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2024 Q2 Country Insights Scores to Download in Excel
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
India GDP Preview: Slowing Growth, Solid Prospects
August 26, 2024 6:04 AM UTC
India’s Q1 FY25 (Apr-Jun) GDP is expected to moderateto 7% yr/yr. The slowdown is expected on the back of limited government spending and sluggish urban demand. Additionally, high interest rates and inflation are expected to have been a drag on growth.
China Harder Landing Scenario
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
China Housing Bailout: More Needed
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
Ukraine War Update: Surprising Ukraine Incursion in Russia Continues
August 27, 2024 10:51 AM UTC
Bottom Line: Ukraine’s surprise cross-border offensive inside Russia's western Kursk region continues with pace as Ukrainians recently advanced near Sudzha. In response, Russian military deploys forces from lower priority sectors of the frontline in Ukraine to the frontline in Kursk Oblast. We for
EM Markets Divergence with China Harder Landing Concerns
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
Country Insights: Labor Productivity and Growth in China
September 4, 2024 9:30 AM UTC
The most recent update of our Country Insights model ranks China as the seventh strongest performer in our labor productivity growth sub-factor. However, the country's score has shown a clear downward trend after the GFC.
ECB: Life in the Not So Fast Lane!
August 27, 2024 9:47 AM UTC
A keynote speech by ECB Chief Economist Lane at Jackson Hole over the week-end suggested that further monetary easing is on the way but in a path that has to steer between the risks of moving too fast against those from moving too slowly. Very clearly he implied that policy will still have to rema
Market Turbulence and What has Changed?
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
Preview: Due September 6 - U.S. August Employment (Non-Farm Payrolls) - Less weak than a weather-restrained July
August 27, 2024 3:58 PM UTC
We expect August’s non-farm payroll to rise by 160k, 135k in the private sector, both slightly stronger than respective July gains of 114k and 97k that were probably restrained by weather but below 3-month averages of 170k and 146k, and thus implying a continued modest slowing in trend. We expect
China Data: Soft Start to Q3
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
Fed Faster Than ECB and BOE?
August 29, 2024 2:05 PM UTC
The Fed will likely ease by more than the ECB and BOE by June 2025, both given pro-activeness from the Fed and also the big gap between the current policy rate and Fed’s assessment of neutral rates. We see a cumulative 175bps of cuts by end June 2025. ECB hawks however are unlikely to stop a c
2024 Q2 Shadow Credit Ratings to Download in Excel
August 29, 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. We produce Shadow Credit Ratings for 162 countries, comparable to those from official credit rat
Powell Jackson Hole Guidance
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
U.S. Election Update: Heading for the Least Risky Outcome?
August 12, 2024 3:06 PM UTC
Since President Joe Biden dropped out of the race, his Vice President Kamala Harris has moved into a marginal lead in the polls against former president Donald Trump and must now be seen, albeit marginally, as the more likely winner. Democrats are looking increasingly likely to gain control of the H
A Harder Landing and the Fed
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
Turkiye Inflation Review: CPI Further Cooled Off to 51.9% in August
September 3, 2024 12:18 PM UTC
Bottom line: After easing to 61.8% y/y in July down from 71.6% annually in June, consumer price index (CPI) cooled further down to 51.9% y/y in August backed by the favourable base effects, tightened monetary and fiscal policies, additional macro prudential measures and relative slowdown in credit
Riksbank Deliver 25bps and More to Come
August 20, 2024 7:58 AM UTC
Riksbank appear more concerned about a weak economy, which is causing forward guidance of a faster pace of easing after today’s 25bps cut to 3.50%. We look for 25bps cuts at the September and December meeting and a further 25bps is possible at the November meeting if inflation remains under cont
UK GDP Preview (Sep 11): More Mixed Messages Ahead as Fiscal Updates Looms
September 3, 2024 9:23 AM UTC
It does seem as if the economy is going to show more positive signs with the July GDP data. Indeed, we see a 0.2% m/m rise, albeit with the data still showing volatility. Indeed, GDP growth has been positive in only one of the three months of the last quarter, having been flat in June. Regardl
China Consumer Volatility
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.
