The latest data out of Turkey have reinforced our view that the rebalancing process is becoming more challenging. At the heart of the problem is excessively strong domestic demand and the tension between deploying an exchange rate strategy intended to …
4th February 2026
The balance of probabilities is tilted towards Brazil avoiding major additional pre-election fiscal loosening (and the resulting backlash in financial markets). As a result, we think the Selic rate can fall a bit further this year than is currently …
Inflation is subdued or falling across Sub-Saharan Africa, a trend which we think has further to run over the course of 2026. Monetary stances are generally tight, which provides policymakers with plenty of scope to ease policy. Indeed, we think rates …
Survey-based activity indicators point to solid growth continuing While not as eye-catching as last month’s rise in the ISM manufacturing index to a three-year high, the ISM services index remained at a healthy 53.8 in January, hinting at the potential …
The newly-planned rise in defence expenditure marks a much-needed shift from the Trudeau era but is still too small to sufficiently lift spending above 2% of GDP or generate significant multiplier effects. The first budget of Prime Minister Mark Carney’s …
Rates left on hold, easing cycle nearing an end The decision by the National Bank of Poland (NBP) to leave its policy rate on hold today, at 4.00%, is likely to be followed by an interest rate cut at the next meeting in March. But the easing cycle is near …
By allowing mortgage lenders to lend more for any given level of borrowers’ income, the relaxation of the cap on high loan-to-income (LTI) lending last year suggests gross mortgage lending will rise faster in 2026 and 2027 than our forecast for a gradual …
Housing market heating up heading into the spring The large 8% rise in home purchase mortgage applications in January lifted them to their highest level in three years and is consistent with existing home sales rising to around 4.5m annualised over the …
Our China Labour Market Indicator has climbed back above its long-run average recently, signalling an improving employment backdrop. A key driver has been stronger labour demand among exporters, who have become more willing to hire and raise wages as the …
The potential for Venezuelan oil to be used, albeit indirectly, to refill the US Strategic Petroleum Reserve over the coming years gives us even more confidence in our view that a boost to US imports of Venezuelan oil will not displace imports from …
Inflation likely to fall further January’s declines in headline and core inflation left both below the ECB’s forecasts for Q1. This is consistent with our view that inflation will be lower than the central bank expects in 2026, but January’s data were not …
Survey data point to an improving commercial real estate lending environment in H1 this year. This will support investment activity, though our updated estimates suggest refinancing challenges will still be significant this year. The recent release of the …
Taiwan’s economy for a long time grew at the same pace as Korea, but is now surging ahead. Taiwan’s central role in AI-related electronics supply chains has driven a powerful post-pandemic expansion, while Korea’s more diversified and cyclically weaker …
The recent pick-up in economic activity and inflation suggests that the neutral rate of interest may now be closer to 4% instead of the RBA’s estimate of around 3.5%. Given that the RBA believes that a sustained period of below-trend GDP growth will be …
RBNZ will look past rise in unemployment The modest rise in New Zealand’s jobless rate in Q4 masks the fact that underlying labour market conditions have started to improve. That said, we still think policy tightening won’t be on the Bank’s agenda this …
3rd February 2026
Overview – Global inflation looks set to undershoot consensus forecasts, amid falling commodity prices, cooling labour markets, and an absence of inflationary spillovers from tariffs. In the US, we expect core inflation to ease later this year once the …
This weekend’s Japanese election is shaping up to be one of the most consequential in years. As Sanae Takaichi, newly installed leader of the ruling Liberal Democratic Party, seeks to cement her mandate, government bond yields and the yen have been moving …
We recently hosted a Drop-In on the sell-off in gold and other precious metals. This Update answers six key questions on topics such as the role of leverage in driving prices, the macroeconomic and market risks from falling prices, and our view on where …
Our Interactive Markets Chart Pack gives you a comprehensive and timely view of the latest developments in financial markets, and how we expect them to perform in 2026 and beyond. The Chart Pack can be downloaded in PDF form using the Download button on …
Among the largest euro-zone countries, public debt looks most worrying in France because it is on an upward trajectory and Italy because it is likely to remain very high. Government debt is also set to increase in Germany, but it will remain low by …
The ECB’s Q4 Bank Lending Survey, published this morning, suggests that banks have become more cautious about lending to companies while consumers remain reluctant to spend. It also showed that the growth in mortgage demand has slowed sharply, implying …
Gulf’s non-oil sectors start the year on softer footing January’s PMIs from the Gulf were a mixed bag, though, non-oil sectors appear to have lost some momentum against the backdrop of low oil prices and heightened tensions in the region due to the …
Korea’s equity boom is unlikely to deliver a major boost to Korean consumers or the broader economy. But it is sending a clear signal about the external outlook. The rally reflects Korea’s central role in the global AI cycle and points to strong export …
