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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
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 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
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
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
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 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 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
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 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
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
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 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
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.
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 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 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
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
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.
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 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
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
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 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 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 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
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
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 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 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 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
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 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
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 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 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
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
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 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
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
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 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