Eurozone; ECB Tone More Neutral Than Suggested by March Meeting Market Reaction?

April 16, 2026 12:18 PM UTC

Little new can be taken from the minutes to the March ECB Council 19 meeting, save that at least to us the ECB was too optimistic about growth and too pessimistic about inflation. In regard to the latter, while acknowledging tighter financial conditions, the ECB still seemed to be downplaying what a

China: GDP Beat, But Domestic Demand Weak

April 16, 2026 6:39 AM UTC

•    Q1 GDP beat expectations helped by Industrial production, but the domestic demand picture remains weak with soft consumption and the ongoing negative drag from the residential property sector. We still feel that the economy remains too dependent on high tech manufacturing and modest consu

DM Central Bank Signals Awaited

April 15, 2026 12:12 PM UTC

·       Fed/ECB and BOE meetings will likely see concern over the potential 2nd round inflation effects from the Iran war, but forecasts seeing inflation coming down in 2027 and no imminent signals of tightening from the ECB/BOE – our baseline remains for easing later in the year, as energy

Eurozone: ECB Downplaying Supply of Credit as it Focuses on its Cost

April 14, 2026 1:35 PM UTC

Even amid increasing suggestions that the Middle East conflict will reap marked real economy damage that should limit the length and extent of any inflation surge, markets are still pricing in almost three 25 bp ECB hikes in the coming year.  We think this is still very excessive and reflects an ou

Iran Blockade and What Next?

April 13, 2026 9:58 AM UTC

·       Though the U.S. is introducing a blockade on Iran oil exports, we think the U.S. and Iran remain reluctant to restart the war.  How Iran responds to the U.S. blockade is important.  It could choose to respond by attacking Gulf energy installations before or after the 2-week ceasefir

U.S. March CPI - Subdued core rate provides relief

April 10, 2026 12:55 PM UTC

March CPI is as the market expected with a 0.9% increase (0.865% before rounding) led by a surge in energy, but the core rate ex food and energy shows little sign of feed through, rising by a lower than expected 0.2%, with the gain before rounding at 0.196%, the slowest since November’s subdued tw

China: Oil boosts PPI but CPI Less

April 10, 2026 7:37 AM UTC

•    Given lags and the still elevated oil prices for Q2/Q3 delivery it is likely that PPI will be further boosted in the coming months. This could boost 2026 China CPI by around 0.3-0.4% and we changed our 2026 forecast to 1.4% in the March Outlook (here) -- the higher price of Fertilizers wi

U.S. Personal Income slips, Core PCE Prices remain firm

April 9, 2026 1:17 PM UTC

The latest US data is mostly on the weak side of expectations, most notably a 0.1% decline in personal income for February that significantly underperformed a 0.5% rise in spending (itself slightly below expectations) which saw the savings rate slip back after a tax cut-assisted bounce in January. 0

FOMC Minutes from March 18: Increased risks, but still a dovish leaning

April 8, 2026 6:58 PM UTC

FOMC minutes from March 18 show greater concern over inflationary risks but with concerns also seen on risks to employment, do not appear to be hawkish. It still appears that the next move is more likely to be an ease than a hike, even if the timing for rate cuts may have been pushed back somewhat.

Preview: Due April 9 - U.S. January Personal Income and Spending - Core PCE Prices to outperform CPI

April 8, 2026 12:13 PM UTC

We expect February to see a third straight strong 0.4% increase in core PCE prices, while personal spending with a 0.6% increase outperforms a 0.3% rise in personal income. This will see a January bounce in savings corrected.

Eurozone: Manufacturing Seeing Excess Supply Not Excess Demand

April 8, 2026 11:13 AM UTC

In Europe generally, but especially in the EZ, it will be manufacturing that will bear the brunt of the recent jump in energy prices, where industrial electricity prices even before the conflict started were among the highest globally. While high energy costs affect all sectors, manufacturing’s re

2-Week Ceasefire, Then?

