The main takeaway from Thursday’s ECB meeting is that a rate cut in June is highly likely. Big upward surprises to inflation and wage growth data, or increases in the ECB’s updated inflation projections, would probably be necessary for officials to hold …
12th April 2024
Bernanke puts the boot in, but doesn’t recommend the BoE projects interest rates Our initial impression (our full analysis is here ) of the changes to the Bank of England’s forecasting and communications recommended by Ben Bernanke is that they would go a …
We think ‘value’ stocks will generally underperform their ‘growth’ counterparts while a bubble in the US stock market continues to inflate, even if Treasury yields don’t drop back in the way that we expect. Depending on your perspective, value stocks – …
China’s energy and industrial metal imports were generally strong in the first quarter. We expect them to hold up well in the coming months as fiscal stimulus continues to support construction activity, but we expect import growth to subside later in the …
After a positive end to 2023 commercial property investment has since lost momentum, not helped by a rebound in interest rates. But we still think interest rates will fall back this year and, while commercial capital values may see a further decline, …
Global Economics Chart Pack (April 2024) …
Encouraging signs for manufacturing sector The general election is a week away and manifestos have finally been released. The main opposition Indian National Congress (INC) party has now published its full manifesto, while the BJP published manifestos for …
The Bank of Korea left its policy rate on hold today (at 3.5%), but kept open the possibility of rate cuts later this year. However, with inflation concerns continuing to linger, we are pushing back the timing of when we think the central bank will cut …
This page has been updated with additional analysis since first publication. Recovery well underway, but inflation will continue to fall The 0.1% m/m rise in GDP in February (consensus and CE +0.1%) and the upward revision to the gain in January from 0.2% …
Markets fret inflation risks The RBNZ’s meeting this Wednesday went by without much ado, with the Bank leaving rates unchanged as everyone had expected. If anything, the Committee sounded a touch dovish, as it no longer mentioned its limited tolerance for …
Yen falling to fresh 34-year low Following a hotter-than-expected US inflation print, the yen has now weakened to 153 against the dollar for the first time since 1990. Bank of Japan Governor Ueda explicitly ruled out responding to the weakness of the …
This page has been updated with additional analysis since first publication . Export volumes remain strong Despite a larger-than-expected y/y fall in export values, export volumes climbed to record highs. Nonetheless, we still think export volumes will …
We don’t expect the tough times to last for Treasuries. But although their woes so far have coincided with big gains in the stock market (at least until very recently) we don’t think a recovery in Treasuries would necessarily coincide with an end to …
On hold, early rate cut unlikely With inflationary pressures lingering, the currency falling sharply and expectations of a rate cut by the US Federal Reserve being pushed back, the prospect of an early rate cut by the Bank of Korea (which today left …
The Monetary Authority of Singapore (MAS) kept policy settings unchanged today, as expected, but with the economy set to remain weak and core inflation on track to resume its downward trend soon we think the MAS will loosen policy at its meeting in …
Today’s ECB policy announcement and press conference support our forecast for a June rate cut. Given that we expect more rate cuts than the money market discounts, we think that Bund yields will fall back towards 2.25% by the end of the year. Today’s …
11th April 2024
Despite yet another hotter-than-expected US CPI release, there are few signs in bond markets that long-term inflation expectations are de-anchoring. That supports our base case that US Treasury yields will fall back later this year, even if it also …
The euro has fallen sharply against the greenback this week, and we wouldn’t be surprised if it weakens a bit further in the short term. That said, we think a fall below parity in the EUR/USD rate is unlikely in the absence of a substantial divergence in …
While inflation fell further across Central and Eastern Europe (CEE) in March, we think that the recent run of good CPI news is largely over. We expect inflation to rise back above central banks’ target ranges in Hungary and Poland by end-2024 (to near …
The ECB’s decision to update its guidance suggests that an interest rate cut at the next meeting in June is very likely. Christine Lagarde would understandably not commit to a path of rate cuts, but we expect the Bank to reduce the deposit rate from 4% …
Nigeria’s authorities have ceased central bank deficit monetisation via the ways and means facility. But the government will struggle to finance its ambitious spending plans – particularly given the challenges of raising revenues. We suspect that the …
This week we held a Drop-In on the outlook for euro-zone commercial property. Clients can access a recording here . This Update provides answers to the most interesting questions that emerged from the discussion. Has inflation indexation helped boost …
How is Egypt’s policy shift one month on It’s now been just over a month since Egypt’s “ Super Wednesday ” policy shift and, while it is still early days, the signs so far are positive and this time might be different to past policy U-turns. After …
Recovery in mortgage lending will pause in Q2 Demand for mortgage credit jumped in Q1 in response to the drop in mortgage rates over the second half of 2023. But a rise in financial market interest rates this week, due to higher-than-expected inflation in …
