View:
ECB Preview (Dec 12): Flagging An End to Policy Restriction
December 4, 2024 3:53 PM UTC
While a larger move is possible, we think that the ECB will instead opt for a fourth 25 bp discount rate cut at this month’s Council meeting, to 3%. But this meeting may be as important for what may be a change in forward guidance in which the ECB accepts that on-target inflation is likely to be d
2024 Q3 Country Insights Scores to Download in Excel
November 27, 2024 1:00 PM 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 third quarter o
FOMC Preview for December 18: A Cautious 25bps Easing
December 11, 2024 7:47 PM UTC
The FOMC meets on December 18 and we expect a 25bps easing to a 4.25-4.5% range. Fed commentary has generally suggested that rates are moving lower while cautioning against assuming easing at any meeting is a done deal. Absence of major surprises in recent employment and CPI data probably clears the
2024 Q3 Shadow Credit Ratings to Download in Excel
November 28, 2024 1:00 PM 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 credit rating agenc
Trump International: EM Countries
November 22, 2024 9:08 AM UTC
Trade and geopolitics will be the key drivers for the Trump administration relationship with key EM countries. While uncertainty on policy tactics are high, China and Vietnam will be among the first to see trade threats and actual tariffs. Mexico will see threats over the 2026 USMCA review and i
China Outlook: Construction and Trade Headwinds v Policy Stimulus
December 17, 2024 11:00 AM UTC
We do see a package of stimulative fiscal policy measures for 2025 including Yuan1-3trn infrastructure spending; Yuan1trn funds to buy completed homes for affordable housing and Yuan1trn capital injection to the big six state banks. Some modest measures for low-income households and to boost soci
Preview: Due December 11 - U.S. November CPI - Progress showing signs of stalling
December 3, 2024 2:11 PM UTC
We expect November’s CPI to increase by 0.3% overall after four straight gains of 0.2% while the ex food and energy rate increases by 0.3% for a fourth straight month. Such an outcome would support concerns that progress in reducing inflation is stalling.
Preview: Due December 6 - U.S. November Employment (Non-Farm Payrolls) - Rebound from October's hurricanes and strike
November 26, 2024 3:36 PM UTC
We expect an above trend 260k increase in November’s non-farm payroll, with 225k in the private sector. This will follow weak October outcomes of up 12k overall and down 28k in the private sector, depressed by two hurricanes and a strike at Boeing. We however expect unemployment to be unchanged at
Ukraine War Update: What is Next in Ukraine under New Trump Administration?
November 26, 2024 1:14 PM UTC
Bottom Line: After Trump was elected for his second term, we foresee two major and one alternative scenario in Ukraine. Our first scenario is based on a negotiated settlement backed by the Trump administration, which could help Russia to gain assurance of no NATO/EU entry in the foreseeable future f
Trump International: DM Countries
November 21, 2024 7:06 AM UTC
Much uncertainty still exists on policy but in 2025 the EU will likely be under pressure from targeted new tariffs by the Trump administration, while also being asked to spend more on defense spending. Purchasing extra LNG and military hardware from the U.S. is one way towards a potential trade de
U.S. Outlook: Healthy Economy Facing Policy Risks
December 19, 2024 8:01 AM UTC
• The U.S. economy, consumer spending in particular, has continued to show surprising resilience, and is growing at a pace probably in excess of long-run potential near 2.0%. Inflation has fallen significantly from its highs, with core PCE inflation now running slightly below 3.0%, but rema
This week's five highlights
December 6, 2024 10:00 AM UTC
U.S. November Employment To Rebound from October's hurricanes and strike
U.S. Initial Claims up but still low, narrowing in Trade Deficit may be temporary
U.S. November ADP Employment Mostly strong despite weak manufacturing
USD/JPY Chops Around
A Political Crisis But Not (Yet) a Fiscal One for France
Commodities Outlook: Strategic Caution
December 18, 2024 11:00 AM UTC