April 8, 2026 10:09 AM UTC

·       The ceasefire will likely involve a new normal of shipping companies paying Iran a toll.  While this is adding a cost to Gulf crude oil/products and LNG, the premium will be a lot lower than the cost of an ongoing war.  The U.S. and Iran will now likely be reluctant to restart the w

2yr and The Iran War

April 7, 2026 8:00 AM UTC

·       2yr yields can edge lower from current less elevated levels, as DM central banks continue to try to calm fears of near-term rate hikes outside of the BOJ/RBA.  However, the key swing factor remains the length of the Iran war, as that will determine the trajectory of energy prices in

U.S. March ISM Services - Slower but far from weak, with inflationary pressure rising

April 6, 2026 2:15 PM UTC

March’s ISM services index of 54.0 is weaker than expected and down from February’s 56.1 which was the strongest since July 2022. However, March’s reading remains higher than in every month of 2025, contrasting the S and P services PMI, which on Friday was revised down to a below neutral 49.8

U.S. March Employment - Strong report suggests risks clearly higher on the inflation side

April 3, 2026 1:27 PM UTC

March’s non-farm payrolls is clearly on the strong side of expectations, up by 178k and an even stronger 186k in the private sector, with minimal net downward revisions of 7k. Unemployment unexpectedly fell to 4.3% from 4.4%. Less positive are a lower than expected 0.2% rise in average hourly earn

Preview: Due April 9 - U.S. January Personal Income and Spending - Core PCE Prices to outperform CPI

April 1, 2026 2:44 PM UTC

We expect February to see a third straight strong 0.4% increase in core PCE prices, while personal spending with a 0.6% increase outperforms a 0.3% rise in personal income. This will see a January bounce in savings corrected.

U.S. February Retail Sales and March ADP Employment resilient, but gasoline prices may undermine consumers

April 1, 2026 1:10 PM UTC

March’s ADP’s estimate of private sector employment of 62k is stronger than the market expected and similar to February’s 66k. February retail sales are also marginally firmer than expected, up by 0.6% overall, 0.5% ex autos and 0l;4% ex autos and gasoline.  In March consumers will be dealing

Eurozone Labor Market: A Structural and Disinflationary Shift?

April 1, 2026 10:00 AM UTC

That we think the ECB is being optimistic about the real economy and labor market outlook is almost an understatement made all the more so since the outbreak of the Iran War.  In the ECB’s latest baseline scenario, recession is clearly avoided and the jobless rate, while revised a little higher (

Iran War: Invasion Risks

March 31, 2026 10:55 AM UTC

·       Any ground-based invasion would likely result in a long war and Iran would likely counter with attacks on energy or other key facilities around the Gulf.  Sea and air based invasions are also difficult, while any victory would likely be followed by occupation.  WTI oil prices would

EZ HICP Review: Headline Surges as Core Slips Back?

March 31, 2026 9:44 AM UTC

The first of the Iran War induced rise in prices has arrived but with the flash March HICP data a little below expectations, both the consensus and that of the ECB.  Instead, the headline rate spiked higher to 2.5% from February’s 1.9%, but with the core rate falling back (Figure 1) underscoring

Markets: Short vs Long Iran War

March 30, 2026 8:00 AM UTC

·       For a 4-8 week war and 3-4 quarters of energy price normalisation, we see a 10% U.S. equity market correction in H1 2026 driven by the current Iran war and/or consumption slowing due to lower (real) wage growth, alongside still stretched valuations in equity and equity-bond terms.  T

Mexico: March 25bps Cut, Then September?

March 27, 2026 8:01 AM UTC

Banxico decided to cut the policy rate by 25bps from 6.75% due to concerns over the economy, which could be hurt additionally by the Iran war.  However, Banxico inflation forecasts are yet to reflect the shift in oil prices and the prospect of further upward revisions argue against a May or June cu

EZ HICP Preview (Mar 31): Headline to Surge but Core to Slip Back?

March 26, 2026 1:54 PM UTC

The first of the Iran War induced rise in prices arrive in the coming week with flash March HICP data.  We see the headline rate spiking higher to 2.6%-2.7 from February’s 1.9%, the former largely chiming with that implied ECB thinking from the latter’s recent updated projections.  But both it

March Outlook: Iran War and AI Challenges

March 26, 2026 7:17 AM UTC

Our March Outlook is now published and please see all our economic and policy chapters below.