The dollar has remained roughly unchanged against most major currencies over the past two weeks. Given that our expectations for upcoming data releases and central bank meetings – notably, nonfarm payrolls and the ECB meeting next week – are not far from …
1st March 2024
Turkish GDP growth continues to run hot Data released this week showed that Turkish GDP growth unexpectedly re-accelerated in Q4, which challenges the view that recent aggressive monetary tightening is rebalancing the economy. We published our initial …
The return to growth in the fourth quarter means it is probably safe to say that the economy has avoided recession, but that is mainly due to rapid immigration. Per capita GDP fell for the fifth quarter running and is now barely higher than in 2016. Ahead …
Following the more hawkish speeches from Fed Vice Chair Philip Jefferson and Governor Christopher Waller last week, that tone continued this week – with regional Fed Presidents including New York’s John Williams repeating the suggestion that interest rate …
CBN delivers bold hike but inflation risks remain The Nigerian central bank’s 400bp rate hike and its reaffirmation of its inflation fighting credentials should help provide respite to the naira and inflation. But Nigeria will need to shift away from …
Mexico election campaign officially kicks off Today is the first official day of campaigning for Mexico’s election that takes place on 2 nd June. President López Obrador (Amlo) is barred from running but his anointed successor, Claudia Sheinbaum, is well …
Reading the NPC tea leaves China’s legislature will kick off its annual gathering on Tuesday. This typically lasts a week or so. But from the perspective of analysts and investors, the key events are on the first day. These include the delivery of the …
Korea election: reform prospects in the balance President Yoon Suk-yeol has seen a rebound in his popularity in recent weeks, with an opinion poll published today showing an approval rating of 39% – up from a low earlier this year of just 29%. The …
Could there be a tax-cutting Budget bombshell? The rumours this week suggest that the Chancellor may have a bit less to play with in the Budget on Wednesday 6 th March than the £15bn we estimated. As a result, he seems to be considering more revenue …
The main data releases in the euro-zone this week will have done little to dispel ECB policymakers’ view that they should wait patiently before making a decision on when to cut interest rates. Economic activity appears to have made a slow start to the …
HCES underscores need to update CPI index The initial findings of the Household Consumption Expenditure Survey (HCES) for 2022-23 (the full report will be released in June) show a shift in consumption patterns since the previous survey from over a decade …
More good news for the RBA The Reserve Bank of Australia should take comfort from the fact that most of the data released this week point to a better balance between demand and supply in the economy. On Wednesday we learnt that CPI inflation came in at …
Third contraction in GDP now likely We doubt that the slump in industrial output in January will prevent the Bank of Japan from ending negative rates over the coming months, but the recent string of disappointing data reinforces our view that this will …
Even with Ras el Hekma deal, Egypt needs the IMF Headlines in the past week have been dominated by Egypt’s deal to sell the Ras el Hekma project to the Abu Dhabi sovereign wealth fund, ADQ, to provide crucial foreign currency inflows. But, even with this …
29th February 2024
Checking in on clean energy equities The MSCI Global Alternative Energy Index has outperformed the standard MSCI World Energy benchmark since we published an Update in November arguing that we had reached peak-pessimism for clean energy equities. (See …
Key takeaways from South Africa’s Budget South Africa’s finance minister recommitted to fiscal restraint in this week’s Budget, but an inability to resist calls greater spending ahead of and after the election is likely to derail these fiscal ambitions, …
23rd February 2024
Wage data still offering reasons for caution The latest wage data released out of Poland and Hungary this week showed that labour cost pressures have remained very strong in parts of Central and Eastern Europe (CEE). So despite another slew of …
The tailwind of US equity outperformance appears to be fading for the greenback, as the DXY Index looks set to post its first weekly fall in 2024. A pullback after such a streak isn’t all that surprising, and an upside surprise in PCE data out of the US …
The encouraging January CPI data mean that the Bank of Canada’s April policy meeting is back in play for a potential interest rate cut, although it still seems more likely that the Bank will wait until June – unless the economic and labour market data …
Fed to delay first rate cut until June Fed to wait until June Based on comments from Fed officials this week, we now expect the Fed to wait until June to begin cutting interest rates. Moreover, when it does begin to loosen policy, we suspect that the Fed …
There was no clear direction to prices this week, but a number of individual commodities benefitted from producers announcing cuts to supply. First signs of a pull-back in US natural gas supply Having plummeted in recent weeks, the price of US natural gas …
Venezuela’s inflation plunge In our last Weekly , we flagged Argentina’s inflation problem and the risk that things could get worse before they get better. Data out this week showed that Venezuela may be coming out at the other end of the tunnel. Headline …
Disappointing economic and fiscal forecasts from the OBR haven’t prevented the Chancellor, Jeremy Hunt, from unveiling a splash at previous fiscal events. This time last year, he was handed £14.5bn of headroom against his fiscal mandate to ensure the …
Funding boost could be large, if banks do their part China’s housing market is still struggling . High frequency data suggest that sales in major cities have ticked up since the start of the year. And price declines eased slightly in January. (See Chart …
This week saw a raft of data releases as well as the publication of the ECB accounts . We think that there are three key takeaways . First, the broad trend of economic stagnation and disinflation in the euro-zone is continuing. The Composite PMI edged up …
