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November 01, 2024

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FOMC Preview for November 7: A 25bps Easing, Outlook Unclear
Paying Article

November 1, 2024 3:33 PM UTC

We expect a 25bps FOMC easing on November 7 to a 4.5% to 4.75% range. With the dots from the September 18 meeting relatively evenly split between one and two more 25bps easings this year and data since September 18 on balance being relatively firm the debate is likely to be between no change and a 2

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U.S. October Employment - Special factors add to weakness, but trend looks less strong after revisions
Freemium Article

November 1, 2024 1:27 PM UTC

October’s non-farm payroll is well below consensus with a 12k increase with weakness impacted by a strike at Boeing and hurricanes, though probably also in part due to a correction from an above trend September, and negative revisions make the trend going into this report less strong than it was.

October 31, 2024

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U.S. September Personal Income, Spending and Core PCE Prices, Q3 Employment Cost Index, Weekly Initial Claims - Mostly solid
Paying Article

October 31, 2024 1:18 PM UTC

September’s personal income and spending data is largely old news with Q3 totals having been seen in the GDP report.  As in Q3, growth in spending, of 0.5%, exceeds a 0.3% rise in income while core PCE prices are on the firm side of trend at 0.3%, though only 0.254% before rounding. The Employmen

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Election and U.S. Equities
Paying Article

October 31, 2024 10:30 AM UTC

The multi week reaction will likely swing on the narrow equity market focus of winners and losers and an assessment that a Trump win would be better than Harris for the U.S. equity market.  However, multi quarter the actual implementation of policies can spillover to impact the corporate earnings o

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BoJ Review: Little guidance ahead
Freemium Article

October 31, 2024 5:24 AM UTC

The BoJ keep rate unchanged in the Oct 31 meeting at 0.25% with little forward guidance
Quarterly report remains hawkish in policy stance and mixed revision on CPI

October 30, 2024

Preview: Due October 31 - U.S. September Personal Income and Spending - Core PCE prices may match Core CPI this month
Paying Article

October 30, 2024 2:29 PM UTC

September personal income and spending data will confirm Q3 totals seen with the GDP release, with the only uncertainty being the mix of monthly changes and back month revisions. We look for a stronger 0.3% increase in core PCE prices, and a moderate 0.3% rise in personal income which we expect will

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U.S. Election Scenarios and Post-Election Policy Risks
Freemium Article

October 30, 2024 8:14 AM UTC

The U.S. election remains very close though a win for former President Donald Trump appears slightly more likely than one for Vice President Kamala Harris. The race for control of the House is also close, though here a Democrat majority looks marginally more likely. For the Senate, a Republican majo

October 28, 2024

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UK Budget and Gilts
Freemium Article

October 28, 2024 9:35 AM UTC

The UK government is leaking parts of the October 30 budget to allow markets to adjust before the full announcement.  While the new fiscal rule for debt/GDP could raise some modest concerns over increased supply for the gilt market initially, attention will quickly switch to the BOE November 7 and

October 25, 2024

U.S. September Durable Goods Orders - Aircraft slip, but ex transport showing signs of improvement
Paying Article

October 25, 2024 1:01 PM UTC

September durable goods orders fell by 0.8% in line with expectations with August revised down. Also to -0.8% from unchanged. The weakness of the headline however contrasts with a stronger than expected 0.5% rise ex transport, with August revised up to a 0.6% increase from 0.5%, hinting at underlyin

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U.S. Government Debt and Deficit – How Much Does it Matter?
Freemium Article

October 25, 2024 9:55 AM UTC

Post-election U.S. fiscal policy can still cause stress in the U.S. Treasury market given the unsustainable U.S. budget deficit and the high risk of a rating agency downgrade in H1 2025.  However, 10yr U.S. Treasury yields above 4% now have a buffer and the prospect for Fed policy is also important

October 24, 2024

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China Big Banking System: Lessons from Japan/GFC
Paying Article

October 24, 2024 10:50 AM UTC

The proposed Yuan1trn capital injection for the six largest banks would be pre-emptive, while China is also quick to merge weaker/failing small to mid-sized banks. However, rising NPL’s; plus, low net interest margins with low policy rates; low nominal GDP and pressure to rollover LGFV/SOE debt wi

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Eurozone Services Risks Clearer?
Freemium Article