FOMC View Change: 75bps of Easing in 2024, 150bps in 2025
August 28, 2024 11:45 AM UTC
The dovish tone from Fed Chairman Jerome Powell’s Jackson Hole speech on Friday and the FOMC minutes from July 31 on Wednesday suggest the Fed is almost certain to start easing in September, though only if August’s non-farm payroll is surprisingly weak would 50bps become likely. We continue to e
UK August CPI Preview (Sep 18): Inflation Slips Back and Services Resilience Diminishes Further?
September 9, 2024 10:49 AM UTC
The July CPI was notable for the clear and larger-than-expected fall in services inflation, one driven by a fall in restaurant/hotel inflation, this often seen as a bellwether indicator of price persistence. Indeed, services inflation fell 0.5 ppt to 5.2%, a two-year low and well below the BoE pro
ECB Policy Clues: July Accounts and Lane
August 22, 2024 12:24 PM UTC
Elements of the July accounts help build confidence in more easing we expect ECB Lane Jackson Hole speech on Saturday to also provide comfort in near-term rate expectations. However, it is clear that key ECB board members do not want to be as clear as the run-up to the June meeting, but this could
Indonesia's 2025 Draft Budget: A High-Stakes Gamble on Growth and Subsidies
August 20, 2024 6:24 AM UTC
Indonesia's 2025 budget is a high-risk gamble, with potential for the fiscal deficit to breach the 3% of GDP legal threshold. The ambitious revenue targets and planned spending cuts pose significant challenges, particularly in a low commodity price environment. The reliance on optimistic tax revenue
Brazil: Activity Surprises Again in Q2
August 19, 2024 1:24 PM UTC
The Brazilian economy outperformed expectations in Q2, with a 1.1% growth (according to monthly data) driven by industrial production and strong household demand. This strength likely stems from the fiscal push in late 2023, though a slight deceleration is anticipated in the second half of 2024. Wit
EZ HICP Preview (Aug 30): Disinflation Resumes?
August 14, 2024 2:02 PM UTC
It could be argued that the EZ disinflation process has stalled given that no further drop beyond that to 2.4% in April has occurred. Indeed, somewhat unexpectedly, headline HICP inflation rose a notch to 2.6% in July, reversing the slide seen in June. This is even the case regarding the core ra
EZ Growth Risks Increasing?
August 12, 2024 9:52 AM UTC
The EZ economy has been seeing downside risks but ones that may now be materializing. The fact that growth rates among the EZ main economies have diverged of late (Spain robust, Germany contracting afresh) actually reflects a marked disparity in growth rates between strong services and persisting
ECB Preview: Growth Risks Debate Clearer?
September 5, 2024 11:18 AM UTC
That the ECB will cuts official rates again when it gives its next policy verdict on Sep 12 is now almost a given. Even the hawks on the Council are willing to concede that the discount rate can (and maybe even should) fall another 25 bp (to 3.5%). This will come alongside larger reductions to t
Preview: Due September 5 - U.S. July ADP Employment - Momentum slowing but not sharply
August 27, 2024 4:37 PM UTC
We expect a 130k increase in August’s ADP estimate for private sector employment growth, slightly below the 135k we expect for private sector non-farm payrolls. The two series have become more consistent with each other in recent months. We expect overall non-farm payrolls to rise by 160k. Trend
Israel/Hezbollah War Risks
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
Fed Decision Making/H1 2025 Fiscal Tensions and Yield Curve Steepening
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
FX Weekly Strategy: August 19th - 23rd
August 16, 2024 2:28 PM UTC
EUR may come under pressure if PMIs remain relatively weak
GBP strength a little extended but should continue if PMIs remain strong
SEK may be vulnerable even though Riksbank rate cut is largely priced in
CAD would benefit if inflation data surprises on the upside
JPY still has the most potential for vo
UK GDP Review: Mixed Messages with Little to Sway the BoE
August 15, 2024 7:00 AM UTC
After the mild recession in H2 last year, the ‘recovery’ now evident is much clearer than any expected with GDP growth notably positive but in only one of the three months of the last quarter. Indeed, amid weaker retail sales, property transactions and car production data, GDP failed to grow i
Ukraine War Update: Surprising Ukraine Incursion in Russia
August 12, 2024 4:02 PM UTC
Bottom Line: After Russia executed strong counteroffensive operations in the western regions of Ukraine this summer, aiming to seize more territory before the U.S. presidential elections, Ukraine made a surprise attack in return and conducted a cross-border offensive inside Russia's western Kursk re