Trouble in Thailand Figures published earlier this week showed that Thailand’s economy contracted by 0.6% in the final quarter of last year. Thailand has experienced by far the slowest recovery from the pandemic in the region – GDP is now just 0.5% …
Majority of MPC in no rush to pivot The minutes of the Reserve Bank’s February policy meeting released this week show the first signs of dissent as MPC member Jayanth Varma argued that a cut to the repo rate would be prudent to show that the committee is …
Import volumes weakest since 2020 We’ve been arguing that Japan is not in recession even though GDP has fallen for two consecutive quarters. However, February’s soft flash PMI and the large fall in imports in January hardly instil confidence in the …
RBA won't hike rates again Flash PMI data released yesterday showed that Australia’s composite output index jumped to a 10-month high of 51.8 in February. The index is now consistent with annual real GDP growth of about 2.0% in Q1 (see Chart 1), which …
Tunisia: threat of messy crisis and default builds Tunisia managed to meet a Eurobond repayment this week but only by draining its already-low FX reserves. In the meantime, steps were also taken towards deficit monetisation, taking Tunisia further down …
22nd February 2024
PPI a kick in the teeth for inflation doves Mea Culpa The much stronger-than-expected 0.5% m/m increase in core PPI in January came as a hammer blow for PCE estimates, since the overshoot was mostly in the portfolio management and health care-related …
16th February 2024
The plunge in natural gas prices breathed some life into what was otherwise a relatively quiet week in commodity markets. Prices have fallen heavily in most major gas markets as stocks remain high for this time of the year. In the US, the House of …
Signs of healthy growth going into the first quarter support our view that the Bank of Canada will probably wait until June to pivot to rate cuts. Signs of positive activity in the first quarter The latest January data has brought signs that growth could …
The theme of the week has been one of diverging inflation stories which have helped boost the US dollar. These divergences came not just between economies (hot in the US and cold in the UK, for example) but also within economies, with mixed messages from …
Ratings downgrade highlights realities in Israel The decision by Moody’s to deliver Israel’s first credit rating downgrade in its history late last week is a warning sign to policymakers that the strength of the public finances should not be taken for …
Can Milei tame inflation? The jump in inflation in Argentina to 254% y/y in January underscores the scale of the challenge the Milei administration faces stabilising the economy. The rise (from 211% y/y in December) reflected the full impact of the 50%+ …
It’s debatable whether the 0.1% q/q and 0.3% q/q contractions in real GDP in Q3 and Q4 2023 should be labelled as a recession given the falls were so small. While it satisfies the usual definition of a recession being two consecutive quarters of falling …
The German Economy Minister Robert Habeck admitted this week that the economic situation was “dramatically bad” and said the government would reduce its 2024 growth forecast from 1.3% to 0.2%. The new forecast is a bit lower than the Bundesbank’s latest …
Will the Bank of Korea turn dovish? The BoK looks almost certain to leave interest rates unchanged at its meeting on Thursday. Instead, the focus will be on the tone of the statement. We expect the central bank to start sounding more dovish, as concerns …
South Africa's Finance Minister Enoch Godongwana faces an uphill task in next week's Budget to convince investors that the government will be able to place the public finances on a sustainable footing. Mr. Godongwana will start his speech in parliament …
Farmer protests won’t lead to big fiscal giveaways Widescale farmer protests have returned and have dominated the headlines this week. Farmers are currently marching from neighbouring states towards New Delhi in demand of higher prices for key crops; …
Services inflation will slow sharply Australian labour market data published yesterday garnered considerable attention, largely because they showed that the unemployment rate overshot analyst expectations and jumped to a two-year high of 4.1%. However, we …
Japan’s economy is not in recession The preliminary estimate of Q4 GDP showed the second consecutive contraction in output, but we doubt it will scupper the BoJ’s plans to end negative interest rates. For a start, the quality of Japan’s preliminary GDP …
Saudi’s loose fiscal stance to continue (for now) Data released yesterday confirmed that Saudi Arabia ran a budget deficit over 2023 as a whole and, as the government maintains high spending levels despite lower oil prices, the Kingdom will run larger …
15th February 2024
The strength of the labour market in January is another reason to think that the Bank of Canada can wait a little longer before it starts to cut interest rates. Bank’s latest communications give little away Governor Tiff Macklem gave little away in his …
9th February 2024
While the dollar has fallen back a touch over the past couple of days, it has held on to most of its post-payrolls gains. The DXY index is now up about 3% on the year, having regained roughly half its drop over the last two months of 2023. The greenback’s …
Bond vigilante fiddle, as budget burns Budget on an unsustainable path The CBO released new budget projections this week showing the Federal deficit falling only slightly from 6.2% of GDP in fiscal year 2023, to 5.3% in 2024. The deficit is then expected …
The price of cocoa was the star performer this week in commodity markets , rising by 16% on the week. The price has risen by 40% since the start of this year, on the back of consistently poor harvests in Côte d’Ivoire and Ghana. Meanwhile, conflict in the …
SONA: Ramaphosa sets out policy plans South Africa’s President Ramaphosa delivered his State of the Nation (SONA) on Thursday. His speech celebrated the 30 th anniversary of the transition to democracy and laid out the ANC’s policy agenda ahead of the …
Is euro adoption the path forward for Czechia? The Czech government’s debate on adopting the euro reignited at the start of this year and took another step forward this week, although we think that the potential benefits of joining the single currency …