The second consecutive monthly reduction in the International Energy Agency’s (IEA) 2024 oil demand growth forecast this week further widened the wedge between the IEA’s and OPEC’s near-term outlooks. Against the backdrop of the recent falls in oil prices …
17th May 2024
SA: NHI bill signals looser policy post-election South Africa’s President Ramaphosa approval of the controversial National Health Insurance (NHI) bill this week was a clear effort to bolster the ANC’s support ahead of the election. But it also signals …
Abinader again The Dominican Republic’s general election on Sunday is likely to buck Latin America’s anti-incumbency wave. Opinion polls point to current president Luis Abinader comfortably winning re-election. Indeed, some of the latest surveys put him …
New tariffs much ado about nothing The Biden administration’s announcement this week of an increase in tariffs on hi-tech & green-related goods imports from China will have little impact. The biggest change ostensibly was the announcement that the tariff …
Putin’s political shake-up and meeting with Xi There were two big developments in Russia this week. The first was the cabinet reshuffle, in which long-serving defence minister Sergei Shoigu was replaced by economist Andrei Belousov. A lot of ink has been …
We’ll be discussing the outlook for UK inflation and interest rates in a 20-minute online briefing at 9.30am BST on Wednesday 22nd May shortly after the release of April's CPI data. (Register here .) Next Wednesday’s release of April’s CPI inflation data …
Property support ramps up The PBOC today announced major changes to property controls, including removal of regulatory floors for mortgage rates and a lowering of the minimum downpayment to 15% for first homes and 25% for second homes, 5%-pts lower than …
The US decision to hike tariffs on Chinese EVs from 25% to 100% and to also raise tariffs on EV batteries, semiconductors and solar panels, raises the question how Europe will respond. Europe is in a different position from the US because imports of these …
Weak growth a concern for the central bank Bank Indonesia is the only central bank in the region with a mandate to ensure currency stability. While we had not been expecting the central bank to raise interest rates at its April meeting , the move didn’t …
Non-aligned policy to be tested in US-China divide This week we took a deep-dive into a topic that regularly comes up in our conversations with clients: how India positions itself in a fragmenting global economy. (See here .) Our analysis makes the point …
BoJ starting to scale back bond purchases The 0.5% q/q fall in Q1 GDP was the second fall over the last three quarters. With GDP unchanged in Q4, Japan barely escaped a recession. What’s more, with real consumption falling for four consecutive quarters, …
Budget leaves much to be desired The headlines this week were dominated entirely by the contentious 2024/25 Federal Budget , which some commentators have described as “smoke and mirrors”. We certainly sympathise with those who take umbrage at Treasurer …
Saudi’s gigaprojects stick or twist moment Comments from Saudi Arabia’s Finance Minister Mohammed Al-Jadaan this week have added to the growing discourse of whether the Kingdom can afford, both literally and figuratively, to continue with its vast suite …
16th May 2024
The US dollar looks set to end the week broadly unchanged against most currencies, with its renewed strength against the yen being the key exception. Next week’s CPI data release out of the US could break the calm that has prevailed in FX markets over the …
10th May 2024
Markets brace for April data dump After a quiet week for data this week, following April’s softer Employment Report, things will heat up again next week with April’s CPI report. CPI the new king of data releases CPI is now undoubtedly the most …
SA: coalition fears grab the headlines Electioneering in South Africa heated up this week as parties openly warned of the different scenarios that could come after this month’s polls. The scenario that is most worrying remains a left-wing coalition. The …
The strength of the April labour market data means we now expect the Bank of Canada to begin its loosening cycle in July, rather than June. Nonetheless, the sharp growth in labour supply and moderation in wage growth means we remain confident in our view …
Hungary straddling US-China divide Chinese President Xi’s visit to Hungary this week was the first by China’s head of state in 20 years and led to the establishment of an “all-weather partnership” between both countries. There are advantages to this …
With less than a month to go until OPEC+ meets to decide upon its next policy move, rumours are heating up as to what its move will be. Last week, anonymous OPEC+ sources suggested that the 2.2 million bpd of voluntary cuts would be extended once again, …
Battery production rules aim to limit overcapacity There was a concerted effort this week, across state media and from Xi Jinping himself, to push back against foreign suggestions that China’s rising exports of “new energy” products reflect overcapacity …
With the Bank of England hinting on Thursday that it is close to cutting interest rates and that rates may need to fall further than investors expect, we have become a bit more confident in our view that, due to low inflation, rates will be cut from 5.25% …
Weak growth a concern for the central bank The central bank in the Philippines has left interest rates unchanged since a hike in October 2023. Another hold at its scheduled meeting on Thursday is almost certain. Instead, the main interest will be on the …
Sticking to Q3 call despite shifting consensus The latest poll from Bloomberg published this week show that the consensus is now expecting the RBI to begin its easing cycle in Q4. It is now forecasting 50bps of cuts by the end of the year, which would …
Mexico: more support for Pemex? One of the central views of the Update we published earlier this week on Mexico’s public finances was that limited fiscal room combined with presidential frontrunner Claudia Sheinbaum’s strong environmental credentials …
This week brought more evidence that European central banks feel comfortable starting their easing cycles ahead of the Fed. As we had expected, the Riksbank cut its policy rate by 25bp, even after last week’s Fed meeting confirmed that it will take longer …