Australian bonds have been battered lately, and its currency boosted, by the prospect of the country’s central bank reversing course on monetary easing. But even though it’s now followed through with a rate hike we don’t expect many, if any, other bond …
The Reserve Bank of Australia struck an unambiguously hawkish tone when it raised rates by 25bp at its meeting today. Our base case is that the Bank will deliver only one more 25bp hike this year, but the balance of risks is arguably tilted towards …
RBA hands down a hawkish 25bp hike The RBA continued to sound concerned about rising capacity pressures when it lifted its cash rate by 25bp today. There is a growing risk that rates will need to be taken above the 4.10% peak we have pencilled into our …
The 18% tariff that President Trump has announced will be applied to imports from India – down from 50% – would significantly boost India’s attractiveness as an alternative manufacturing hub to China. And there could be geopolitical ramifications too; …
2nd February 2026
We doubt that any other major EM central bank will imminently follow Colombia in kicking off hiking cycles, although a strengthening of inflation pressures in parts of Central Europe (Czechia and Poland) and domestic demand in Taiwan could prompt their …
The recently signed EU-India trade deal promises big tariff reductions which should support EU export growth. However, the starting level of exports is low, the phase-in will be gradual, and imports from India will also keep rising. So while euro-zone …
Finally turning a corner? The surge in the ISM Manufacturing Index in January suggests that after years of malaise, perhaps the manufacturing sector might be turning a corner. While the headline index is still at a level that historically has been …
The data published since the start of the year suggest economic activity and price pressures have strengthened. But we still expect annual GDP growth to slow and the weak labour market to weigh on price pressures. This and the smaller rises in regulated …
Saudi Arabia’s economy strengthened over the course of 2025 as the resumption of oil output hikes fuelled growth. But as that boost starts to fade and fiscal consolidation is ramped up against the backdrop of falling oil prices, we think that overall GDP …
The idea that the Fed could pave the way for much lower policy rates by shrinking its balance sheet is unconvincing. Balance sheet reduction is a blunt tool for tightening financial conditions, and pushing it too far risks disrupting short-term funding …
This has been a turbulent past week for the dollar. A sharp sell-off at the start of last week revived the “Sell America” narrative, before the currency partially recovered after Donald Trump nominated Kevin Warsh to be the next Federal Reserve Chair. But …
Whichever party wins Thailand’s general election on 8 th February will inherit a weak economy, tight fiscal constraints, and deep-seated structural and demographic challenges. The continued shift towards economic populism means that the new government …
PMIs in contractionary territory The manufacturing PMIs out of Emerging Europe all came in below 50 which suggests that industrial sectors across the region started the year on the back foot. We think that demand conditions in Central Europe should …
We now believe that the BoJ’s policy rate will climb to 2.5% during the 2030s as inflation settles at higher levels, potential growth picks up and a shift in incentives alters the balance between desired savings and investment. Japan’s 10-year yield has …
This page has been updated with additional analysis since first publication. Subdued start to the year but prices to beat expectations Although Nationwide house prices rose by 0.3% m/m in January, that only partially reversed December’s fall and means …
After an unusually hectic few days for financial markets, even by recent standards, here are three key things to watch in the coming week. Mr Warsh goes (back) to Washington The long Fed nomination race is over and the winner is Kevin Warsh . The …
Australia’s house price rally maintained solid momentum in January, while growth in advertised rents accelerated further. With the housing sector likely to feed inflationary pressures for a while to come, the case for the Reserve Bank of Australia to …
The January manufacturing PMI readings for Asian economies remain consistent with generally steady growth in manufacturing. However, the PMIs have recently been a poor guide to the hard activity data in several economies. Exports from most countries have …
Construction downturn weighing on growth This report was first published on Monday 2 nd February, covering the official PMIs and the RatingDog manufacturing PMI. We added commentary on the RatingDog services and composite PMIs on Wednesday 4 th February. …
In an unspectacular FY26/27 Union Budget summed up by the fall in equities since the announcement, the Finance Ministry has unveiled small boosts to spending in politically-sensitive areas and made up for the shortfall by projecting higher revenues and a …
1st February 2026
Hiking cycle starts with a bang, more to come Colombia’s central bank delivered a larger-than-expected 100bp interest rate hike, to 10.25%, at today’s meeting and the hiking cycle has further to run as policymakers try to get ahead of the deteriorating …
30th January 2026
China Chart Pack (Jan 26) …
The reaction in the markets to Donald Trump’s nomination of Kevin Warsh to be the next Fed Chair is broadly consistent with our view that the president has made a relatively safe choice . For a start, the dollar rallied and gold fell back after the …
With this week’s Bank of Canada meeting reaffirming that the policy rate will stay at 2.25% for some time, all attention is now firmly on which direction the next move will be in. Following a string of strong labour force surveys, investors had already …
