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October 04, 2024

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U.S. September Employment - A strong month and downside risk to October has fallen too
Freemium Article

October 4, 2024 1:13 PM UTC

September’s non-farm payroll is well above consensus with a rise of 254k. Unusually net back revisions are positive at 72k, if largely in government. Unemployment unexpectedly fell to 4.1% from 4.2% and average hourly earnings were above trend at 0.4% again with upward back revisions. This is clea

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BOE: Gradual to Activist?
Freemium Article

October 4, 2024 8:53 AM UTC

The contrast between BOE Bailey and Pill comments suggest a debate is occurring in the BOE over more easing than a simple quarterly pace of 25bps cuts.  This is not just about data, but some members could be putting more weight on forward looking forecasts than current inflation trends.  The Decem

October 03, 2024

U.S. September ISM Services - Strongest since February 2023, but now close to S and P services PMI
Paying Article

October 3, 2024 2:22 PM UTC

September’s ISM services index at 54.9 is the strongest since February 2023 and a sharp rise from August’s 51.5. It brings the index closer to the S and P Services PMI of 55.2, which has been close to 55 for five straight months. We viewed the strength of the S and P index as due to expectations

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China: Any Lessons from the 1997-98 Asian Crisis?
Freemium Article

October 3, 2024 1:30 PM UTC

Overall, the warning from slow real credit growth on reduced credit supply and demand is the main lesson from the Asia crisis 1997-98.  China High FX reserves; low borrowing overseas and dominance of domestic investors in Yuan markets argues against a currency crisis.  Asia widespread banking cris

October 01, 2024

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Brazil: Quarterly Inflation Report Shows BCB Worries
Freemium Article

October 1, 2024 2:10 PM UTC

The Brazilian Central Bank's latest report highlights stronger-than-expected economic growth of 1.4% in Q2 and a positive output gap, raising inflation risks. While non-core inflation decreased, core measures like services inflation remain sticky. Credit growth continues to be robust, but fiscal pol

September 30, 2024

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ECB October Rate Cut for Insurance
Paying Article

September 30, 2024 2:20 PM UTC

Recent economic data and national CPI numbers have increased the economic case for less restrictive policy.  Combined with softening of guidance from ECB Lagarde and Schnabel, this leaves us inclined to now forecast a 25bps cut at the October 17 ECB meeting.  This will likely be followed by a 25bp

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Israel/Hezbollah Scenarios
Freemium Article

September 30, 2024 9:26 AM UTC

The most likely scenarios between Israel and Hezbollah are Israel/Hezbollah intermittent attacks/counterattacks (40%) or significant ground invasion Southern Lebanon (45%).  Both would be difficult in human terms and raise geopolitical tensions, but are unlikely to cause a lasting impact on global

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RBI’s October Rate Call: Patience May Prevail Over Pressure
Paying Article

September 30, 2024 6:58 AM UTC

The RBI is expected to keep interest rates unchanged in its October meeting, despite global central banks initiating rate cuts. Domestic inflation concerns and uncertainties over MPC appointments are likely to drive a cautious "wait-and-watch" approach, with potential easing only by December. 

September 27, 2024

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U.S. August Personal Income and Spending - Core PCE Prices looking subdued in Q3
Paying Article

September 27, 2024 1:16 PM UTC

August’s PCE price data, up 0.1% both overall and core (0.09% and 0.13% respectively before rounding) shows the core rate softer than expected, and well below the 0.3% core CPI. Personal income and spending gains of 0.2% are both on the low side of expectations but a narrower August advance goods

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September Outlook: Rate Cuts But How Far?
Paying Article

September 27, 2024 7:44 AM UTC

The 15 chapters of our September Outlook have now been published.  See the headlines and weblinks enclosed for links to the articles on economic, policy and markets for the 23 countries that we cover.

September 26, 2024

Preview: Due September 27 - U.S. August Personal Income and Spending - Core PCE prices to underperform Core CPI
Paying Article

September 26, 2024 5:03 PM UTC

We expect August core PCE prices to rise by 0.2%, a little softer than the 0.3% core CPI which rose by 0.28% before rounding. We also expect personal income with a 0.4% rise to outpace a 0.2% increase in personal spending. GDP revisions suggest back data for personal income will be revised significa

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EM FX Outlook: Fed Easing Helps but Divergent Trends
Paying Article

September 26, 2024 8:00 AM UTC

  USD strength is ebbing across the board, which provides a positive force for most EM currencies on a spot basis.  However, where inflation differentials are large, the downward pressure will remain in 2025 e.g. Turkish Lira (TRY).  Where inflation differentials are modest against the U.S., but

September 25, 2024

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BCB Minutes: Adding Some Hawkishness to the Communique
Freemium Article

September 25, 2024 1:44 PM UTC

The Brazilian Central Bank raised the policy rate by 25 bps to 10.75%, citing stronger-than-expected economic activity and deteriorating inflation expectations. The committee highlighted rising inflationary pressures, especially in wages and credit growth. While future rate hikes are likely, no forw

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Charting Our Views: Technical Analysis for Q4 2024
Paying Article

September 25, 2024 1:35 PM UTC

Our latest quarterly technical analysis views on Bonds, Equities, Commodities and FX is now available.  