The oil supply outlook depends on OPEC+ policies, with the reversal of the voluntary 2.2 million b/d cuts being officially delayed until April 2025. However, we expect the progressive rollover of these barrels into the market to be further postponed at least until the third quarter of 2025, as the c
China Response to Trump Tariffs: Yuan Depreciation and Fiscal Policy Easing
December 11, 2024 8:03 AM UTC
A U.S./China trade war looks highly likely in H1 2025. We would feel that Trump will threaten and then introduce across the board tariff of around 30% on all China imports versus an average of around 20% currently. China will likely respond with targeted tariffs and more restriction on rare eart
Outlook Overview: The Trump Effect- Tariffs, Fiscal Shifts and Geopolitics
December 19, 2024 9:25 AM UTC
· The U.S. economy momentum remains reasonable before President elect Trump’s policies impact in 2025 and 2026. While high uncertainty exists on the scale and timing of policies, the strategic bias is clear – sizeable tax cuts that will boost the budget deficit; tariffs (threats
Equities Outlook: U.S. Exceptionalism v Valuations
December 18, 2024 10:05 AM UTC
· The glory days of exceptionalism for U.S. equities will likely extend in Q1 2025 to bring the S&P500 to 6200-6300. The problem is that valuations have now become stretched with S&P500 ex magnificent 7 on a forward P/E of 19 and valuations out of line with real bond yields (Figure 1)
FOMC eases by 25bps, dots and economic forecasts more hawkish
December 18, 2024 7:21 PM UTC
The FOMC has eased by 25bps as expected but the dots look hawkish with only 50bps of easing seen in 2025 rather than 100bps, and there was one dissenting vote, Cleveland Fed President Hammack preferring to keep rates unchanged. Core PCE price forecasts have also been revised significantly higher, 20
Eurozone Outlook: Trump, Tariffs and the Possible Trade Tremor
December 17, 2024 8:16 AM UTC
· Once again, it does seem as if EZ activity expectations are being pared back in line with our below consensus thinking, most notably for next year. The result is that while the economy has been growing afresh it is doing so timidly, with downside risks persisting more clearly into 2
Preview: Due December 6 - U.S. November Employment (Non-Farm Payrolls) - Rebound from October's hurricanes and strike
December 5, 2024 2:08 PM UTC
We expect an above trend 260k increase in November’s non-farm payroll, with 225k in the private sector. This will follow weak October outcomes of up 12k overall and down 28k in the private sector, depressed by two hurricanes and a strike at Boeing. We however expect unemployment to be unchanged at
UK CPI & BoE Preview (Dec 18-19): Benign Inflation Signals But BoE Still Cautious
December 11, 2024 12:27 PM UTC
While they may not affect the overall BoE verdict on Dec 19, which looks very likely to be a pause after last month’s 25 bp cut (to 4.75%), forthcoming data may very well influence the MPC vote and the message in the updated Monetary Policy Summary. In particular, CPI data (Dec 18) may have some
Top Trump Tariff Threats
December 2, 2024 10:08 AM UTC
Internal dynamics within BRICS argues against a BRICS currency due to divergent economies and structures, though BRICS could one day look to have a payment system. Nevertheless, the threat of tariffs on BRICS if they form a new currency will also likely help the USD against EM currencies in H1 202
France Budget Deal or Crisis?
November 28, 2024 12:54 PM UTC
Concerns about the 2025 French budget failing have caused new spread widening for 10yr France v Germany. What are the prospects?If the new and still very much minority government reaches agreement with National Rally and passes the 2025 budget, then it will produce some relief in markets but will
Eurozone: Measuring Monthly GDP Highlights Growing Weakness
November 27, 2024 11:01 AM UTC
Getting a reliable coincident assessment of the EZ real economy, let alone any insight into the likely near-term outlook, is difficult. EZ GDP data are prone to rapid revision, arrive only quarterly and only with a long lag offer detail from either the spending or output side that would allow a be
Asia/Pacific (ex-China/Japan) Outlook: Trump Tariffs, China +1 and Growth
December 19, 2024 10:57 AM UTC
Emerging Asian economies are projected to lead global growth in 2025, with India and Southeast Asia at the forefront. These regions will anchor resilience in Asia, even as China's economic growth remains moderate.