Muted PPI suggests core PCE inflation still on downward trend The March PPI data show the folly of relying too much on the CPI data. Our calculations suggest that, based on the combined inputs from PPI and CPI, core PCE prices increased by a more muted …
Updated guidance suggests that June cut is likely The ECB’s decision to update its guidance suggests that an interest rate cut at the next meeting in June is very likely. In the press conference, Christine Lagarde won’t give a clear signal about the path …
Residential has taken an increasing share of the professional investment universe over the last decade or more and we will be adding the sector to our next set of UK commercial property forecasts. Our in-depth analysis indicates residential’s recent …
The Bank of England’s Q1 Credit Conditions Survey provides further evidence that the drag on activity from high interest rates is starting to fade. Looser credit conditions will soon aid the economic recovery. The fall in mortgage rates at the start of …
Capital flows into EMs have continued to rise in recent weeks, aided by robust global risk appetite. While yesterday’s strong US CPI release has clouded the outlook for Fed interest rate cuts and weighed on some EM currencies, we still believe booming …
Even if the US Federal Reserve leaves its policy rate unchanged for longer than we expect, our forecast that inflation in the UK will be lower than in the US suggests this won’t prevent the Bank of England from cutting rates from 5.25% to 5.00% in June …
The minutes of their most recent meetings revealed that the RBA and the RBNZ have both abandoned their tightening bias. However, the two central banks are likely to walk different paths when it comes to policy easing. We expect the RBNZ to cut rates in …
This page has been updated with additional analysis since first publication . Overinvestment will keep inflation below pre-pandemic average CPI inflation rose less than expected in March but is still trending upwards. We think an easing of food price …
Cautious optimism from surveyors on prices and activity The slight increase in the balances for past prices and new buyer enquiries in the RICS Residential Market Survey for March showed that demand remained robust, as mortgage rates stabilised after …
10th April 2024
Fed looking to slow QT by half from June According to the minutes of the Fed’s mid-March policy meeting “almost all participants judged that it would be appropriate to move policy to a less restrictive stance at some point this year if the economy evolved …
Inflation stabilises, easing cycle is not that far away The stabilisation in Russian inflation at 7.7% y/y in March was in line with expectations and adds to evidence that inflation pressures have continued to cool in recent months. The month-on-month …
Today’s slump in S&P 500, following the release of a hotter-than-expected US CPI report for March, underscores the US stock market’s vulnerability to disappointing news on inflation. (See Chart 1.) Nonetheless, even though the pull-back was accompanied by …
Governor Tiff Macklem sounded relatively dovish in the Bank of Canada’s press conference today, leaving the door open to an interest rate cut at the next meeting in June. While the Bank left the policy rate at 5.0% today, the policy statement and …
After a period of relative calm, Italy’s fragile public finances are likely to come under the spotlight again before long. Budget deficits will be much higher than the latest government projections imply and Italy will probably face official EU procedures …
Bank leaves the door open for a June interest rate cut The acknowledgment by the Bank of Canada today that “the data since January have increased our confidence that inflation will continue to come down” leaves the door open to an interest rate cut at the …
Third consecutive 0.4% m/m gain in core CPI kills June rate cut hopes Alongside the pick-up in monthly payroll employment gains, the third consecutive 0.4% m/m rise in core CPI in March pretty much kills off hopes of a June rate cut from the Fed. The …
Underlying services prices still providing cause for concern The slightly softer-than-expected Brazilian inflation figure for March of 3.9% y/y keeps the door open to 50bp interest rate cuts at the Copom meetings both next month and in June. But with …
The incidence of sovereign debt distress has continued to decline across the emerging world in recent weeks, driven mainly by an improvement in global risk appetite and the corresponding narrowing of credit spreads. But in some cases, things appear to …
In light of our China team’s new non-consensus view that an aggressive slowdown in property sector construction seems almost inevitable in the years ahead, we have revised our price forecasts. We now expect prices to generally flatline in 2025, before …
A resurgence in hydropower in China this year combined with the continued rapid expansion of its wind, solar and nuclear power capabilities may pave the way for 2024 to mark the start of a steady decline in China’s coal demand. But a contraction in demand …
BoT on hold, but cuts likely later in the year Thailand’s central bank (BoT) today resisted pressure from the government to loosen monetary policy, but with growth set to remain weak and inflationary pressures very subdued, we still think rate cuts are …
The Reserve Bank of New Zealand didn’t drop any hints as to when it might pivot to looser policy at its meeting today. However, as inflation risks recede, we still expect the Bank to start cutting rates by August. The RBNZ’s decision to leave rates on …
RBNZ remains on the sidelines The RBNZ didn’t drop any hints as to when it might pivot to looser policy at its meeting today, but we still think that it will start cutting rates by August. The RBNZ’s decision to leave rates on hold at 5.50% was correctly …