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DM FX Outlook: USD Set for 2025 Decline
Paying Article

September 25, 2024 7:11 AM UTC

·       Bottom Line: The USD has reached the end of year targets of 1.12 for EUR/USD and 140 for USD/JPY that we forecast in June, when it was trading at 1.07 and 159 respectively. From here, we still favour the USD downside through both the rest of the year and 2025, as the Fed continues to

September 24, 2024

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DM Rates Outlook: Rate Cuts Arrive Except Japan
Paying Article

September 24, 2024 9:00 AM UTC

•    For U.S. Treasuries, we see 2yr yields coming down further on our baseline soft landing view, as the Fed moves consistently to a 3.00-3.25% Fed Funds rate. However, with considerable Fed easing already discounted, 2yr yield decline should be modest and 2yr yields should bottom mid-2025. 1

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China Outlook: Unbalanced Growth and Slowing
Freemium Article

September 24, 2024 8:54 AM UTC

      Growth is benefitting from momentum in public investment/exports and high tech production.  However, domestic demand is slower and this is a drag on H2 2024 and 2025 growth prospects.  Aside from the ongoing negative drag from the residential construction crisis, consumption is also softe

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China Steps Up Support, But Not a Game changer
Freemium Article

September 24, 2024 8:39 AM UTC

China has surprised and cut the 7 day reverse repo rate by 20bps to 1.5%, with a 50bps cuts in the RRR rate.  Combined with other measures this is a step-up in support and could help GDP on the margin, but the measures are not game changers as monetary policy is currently ineffective.  While furth

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Equities Outlook: Choppy U.S. and Outperformance Elsewhere
Freemium Article

September 24, 2024 8:30 AM UTC

 •     We now forecast 5450 for the S&P500 for end 2024, but could see a move to 5200/5000 in the next 3-6 months as volatile data keeps the soft v hard landing debate alive.  On our baseline of a U.S. soft landing, we would see the S&P500 at 5600 by end 2025. The tech sector is still really i

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RBA Review: Waiting to ease
Paying Article

September 24, 2024 5:12 AM UTC

The RBA meeting on September 24th kept rates on hold 

September 23, 2024

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U.S. Outlook: Fed Focus Turning To Downside Risks
Paying Article

September 23, 2024 2:16 PM UTC

•    The U.S. economy is showing clear signs of labor market slowing which poses downside risks to the still impressive resilience of consumer spending, which has sustained healthy GDP growth through Q2 2024. We expect GDP growth below potential in the second half of 2024 and the first half of

September 20, 2024

Chartbook: Chart USD Index DXY: Poised for further losses into the coming quarter
Paying Article

September 20, 2024 11:49 AM UTC

The anticipated break below congestion around 104.00 has extended

BoJ review: Pitstop Along the Road
Freemium Article

September 20, 2024 3:33 AM UTC

The BoJ keep rate unchanged in the Sep 20 meeting at 0.25% with forward guidance of more tightening to come

September 19, 2024

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BCB Review: Switching Back to Hikes
Paying Article

September 19, 2024 12:50 PM UTC

The Brazilian Central Bank (BCB) raised the policy rate to 10.75%, signaling more hikes due to domestic pressures, including stronger economic activity and de-anchored inflation expectations. Despite global uncertainties, the decision reflects concerns about Brazil's positive output gap and fragile

September 18, 2024

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Fed: 50bps Cut and 175bps More to Follow?
Paying Article

September 18, 2024 7:39 PM UTC

The 50bps cut in the Fed Funds rate to 4.75-5.00% will likely be followed with two 25bps cuts in November and December. For 2025, we now look for 125bps rather than 150bps, given our soft landing view and also the 50bps being delivered at the September meeting.  This would be a 3.00-3.25% Fed Funds

September 17, 2024

Preview: Due September 27 - U.S. August Personal Income and Spending - Core PCE prices to underperform Core CPI
Paying Article

September 17, 2024 3:00 PM UTC

We expect August core PCE prices to rise by 0.2%, a little softer than the 0.3% core CPI which rose by 0.28% before rounding. We also expect personal income with a 0.4% rise to unusually outpace a 0.2% increase in personal spending.

