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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 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 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 6, 2024 10:53 AM UTC
The fact that EZ growth was revised down a notch to 0.2% in Q2 is of little importance – it partly reflects a small recovery in imports that we have been flagging for some time would be a likely break on recorded activity. Over and beyond more signs of slowing wage pressures in Q2 data, more not
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 5, 2024 9:30 AM UTC
Though our baseline view is for a soft landing for the U.S. economy and the Fed cutting to 3.00-3.25% by end 2025 (here), uncertainty exists over the scale of the slowdown. If the U.S. economy has a harder landing (stagnation/technical recession with 20-25% probability), then the Fed could likely
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 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 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 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 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 28, 2024 9:00 AM UTC
The Country Insights Model is a comprehensive quantitative tool for assessing country and sovereign risk by measuring a country’s risk of external and domestic financial shocks and its ability to grow. The access to our full range of scores across 174 countries corresponding to the second quarter
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.
August 26, 2024 8:02 AM UTC
The probability of an Israel/Hezbollah war in the next 12 months has move up from low to modest probability, but would be a high impact event geopolitically and for global markets. For global markets, a distinction would be drawn between an Israel/Hezbollah war that did not involve Iran/U.S. and o
August 23, 2024 2:38 PM UTC
Fed Powell clearly signaled a Sep 18 FOMC cut, but his analysis on the economy is softer than harder landing. Though the option of 50bps was not ruled out, the comments from Powell and other Fed officials are more consistent with 25bps than 50bps. Nevertheless, the Fed is now more focused on
August 23, 2024 1:02 PM UTC
Banxico has resumed its rate-cutting cycle, reducing the policy rate from 11% to 10.75%, with a split board decision. Most members noted weakening domestic activity and external volatility impacting the exchange rate. While some view the rise in non-core inflation as transitory, others see it, along
August 21, 2024 2:50 PM UTC
Mexico's FDI reached USD 31 billion in the first half of 2024, a 7% increase from 2023. However, this figure may be inflated by not accounting for USD inflation, potentially reducing real growth. While nearshoring discussions continue, current FDI largely reflects reinvestment by existing foreign fi
August 21, 2024 9:00 AM UTC
Though China’s authorities have taken some action to help the residential construction sector, the negative drags from the huge excess completed housing and uncompleted projects continues to weigh directly on the construction/steel and cement sector and consumer confidence. Aggressive policy actio
August 19, 2024 8:15 AM UTC
2yr U.S. Treasury yields can fall gradually by end 2025 to 3.25%, as a more neutral Fed Funds era is discounted. 10yr yields ability to decline on a soft landing is more difficult, given high net supply facing the market. We also remain concerned that the U.S. will see some temporary fiscal stre
August 16, 2024 8:10 PM UTC
Mexico's fiscal situation is becoming challenging, with a primary deficit emerging due to increased support for PEMEX and overestimated growth projections. The Debt/GDP ratio is expected to rise to around 50.8% by 2024, possibly stabilizing around 49-54% depending on fiscal consolidation efforts. Wh
August 15, 2024 3:15 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 15, 2024 12:52 PM UTC
July retail sales with a stronger than expected 1.0% increase shows the consumer still has some momentum at the start of Q3, while a dip in initial claims to 227k from 234k suggests the labor market is not seeing increased weakness in early August. August manufacturing surveys from the Philly Fed at
August 15, 2024 6:40 AM UTC
Overall, the July data is consistent with our forecast of a weaker H2 and we still look for 4.7% GDP growth for 2024. The data is also consistent with our forecast of 4.0% in 2025 GDP growth. Consumption behavior could stall further and cause more of a drag than we anticipate and we now see a 30
August 14, 2024 3:35 PM UTC
Global market turbulence has had a spillover impact into EM, but also some EM assets have benefitted from rotation away from the U.S. What are the prospects in the coming months?
We see scope for a 2nd wave of U.S. equity and Japanese Yen (JPY) correction, which are a mixed influence for EM assets
August 14, 2024 1:08 PM UTC
July CPI is consistent with inflationary pressures continuing to ease towards target with gains of 0.2% overall and ex food and energy as expected, but before rounding the gains were only 0.155% and 0.165% respectively.
August 13, 2024 12:22 PM UTC
• We see the recent market turbulence as being partially a reduction in risky positions. However, the U.S. economy is slowing and triggering a debate about a soft or harder landing (we see slowing rather than recession in our baseline), while EZ data shows the recovery is not gaining moment
August 13, 2024 8:02 AM UTC
India's inflation cooled to 3.54% yr/yr in July, marking its lowest in nearly five years and slipping below the RBI's 4% target. With food prices driving the decline, the central bank may now consider a rate cut. However, future inflation risks remain amid uncertain monsoon patterns and global price
August 11, 2024 5:03 PM UTC
The RBI will retained its stance of withdrawal of accomodation and maintained benchmark rate of 6.5% in its August meeting, staying on the path of inflation target. Concerns around high food inflation and geopolitical instability ensured that the RBI remained committed to its monetary tightening sta
August 7, 2024 4:44 AM UTC
More choppy risk sensitive trading seen
JPY downside looks very limited given low level and still low risk premia
CHF strength may be overdone unless there is stronger evidence of recession risk
AUD and NOK weakness may be overdone; GBP more vulnerable
August 6, 2024 9:00 PM UTC
More choppy risk sensitive trading seen
JPY downside looks very limited given low level and still low risk premia
CHF strength may be overdone unless there is stronger evidence of recession risk
AUD and NOK weakness may be overdone; GBP more vulnerable
August 6, 2024 3:13 PM UTC
More choppy risk sensitive trading seen
JPY downside looks very limited given low level and still low risk premia
CHF strength may be overdone unless there is stronger evidence of recession risk
AUD and NOK weakness may be overdone; GBP more vulnerable