the big picture was one of a very weak market, reaffirming our view that rent growth will slow further and the …
The Q1 RICS commercial survey provided further evidence that occupier demand has turned the corner, with demand ticking up in the industrial and office sectors. But with availability still elevated, office and retail rents are expected to decline over …
Foreign-born workers have been entirely responsible for the post-pandemic recovery in employment. But a gradual rise in labour market participation and a moderation in net migration may mean the share of UK-born employment starts to rise again. The risk …
A later start to Fed rate cuts than we anticipated will push the fall in mortgage rates and recovery in activity into the second half of the year. But as we think that the Fed Funds rate will eventually be cut by more than markets have currently priced …
GDP growth slows, but underlying momentum remains strong First-quarter GDP growth came in weaker-than-expected at 1.6% annualised, the weakest quarterly gain in almost two years, but the strong 3.1% gain in final sales to private domestic purchasers …
Stalling privatisation drive a blot on Egypt’s reforms Having previously pledged to reinvigorate its state privatisation drive, Egyptian officials have significantly pared back their targets. This could remain the one demerit on its IMF report card. …
Hawkish message as rates remain on hold Turkey’s central bank left its policy rate on hold at 50.00% at today’s meeting, but the statement continued to strike a hawkish tone amid persistent inflation risks in the economy. While we think the tightening …
Spanish house prices have risen 5% over the last two years despite rising interest rates. The relative affordability of houses in Spain is the main reason that the market remains strong, but the resilience of foreign demand for houses and a rising …
House price growth in London remains negative according to the ONS, but timelier measures of house prices and sentiment suggest that activity has picked up and prices are regaining momentum. The recent slight increase in mortgage rates may temper the …
The paring back of expectations for interest rate cuts in advanced economies this month has generally come alongside an upward revision to interest rate expectations across Emerging Europe. However, we think analysts may still be overestimating how far …
GDP growth in Korea rose sharply in Q1 but we don't expect this strength to last. Weak global growth is set to weigh on exports in the near term while tight monetary and fiscal policy will curtail domestic demand. Today’s figures show that the economy …
Even if the US dollar stays strong against most currencies this year, we think that much of the broad-based weakness in EM (emerging market) FX has run its course. While some EM central banks may now slow their easing cycles, major shifts in policy are …
24th April 2024
India has been the star performer among major EMs over the past several quarters and the latest data suggest that the strength of economic activity has continued through to the eve of the election. Headline inflation is grinding back to the RBI’s 4% …
All-property yields have been broadly stable since the start of the year. Higher-than-expected interest rates mean yields may see a further small rise over the next few months, but we still think they will flatten out by end-24. However, with no yield …
Hot inflation data dash hopes for rate cuts anytime soon Will take longer for the Fed to get “greater confidence” about path to 2% inflation. Nevertheless, cuts in 2024 still plausible The recent run of stronger inflation and activity data has …
The policy shifts underway in Turkey, Nigeria, Argentina and Egypt have ticked a lot of the right boxes so far, but it will take years for the full economic benefits to materialise and require policymakers to remain committed to reforms. We’re most …
Retail sales growth disappointing The surprise fall in retail sales in February and the apparent stagnation in March means they had a disappointing first quarter. That reinforces our view that the Bank of Canada is likely to cut interest rates at the next …
First-quarter business equipment declined The rise in durable goods orders in March was mainly due to the volatile transport component, with core and underlying capital goods orders only inching up. While underlying capital goods shipments rose last …
Rise in inflation puts the final nail in the coffin for a May rate cut The rise in Mexico’s headline inflation rate to 4.6% y/y in the first half of April, coming alongside the delay to rate cuts in the US (and fall in the peso), mean that Banxico is all …
Activity in the region picked up in Q1 and we expect this to continue in the coming quarters. But growth over the year as a whole will fall short of consensus expectations. The disinflation process is entering a slower phase and the delay in rate cuts …
The escalation of the conflict between Israel and Iran has largely been shrugged off by the oil market and risk premia in the Gulf remain low. Even so, growth will remain weak in the Gulf this year. There will be bigger macro consequences from …
The Central Bank of Nigeria’s (CBN) monetary policy reforms have injected a welcome dose of momentum back into the country’s policy shift. But the minutes to the latest MPC meetings also suggest that a slowdown in growth could prompt a (premature) shift …
Our China Activity Proxy (CAP) suggests the economy saw a healthy expansion in March, driven by the continued strength of industry. While we think that fiscal support will keep fuelling the economy in the near-term, structural headwinds will start to drag …
You can use the "Table of Contents" feature, found on the top right of the webpage, to navigate this publication quickly. Summary: The rally in equities over the past year or so, driven in no small part by hype around AI, has left stock markets looking …
In a surprise move, Bank Indonesia (BI) today hiked its main policy rate by 25bps (to 6.25%) and made clear that supporting the currency would remain its key priority over the coming months. But there is a good chance this will be a case of “one and …
While EM policymakers haven’t raised concerns about Chinese overcapacity in the same way that their counterparts in the US and Europe have, they too are facing widening trade deficits with China. We suspect EMs will be less likely than DMs to turn to …
This page has been updated with additional analysis since first publication. Signs of life for the German economy The rise in the German Ifo in April, together with the jump in the Composite PMI in the same month, suggests that the German economy may be …
Hike aimed at supporting the currency In a surprise move, Bank Indonesia (BI) today hiked its main policy rate by 25bps (to 6.25%), and made clear that supporting the currency would remain its key priority over the coming months. However, with …
The latest activity data suggest that GDP contracted at the start of the year, but a rebound is very likely over the coming quarters. Goods inflation should keep slowing rapidly, but strong wage growth will keep inflation above the BoJ’s target for most …
Upside inflation surprise bodes poorly for rate cuts With price pressures proving inordinately resilient, there is little scope for the Reserve Bank of Australia to start loosening policy in the near future. The 1.0% q/q rise in consumer prices in Q1 was …
Although the BLS’s new tenant rent index has overstated the speed of the slowdown in shelter inflation, the leading indicators remain unanimous in their message that the slowdown is still coming. Despite some larger monthly rises in core goods and …
23rd April 2024
The latest e-commerce statistics suggest that the pandemic has left US online sales on a permanently higher trend. That will be bad news for retail rents generally, though the detailed data also hint that there may have been a return to physical shopping …
We expect corporate bond yields in the UK and euro-zone to fall as rate cuts in those economies push down risk-free rates and strong risk sentiment narrows spreads further. In contrast to the weaker-than-expected PMI data out of the US today, PMIs for …
The latest flash PMIs suggest that GDP growth picked up in most advanced economies at the start of Q2. But stronger services activity risks keeping price pressures elevated in some DMs. The flash PMIs for April suggest that economic activity picked up in …
Largest increase in new home sales in over a year The large uptick in new home sales in March is consistent with our above-consensus prediction that sales of new homes will climb to 750,000 by year end. The 8.8% rise in new home sales in March took them …
Prime office rent growth in Scandinavia is expected to moderate in the coming years as soft demand and rising supply push up vacancy. But having trailed the other Scandinavian cities in 2023, we think that tighter supply could help rent growth in Oslo …
If sustained, the recent rises in market interest rate expectations and gilt yields may mean that the Chancellor has only around £5bn of fiscal headroom, down from £8.9bn in the March Budget, with which to fund further tax cuts before the next election. …