September 16, 2024

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China: Weak August Data
Freemium Article

September 16, 2024 6:58 AM UTC

China August data was worse than expected and confirms the weak trend in H2, with retail sales a real worry. The government risks missing the 5% growth target for 2024 and targeted fiscal policy moves are likely, but need to be implemented quickly.  10bps cut in the 7 day reverse repo rate is also

September 13, 2024

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Mexico: Controversial Judicial Reform is Approved by the Congress
Freemium Article

September 13, 2024 1:39 PM UTC

The Mexican Senate approved a controversial judicial reform proposed by President López Obrador's MORENA party. The reform calls for the election of all 7,000 federal judges, with current judges being dismissed. Supreme Court justices will also be reduced and replaced by elections in 2025. Concerns

September 12, 2024

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ECB Review: Under-Estimating Downside Risks?
Freemium Article

September 12, 2024 2:16 PM UTC

That the ECB cut the discount rate again by another 25 bp (to 3.5%) was no surprise.  Neither was an unchanged tone at the press conference, with no clearer acknowledgment of downside risks even given ECB GDP projections (Figure 1) which moved down more toward our long-standing below-consensus thin

September 11, 2024

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FOMC Preview for September 18: A Cautious Start to Easing
Paying Article

September 11, 2024 3:35 PM UTC

The FOMC meets on September 18 and with recent data raising concern about emerging labor market weakness, and inflation down but not defeated, a cautious 25bps easing of the Fed Funds target, to 5.0-5.25% appears very likely. The statement is likely to leave the Fed’s options open to either accele

September 10, 2024

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India CPI Review: Easing Prices, but Monsoon Risks Loom
Freemium Article

September 10, 2024 9:14 AM UTC

Bottom line: India’s August inflation level is expected to trend down to 3.5% yr/yr, from 3.53% y/y in July, reflecting higher base effects. Interest rate cut is unlikely though as the RBI perceives this as a temporary reprieve. 

September 09, 2024

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China Equities: More of the Same or Game changing Policies
Paying Article

September 9, 2024 9:15 AM UTC

 We remain strategically underweight China Equities in global and EM equity baskets, due to the structural slowing of growth and low EPS prospects. Event risk around the U.S. presidential election will also start to be considered.  Further targeted policies from China authorities could cause inter

September 06, 2024

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U.S. August Employment - A little stronger than downwardly revised June and July
Freemium Article

September 6, 2024 1:10 PM UTC

August’s non-farm payroll is a little weaker than expected with a 142k rise overall, 118k in the private sector, with significant negative back month revisions in the preceding two months totaling 86k. However the data is stronger than July’s, not only in the payroll, but also a correction lower

September 05, 2024

U.S. August ISM Services - Still showing modest expansion
Paying Article

September 5, 2024 2:13 PM UTC

August’s ISM services index at 51.5 is almost unchanged from July’s 51.4 and implies an economy continuing to expand at a modest pace. Employment at 50.2 is down from July’s 51.1, but in being above the neutral 50 remains stronger than the readings seen from February through June.

September 04, 2024

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Eurozone: Labor Market Faltering
Freemium Article

September 4, 2024 10:36 AM UTC

There are suggestions that worries about weaker growth are now reverberating within the ECB, albeit with the hawks still more mindful of service price resilience.  But the former worries chime with our long-standing concern of downside risk to what we still see is a below-consensus growth outlook,

September 03, 2024

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Country Risk in MENA
Paying Article

September 3, 2024 10:00 AM UTC

Country risk in Middle East and North Africa is impacted by the ongoing war in Gaza, alongside reviews of Bahrain, Egypt, Iran and Qatar.     

September 02, 2024

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China Harder Landing Scenario
Paying Article

September 2, 2024 10:55 AM UTC

 We see a 30% probability of a harder landing in China GDP growth in 2025, which we most likely be in the 3-4% region but could persist into 2026 (Figure 1).  A large than projected slowdown in consumption would be a key concern, alongside persistently moderate negative deductions from residential

August 30, 2024

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U.S. July Personal Income and Spending - Core PCE Prices subdued, savings at a 2-year low
Paying Article

August 30, 2024 1:00 PM UTC

July’s PCE price data, up 0.2% both overall and core (with both subdued at 0.16% before rounding) is on consensus, as is a 0.5% increase in personal spending. Income at 0.3% is stronger than consensus, but still underperforms spending, leaving the savings rate at 2.9%, the lowest since June 2022.

August 29, 2024

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Preview: Due August 30 - U.S. July Personal Income and Spending - PCE prices a close call between 0.1% and 0.2%
Paying Article

August 29, 2024 1:38 PM UTC

We expect July core PCE prices to be consistent with the core CPI, up by 0.2% but a little less before rounding. We expect a healthy 0.5% rise in personal spending to outperform a subdued 0.1% increase in personal income.

August 28, 2024

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China Consumer Volatility
Paying Article

August 28, 2024 1:30 PM UTC

China consumption patterns are divergent; slowing and becoming more volatile at a sub sector level.  Less certainty over new employment and wage growth, plus wealth worries over housing are some of the causes.  We forecast GDP to slow in H2 and be 4.0% in 2025.

August 26, 2024

U.S. July Durable Goods Orders - Aircraft surge inflated by seasonal adjustments, underlying picture subdued
Paying Article

August 26, 2024 12:49 PM UTC

July durable goods orders surged by 9.9% but this was fully due to a surge in aircraft which appears to be exaggerated by seasonal adjustments. Ex-transport orders maintained a fairly flat picture, with a dip of 0.2%, weaker than expected net of a downward revision to June to a 0.1% increase from 0.