Inflation trajectories will vary across Asia, with India experiencing sticky prices
EMEA Outlook: Rate Cuts in 2025 Despite Global Uncertainties
December 17, 2024 8:00 AM UTC
· In South Africa, our end-year policy rate prediction remains at 7.0% for 2025 and 6.5% for 2026. We foresee headline inflation will fall to 4.2% and 4.6% in 2025 and 2026, respectively, considering power cuts (loadshedding) are relieved and the domestic fiscal outlook is moderately stab
China Politburo and CPI Argue For More Easing
December 9, 2024 9:01 AM UTC
China December Politburo statement has signalled a step up in easing, with monetary policy to become “moderately loose” for the 1st time since the GFC. We now look for 40bps of 7-day reverse repo rate cuts across H1 2025, though a surprise move cannot be ruled out for December – we see a 50bps
Preview: Due December 12 - U.S. November PPI - Core rates slightly below trend after slightly above trend October
December 3, 2024 2:47 PM UTC
We expect moderate gains of 0.2% in November PPI, overall and in each of the core rates, ex food and energy and ex food, energy and trade. 0.2% gains in the core rates would be on the low side of trend, which remains a little too high to be consistent with inflation returning to the 2.0% target.
SNB Preview (Dec 12): How Much Further Easing?
December 3, 2024 1:54 PM UTC
Whatever the SNB does this month is likely to be merely a further staging post in an easing cycle that has to date delivered three 25 bp moves since March, ie taking the policy rate to 1.0%. More likely the SNB will again cut by 25 bp this month, but amid downside real economy risks and inflation
Trump Deregulation and U.S. Financial Stability
November 26, 2024 10:05 AM UTC
Regional banks will be the main beneficiaries from a further watering down or postponement (that is likely under the Trump administration) of the proposed capital increase under the Basel endgame. Combined with laxer M&A rules for bank takeover, this could help lending and credit growth for the U.
Fed: Policy Easing Slowing
December 18, 2024 8:35 PM UTC
The FOMC statement, FOMC medians and Powell during the Q/A left the impression that Fed easing will slow down into H1 2025. We now see two 25bps cuts in March and June 2025 driven by a Fed’s desire to avoid too much labor market slack occurring, but then pausing for the remainder of 2025 at a 3.75
UK GDP Review: Friday the 13th Weakness Confirmed?
December 13, 2024 7:41 AM UTC
The latest GDP data add to questions about the UK’s economy’s apparent solidity, if not strength, as seen in sizeable q/q gains in the first two quarters of the year of 0.7% and 0.5% respectively. As we envisaged, October saw a second successive m/m drop of 0.1%, well below expectations, this
ECB Review: Clearly Flagging An End to Policy Restriction
December 12, 2024 3:02 PM UTC
A fourth 25 bp discount rate cut at this latest Council meeting, to 3%, was also the third in a row. But this meeting was important for the (as we expected) change in forward guidance in which the ECB accepts that on-target inflation is likely to be durable enough so that it no longer has to pursue
FOMC Minutes from November 7 - Few hawkish signals despite stronger than expected data
November 26, 2024 8:00 PM UTC
FOMC minutes from November 7 show agreement that almost all participants judged risks to their dual mandate objectives of maximum employment and price stability to be roughly in balance and almost all backed the decision to ease by 25bps at the meeting, a more moderate move than the 50bps move that
U.S. November Core PCE Prices significantly softer than Core CPI
December 20, 2024 1:59 PM UTC
November PCE prices at 0.1% overall and core has sharply underperformed gains of 0.3% in both overall and core CPI, easing some of the inflationary concerns generated by two straight gains of 0.3% in September and October core PCE prices. Gains of 0.3% in personal income and 0.4% in spending are als
UK CPI Review (Dec 18-19): Still Mixed Inflation Signals
December 18, 2024 7:51 AM UTC
While exceeding both our and BoE thinking, November CPI inflation jumped 0.3 ppt to 2.6%, actually an eight month high. Services inflation remain ned at 5.0% while the core rose 0.2 ppt to 3.5%, also exceeding Bank projections (Figure 1). The data comes after more cost pressure worries were fann