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China: Any Lessons from the 1997-98 Asian Crisis?
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
China Fiscal Stimulus: Details to Follow
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
U.S. House Race Becoming Closer
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
BOE: Gradual to Activist?
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
U.S. Tensions for China: Protected by BRICS and BRI?
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
ECB to Note Better Signs in Bank Lending Survey?
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
U.S. September Employment - A strong month and downside risk to October has fallen too
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
UK Budget Preview (Oct 30): More Tax and More Spend
October 21, 2024 11:30 AM UTC
With speculation that the Chancellor faces a £ 40 bln funding gap which will be addressed largely through tax rises, it seems as if the UK economy faces a larger fiscal tightening than was planned under the previous government. However, with promoting growth the policy priority, the Chancellor is
Preview: Due October 10 - U.S. September CPI - Core returning to trend, gasoline softer
October 9, 2024 12:26 PM UTC
We expect September’s CPI to increase by 0.1% overall with a 0.2% increase ex food and energy. We expect the core CPI to be very close to 0.2% even before rounding, but with a significant decline in gasoline prices expected, we expect the headline CPI to rise by only 0.06% before rounding.
FOMC Minutes Preview and Data Outlook Before the Next Meeting
October 2, 2024 5:52 PM UTC
After a less than dovish speech from Fed Chairman Jerome Powell to the NABE on Monday, it is likely that the minutes from the September 18 meeting due on October 9 will show a similar tone. However the next FOMC decision on November 7 will be data-dependent, and the minutes may highlight the signifi
Brazil: Moody’s Upgrade Brazil’s Rating
October 2, 2024 2:22 PM UTC
Moody's upgraded Brazil's rating to Baa1, one level below investment grade, citing growth and structural reforms like tax and labor reforms. While Brazil's fiscal framework still faces challenges, adherence to it could stabilize the Debt/GDP ratio. Analysts were surprised by the upgrade, but maintai
Turkiye Unveils New Medium Term Program Towards 2024-2027
October 15, 2024 6:30 PM UTC
Bottom Line: Turkiye announced the Medium-Term Program (MTP) for 2024-2027 on September 5. According to the announcement, the main goal of the program aims to bring inflation down to single digits, and ensure price stability. GDP growth aimed to accelerate to 4% next year, 4.5% in 2026 and 5% in 202
U.S. September CPI - Core not led by housing this time, Hurricanes starting to lift Initial Claims
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
UK CPI Preview (Oct 16): Inflation Below Target – BoE Splits Widen?
October 8, 2024 10:14 AM UTC
Helped by a fall in fuel prices, amplified by base effects, alongside some belated softening in services costs, UK inflation may drop to 1.9% in the September CPI (from 2.2%), thus falling below target since April 2021. Admittedly, the drop in services may be limited to a notch lower from Septembe
UK CPI Review: Inflation Below Target – BoE Hawks Placated?
October 16, 2024 6:49 AM UTC
Helped by a fall in fuel prices and airfares, amplified by base effects, alongside some belated broader softening in services costs, UK inflation dropped to 1.7% in the September CPI (from 2.2%), thus falling below target for the first time since April 2021. This drop was greater than expected and
Holding the Line: RBI Maintains Policy Rate Amid Economic Optimism
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
Ukraine War Update: Kursk Battle is Turning into a Stalemate
October 4, 2024 7:05 PM UTC
Bottom Line: After Ukraine’s offensive inside Russia's western Kursk region started early August, it seems the Russian military command is continuing to prioritize offensive operations in priority sectors of the frontline over long-term planning for Russia's theater-wide campaign in Ukraine as Rus
Markets: Rate Cuts or Geopolitics?
October 2, 2024 9:36 AM UTC
Israel will likely counteract Iran, which will prompt a further missile attack by Iran. However, our bias remains that Israel main aim is to have a buffer zone in southern Lebanon up to the Latani river and not fight a prolonged war with Iran. This limits the economic fallout globally and on oil
ECB October Rate Cut for Insurance
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
Israel/Hezbollah Scenarios
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
China and Japan Debt Compared
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
UK GDP Preview (Oct 11): Moderating Momentum?
October 7, 2024 9:17 AM UTC
Much has been made of the UK’s economy’s apparent solidity, if not strength, so far this year given sizeable q/q gains in the first two quarters of the year of 0.7% and 0.5% respectively. But this may be something of a flash in the pan, not least as GDP growth has been positive in only one of
Futures & Options Frenzy: Retail Investors Suffer as SEBI Plans Rescue
October 1, 2024 10:05 AM UTC
Retail investors in India’s futures and options (F&O) market incurred losses of USD 21.6bn over three years, with 93% of traders losing money. SEBI is planning new measures, including raising the minimum contract size and tightening risk management rules, to curb speculative trading and protect in
BRICS Summit 2024: Kazan Declaration not a Game Changer
October 28, 2024 11:41 AM UTC
Bottom Line: The BRICS Summit, which was held in Kazan on October 22-24, was the first summit following BRICS has expanded to include Ethiopia, Iran, Egypt and the United Arab Emirates. Despite expectations, Kazan deceleration, which was a joint statement signed after the summit, is not a game-chan
Bank of Canada Preview for October 23: Close call for 25bps rather than 50bps
October 15, 2024 6:18 PM UTC
The Bank of Canada’s October 23 decision looks a close call between a fourth straight 25bps easing to 4.0%, which is our expectation, or a 50bps move to 3.75%. The BoC can feel increasingly confident of core inflation returning to the 2.0% target in 2025, though tentative signs of growth regaini
UK GDP Review: Momentum Moderating?
October 11, 2024 6:41 AM UTC
Much has been made of the UK’s economy’s apparent solidity, if not strength, so far this year given sizeable q/q gains in the first two quarters of the year of 0.7% and 0.5% respectively. But this may be something of a flash in the pan, not least as GDP growth has been positive in only two of
Preview: Due October 17 - U.S. September Retail Sales - A moderate end to a stronger quarter
October 2, 2024 1:51 PM UTC
We expect a 0.2% increase in September retail sales with a 0.1% increase ex autos, similar to the 0.1% increases seen in both series in August. Ex autos and gasoline we expect a 0.3% increase, slightly stronger than August’s 0.2% but not quite matching a 0.4% gain seen in July.
Eurozone Q3 GDP Preview (Oct 30): (Near) Stagnation?
October 22, 2024 12:02 PM UTC
At best, the EZ economy is diverging ever more clearly as Germany falters while Spain prospers. However, the risks are that the whole of the EZ is weakening. Indeed, in contrast to ECB and consensus thinking of a second successive quarter of 0.2% q/q GDP growth, we see a clear risk that the EZ e
Russia CPI Review: Moderate Fall in Inflation in September but Still Elevated
October 11, 2024 6:48 PM UTC
Bottom Line: According to Russian Federal Statistics Service data released on October 11, inflation cooled off to 8.6% YoY in September after hitting 9.1% both in August and July, but remained elevated due to surges in food and services prices, weakening Ruble (RUB), and huge military spending. The
Preview: Due October 15 - Canada September CPI - To fall below 2% overall, but with pause in BoC core rates
October 2, 2024 2:50 PM UTC
We expect September Canadian CPI to slip to 1.9% yr/yr from 2.0% on weaker gasoline prices, reaching its slowest since February 2021. However we expect the downtrend in the Bank of Canada’s core rates to see a temporary pause as weak data a year ago drops out.
China Big Banking System: Lessons from Japan/GFC
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