October 24, 2024 10:13 AM UTC

It is clear that PMI data are a key component of the data analysis of the ECB. We are somewhat sceptical of the data, at least in its ability to track GDP growth coincidently and accurately.  But the data does offer a wide-ranging insight into private sector economic momentum.  With this in mind t

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BoJ Preview: Forward Guiding Another Hike Imminent
Freemium Article

October 24, 2024 5:15 AM UTC

The BoJ will keep rate unchanged in the Oct 31 meeting at 0.25% with forward guidance suggesting an imminent hike

October 23, 2024

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Mexico: Economy Contracts in August, Slowdown Continues
Freemium Article

October 23, 2024 6:25 PM UTC

Mexico’s economy contracted by 0.3% in August, with agriculture down 9% and the industrial sector shrinking by 0.5%. Construction dropped 3.6%, and employment growth slowed. Weaker internal demand and stabilizing U.S. demand signal more challenges ahead. Banxico may cut rates further, but subpar g

October 22, 2024

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2yr Treasury Yields and A Mature Fed Easing Cycle
Paying Article

October 22, 2024 1:17 PM UTC

The outlook for 2yr yields is still dominated by the scale of expected Fed cuts and this remains fluid and most influenced by whether data continues to show momentum or whether the soft v hard landing debate reignites.  However, other financial markets should also watch how expectations of the matu

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EM Europe and CIS: Select Country Risk Ratings
Paying Article

October 22, 2024 10:00 AM UTC

We provide country risk reviews for EM Europe/CIS countries including Russia/Ukraine and Turikye. 

October 21, 2024

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China Corporate Debt Deleveraging
Paying Article

October 21, 2024 10:45 AM UTC

Private companies ex property developers have seen a small pay down of debt, but the largest remaining portion of non-financial debt ex LGFV is central and local SOE’s.  They have low profitability and have shown few signs of increased leverage.  This leaves the onus on fiscal policy.  

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Country Risk in MENA
Paying Article

October 21, 2024 10:00 AM UTC

We provide reviews of Saudi Arabia, UAE and Algeria this quarter.      

October 20, 2024

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Mexico: More Institutional Reforms on the Pipeline
Freemium Article

October 20, 2024 3:09 PM UTC

Morena's political dominance has strengthened with Claudia Sheinbaum's election and judicial reforms, allowing them to shape the Supreme Court. This boosts their ability to push controversial policies, like state control of Mexico’s energy sector. However, economic slowdown and potential U.S. poli

October 18, 2024

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Sub Sahara Africa: Country Risk Ratings
Paying Article

October 18, 2024 10:00 AM UTC

We provide country risk reviews for Sub Sahara Africa countries including Nigeria/South Africa.  

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China September Data Rotates Higher, But
Paying Article

October 18, 2024 7:30 AM UTC

Q3 GDP and September monthly figures were slightly better than expected. Combined with a speed up of local government spending in Q4 and more completion of uncompleted homes, we change our 2024 GDP forecast to 4.8% v 4.6%.  However, despite a further Yuan1.5-2.0trn of fiscal stimulus to come, we st

October 17, 2024

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Brazil: Demand and Imported Prices Lead Inflation Rise
Freemium Article

October 17, 2024 6:33 PM UTC

Our updated model shows that stronger-than-expected demand and BRL depreciation are driving Brazil’s inflation higher, while supply remains stable. Despite recent rate hikes, inflation expectations have risen, loosening monetary policy. We expect the BCB to implement two more 50 bps hikes before p

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Preview: Due October 31 - U.S. September Personal Income and Spending - Core PCE prices may match Core CPI this month
Paying Article

October 17, 2024 6:28 PM UTC

September personal income and spending data will be largely old news at the time of the release, with Q3 totals due with the GDP release the day before. Ahead of the GDP release we look for a stronger 0.3% increase in core PCE prices, and a moderate 0.3% rise in personal income which we expect will

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ECB Review: Inflation Outlook Lowered?
Freemium Article

October 17, 2024 1:45 PM UTC

The latest 25 bp rate cut from the ECB was obviously not anticipated at the previous meeting, although perhaps the Council was more open to such a move than the press conference then suggested.  But it is clear a reassessment is occurring, not just of the inflation outlook but the real economy too.