Production shutdowns now over If we’re right and the GDP data due next week show a 0.6% q/q drop in output, that would mark the second fall in just three quarters. The recent weakness largely reflects a slump in industrial output at the start of the …
A tricky balancing act At its meeting this Tuesday, the Reserve Bank of Australia continued to leave rates on hold, contrary to our expectations that the Bank would feel compelled to take out some additional insurance in the form of a 25bp hike. To be …
Is the UAE set to butt heads with OPEC again? The UAE‘s announcement that its oil production capacity has been raised ahead of schedule provides further evidence of its desire to raise actual output. But with growing rumours that OPEC may hold off from …
9th May 2024
An eventful week in financial markets is ending with the dollar down, but mounting a comeback in the wake of today’s worryingly weak US non-manufacturing ISM survey . Between the earlier softer-than-expected US non-farm payrolls , the cautious message …
3rd May 2024
After 12 long years, the Trans Mountain oil pipeline expansion finally entered commercial service this week. The pipeline has the potential to raise oil exports significantly, but the full boost is unlikely to be felt for some time. The project increases …
SA’s growth pick-up coming too late for the ANC This week, South Africa manufacturing PMI release reinforced our view that an easing drag from electricity outages will support a pick-up in growth over the coming quarters. But stronger growth is coming …
Trump’s return could benefit India With Donald Trump’s protectionist approach to trade on full display in an interview with the Time magazine this week, what might the implications of a second Trump presidency be for India? India is not as dependent on US …
The 6% fall in the price of Brent oil this week, to around $84 per barrel at the time of writing, was at least partly driven by receding fears that an escalation of hostilities in the Middle East could imperil oil supply. That said, geopolitics in the …
Battle of the survey data ... ESIs vs the PMIs The two survey measures of activity released out of Central and Eastern Europe (CEE) this week appeared to offer quite different insights into the performance of the region’s economies at the start of Q2. …
Encouraging start to the year Growth in the region came to a standstill in Q4 of last year, but data released over the past week add to the evidence of a strong rebound in Q1. Admittedly, the flash GDP data from Mexico released on Tuesday showed that, …
Policy hasn’t kickstarted lending to developers Bank lending decelerated to its slowest pace on record in March. The sectoral breakdown released this week provides some insight into what’s been behind the slowdown. The big picture is that the property …
Data released this week showed that euro-zone GDP rose by a stronger-than-expected 0.3% q/q in Q1. And the disinflation process stalled in April, with the headline rate unchanged at 2.4%. (See here.) But GDP was supported by a big rise in construction in …
We’ll be discussing the outlook for Bank of England policy in a 20-minute online briefing at 3pm BST on Thursday 9th May. (Register here .) OECD too downbeat We think the OECD’s new forecast that the UK will grow at a slower rate in 2025 (of 1.0%) than …
Rate cuts still likely despite strong Q1 growth In a speech this week at an Asian Development Bank conference, Bank of Korea Governor Rhee said that strong GDP growth in the first quarter meant the Bank would need to reconsider the timing of possible …
Government intervenes in FX market yet again As Japanese markets were closed due to Sh ō wa day, the yen surpassed 160 against the dollar in thin trading on Monday, the weakest it has been since the mid-1980s. While the Ministry of Finance refused to …
RBNZ caught between a rock and a hard place We learnt this week that New Zealand’s labour market deteriorated further last quarter. On the back of unexpected job shedding, the unemployment rate rose from 4.0% to 4.3% in Q1, above the RBNZ’s forecast of …
Is Saudi Arabia moving away from China’s orbit? Reports that the US and Saudi Arabia are close to a new security pact would, if confirmed, cause us to re-evaluate our view of the Kingdom’s alignment in a fracturing global economy. Prior to the start of …
2nd May 2024
Whither central bank green policy? The role of central banks in fighting climate change was amongst the varied subjects touched upon by France President Emmanuel Macron in a sprawling speech earlier this month. In addition to pondering deep rhetorical …
30th April 2024
SARB hawkishness continues, no rate cuts in 2024 This week, the SARB published is biannual Monetary Policy Review , which showed a Bank less confident about South Africa’s disinflation trend and reiterated a desire to move to a lower inflation target. …
26th April 2024
US aid package a (large) sticking plaster for Ukraine The $61bn US aid package for Ukraine approved this week will provide a much needed boost to Ukraine’s efforts on the battlefield, but the delays that the funding has faced over recent months casts a …
The latest Summary of Deliberations showed division among the Governing Council about when it will be appropriate to cut interest rates. The data released since the April meeting favour the doves, however, so we are sticking to our view that the first cut …
Have soft landing hopes been dashed? GDP growth slows, but stronger under the hood The slowdown in first-quarter GDP growth to 1.6% annualised, from 3.4%, was more marked than expected, but it was principally due to a bigger drag from the net exports …
In a mixed week for commodity prices, one interesting development is that, after the tin price reached multi-year highs at the end of last week, copper followed suit this week by topping $10,000 per tonne for the first time since April 2022. This is the …
Colombia: drought poses inflation & growth risk The recent rainfalls in many parts of Colombia have provided some relief to the country, which has been hit hard by an El Niño-linked drought. The drought had pushed reservoir levels to historical lows in …
Recovery in activity won’t stop ECB rate cuts This week brought some more evidence that the euro-zone economy is coming out of recession. The euro-zone Composite PMI rose more than expected in April, to a level consistent with GDP expanding slightly. …