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U.S. September Retail Sales continue to show resilience, Initial Claims correct lower
Paying Article

October 17, 2024 1:04 PM UTC

September retail sales show the consumer sustaining solid momentum through Q3 with a stronger than expected rise of 0.4% overall, 0.5% ex autos and impressive gains of 0.7% both ex autos and gasoline and in the control group that contributes to GDP. Initial claims in the survey week for October’s

October 16, 2024

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ECB to Note Better Signs in Bank Lending Survey?
Freemium Article

October 16, 2024 2:17 PM UTC

All and sundry wait as much for the what the ECB says tomorrow (Oct 17) than what it does (ie cut by another 25 bp).  The consensus is that the Council will have to sound much more cautious about downside risks to both (its somewhat optimistic) growth outlook and its too pessimistic inflation pictu

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U.S. House Race Becoming Closer
Paying Article

October 16, 2024 10:00 AM UTC

The probability of a Republican clean sweep has jumped to a 25% probability, which could see a future President Trump go beyond renewing 2017 lapsing tax cuts.  It could also increase the odds of tariffs being increased to fund extra tax cuts!  This would likely curtail the Fed easing cycle and pu

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Asia Country Risk Ratings
Paying Article

October 16, 2024 9:54 AM UTC

We provide country risk reviews for Asia countries including Hong Kong, Thailand, Pakistan and Singapore.  

October 15, 2024

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U.S. Tensions for China: Protected by BRICS and BRI?
Paying Article

October 15, 2024 9:30 AM UTC

BRICS can provide a political buffer but not economic, as BRICS are still searching for practical areas for cooperation.  However, Donald Trump universal tariffs threats could focus BRICS on more intra EM trade. BRI has already helped to redirect China exports to EM countries, despite the slowdown

October 14, 2024

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China Fiscal Stimulus: Details to Follow
Paying Article

October 14, 2024 8:37 AM UTC

Further details of the size of extra central government spending/scaled up local authority purchases of unsold complete homes for affordable housing should be seen late October/early November from the National People Congress.  We estimate Yuan1.5-2.0trn in total of extra spending, which leads us t

October 11, 2024

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France Debt: Non-Residents Budget Jitters
Paying Article

October 11, 2024 9:04 AM UTC

The 2025 budget could pass via a sequence of events, but the potential outcome is so uncertain that it is difficult to attach a probability to the various scenarios. Drama will be high for the next 12 months, which will also most likely see a parliamentary election from July 2025.  France has been

October 10, 2024

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China and Japan Debt Compared
Paying Article

October 10, 2024 1:35 PM UTC

China housing crisis will likely mean that household debt/GDP flat lines in the coming years like Japan after 1990 and be a headwind for consumption.  Meanwhile, the downturn in residential construction is already greater than that experienced by Japan after 1990 and in itself will be remain a stru

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U.S. September CPI - Core not led by housing this time, Hurricanes starting to lift Initial Claims
Freemium Article

October 10, 2024 1:19 PM UTC

September CPI is on the high side of expectations, up 0.2% overall and 0.3% ex food and energy, with the gains before rounding being 0.18% and 0.31% respectively. While the core rate looks similar to August’s, the details are different with strength not led by housing this time. A spike in initial

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ECB Preview (Oct 17): A Change of Tune, A Change of Rates
Freemium Article

October 10, 2024 12:56 PM UTC

It now seems very likely that the ECB will cut rates at a successive Council meeting for the first time in this easing cycle dating back to June.  To date the ECB has allowed the impression that it would ease only every other meeting, ie once a quarter, partly to give it access to what it sees as k

October 09, 2024

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Holding the Line: RBI Maintains Policy Rate Amid Economic Optimism
Paying Article

October 9, 2024 1:56 PM UTC

The Reserve Bank of India (RBI) has decided to maintain the policy repo rate at 6.50% and has shifted its stance to 'neutral' to balance the objectives of inflation management and economic growth. Although inflation has eased, the RBI remains cautious due to rising geopolitical tensions and increase

October 08, 2024

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U.S. Fiscal Policy Post-Election: Temporary Fiscal Stress Rather Than a Crisis
Paying Article

October 8, 2024 9:30 AM UTC

We remain concerned that temporary fiscal stress will be evident in H1 2025, as rating agencies worry over the deficit/debt and interest rate trajectory that is unlikely to improve under either president.  This leaves an event risk of a ratings downgrade from one of the major agencies, given that t

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.