Brazil Risk Premia and EM Debt

January 20, 2025 8:15 AM UTC

Brazil debt market has two domestic crises rather than a spillover from the U.S. in the form of inflation and fiscal policy. Very restrictive BCB policy can help produce some disinflation and we forecast 4.1% for 2026, which some allow some rate cuts in H2. Brazil risk premium will likely be reduced

North American Summary and Highlights 17 January

January 17, 2025 8:44 PM UTC

Overview - GBP slipped on weak retail sales while strong housing starts and industrial production lifted the USD. 

Preview: Due January 30 - U.S. Q4 GDP - Maintaining Momentum

January 17, 2025 4:55 PM UTC

We expect a 2.6% annualized increase in Q4 GDP, slower than Q3’s 3.1% but still maintaining solid momentum.  

FX Weekly Strategy: January 20th-24th

January 17, 2025 4:00 PM UTC

Focus on Trump inauguration and any executive orders on tariffs
USD unlikely to benefit unless he goes ahead with tariffs on Canada and Mexico
GBP looks headed lower one way or another
JPY needs a BoJ rate hike to hold onto recent gains

SA Inflation Preview: Inflation Will Likely Slightly Rise in December

January 17, 2025 2:39 PM UTC

Bottom Line: Despite inflation stood at 2.9% YoY in November, we now foresee annual inflation will slightly accelerate to 3.1% - 3.2% in December due to rising fuel pieces, which will be announced on January 22. We feel unpredictable outlook for the global economy, increasing oil prices following th

China: 5% for 2024 but Still Imbalanced into 2025

January 17, 2025 2:15 PM UTC

  Though China hit the 2024 GDP growth target of 5.0%, monthly data shows the economy unbalanced.  Industrial production/exports and state investment support the economy, with residential property investment negative and consumption sluggish. With monetary policy ineffective, we see Yuan3-5trn fis

Norges Bank Preview (Jan 23): A Message to Markets?

January 17, 2025 1:15 PM UTC

In its first meeting of the year, the Norges Bank is expected to keep rates on hold next Thursday.  But it does have the choice of cutting rates, having flagged a move more likely at the meeting due in March, and could do this both to reflect weaker price pressures (especially excluding what are pr

FX Daily Strategy: N America, January 17th

January 17, 2025 1:13 PM UTC

GBP slips on retail sales weakness
US housing data could be a USD negative

FX Daily Strategy: APAC, January 17th

January 16, 2025 4:08 PM UTC

Chinese data may set the tone on Friday
Scope for the riskier currencies to rally as Chinese GDP posts a strong quarter
GBP vulnerable to evidence of retail sales weakness
US housing data could be a USD negative

Turkiye MPC Preview: CBRT will Likely Continue its Easing Cycle on January 23

January 16, 2025 3:09 PM UTC

Bottom Line: After Central Bank of Turkiye (CBRT) lowered its key policy rate by 250 bps to 47.5% on December 26, we believe the rate cuts will continue during the MPC meeting scheduled for January 23. CBRT will likely reduce the policy rate by 250 bps to 45% as the deceleration trend in inflation c

Brazil: Fiscal Target will be Fulfilled but Doubts Remains over the Fiscal Sustainability

January 16, 2025 3:08 PM UTC

Brazil achieved significant fiscal consolidation in 2024, with a primary deficit of 0.6% of GDP, or 0.2% excluding flood-related costs, driven by revenue growth and reduced judicial expenditures. However, rising debt servicing costs, now at 8% of GDP, worsen the nominal result. Fiscal discipline wil

U.S. December Retail Sales - Trend still solid, Philly Fed surges in January

January 16, 2025 1:58 PM UTC

December retail sales with a 0.4% increase overall and ex auto, 0.3% ex autos and gasoline, are on the weak side of expectations but maintain respectable momentum, particularly in the control group which contributes to GDP, which rose by 0.7%. A strikingly strong January Philly Fed manufacturing ind

ECB December Council Meeting Account Review: The ‘Last Mile’ Appears to Have Shortened Somewhat?

January 16, 2025 1:27 PM UTC

As the account of the December 11-12 Council meeting noted, a fourth 25 bp discount rate cut was agreed but there appeared to be a minority wanting a 50 bp move. But this account also shows some confusion as to just what the advertised change in forward guidance (in which the ECB accepts that on-tar

FX Daily Strategy: N America, January 16th

January 16, 2025 10:14 AM UTC

Little impact seen from US retail sales
AUD has potential to extend gains on solid employment data
GBP is vulnerable to any further evidence of weakness in GDP
Focus shifting to Trump inauguration and any early announcements on tariffs in particular

UK GDP Review: Continued Weakness Evident – BoE Voicing Concern?

January 16, 2025 7:46 AM UTC

The latest set of GDP data add to already-growing 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.  As we envisaged, November saw a bare almost-0.1% m/m rise, this came after October saw a second successi

FOMC Preview for January 29: A Cautious Hold

January 15, 2025 8:10 PM UTC

The FOMC looks set to keep rates on hold at 4.25-4.5% at its January 29 meeting. The statement is unlikely to give much away but the message is likely to be one of cautious optimism on inflation, suggesting further easing is likely but dependent on incoming data. Policy uncertainty under the incomin

Stubborn Inflation Jumped to Record High at Year-End Amid Ruble Woes

January 15, 2025 7:18 PM UTC

Bottom Line: According to Russian Federal Statistics Service (Rosstat) data released on January 15, inflation ticked up to 9.5% YoY in December after hitting 8.9% in November, remaining well above the Central Bank of Russia’s (CBR) midterm target of 4%, due to surges in services and food prices,

FX Daily Strategy: APAC, January 16th

January 15, 2025 4:01 PM UTC

Little impact seen from US retail sales
AUD has potential to extend gains on solid employment data
GBP is vulnerable to any further evidence of weakness in GDP
Focus shifting to Trump inauguration and any early announcements on tariffs in particular

Preview: Due January 16 - U.S. December Retail Sales - Solid end to Q4

January 15, 2025 2:43 PM UTC

We expect US retail sales to finish Q4 on a solid note with a 0.7% rise overall, matching November’s gain, with a 0.6% rise ex autos and a 0.5% increase ex autos and gasoline, the two core rates picking up after both saw modest 0.2% increases in both October and November. 

U.S. December CPI - A modest comfort to the Fed, but early 2025 data will be crucial

January 15, 2025 2:04 PM UTC

While December’s headline CPI is in line with expectations with a 0.4% increase, the core rate ex food and energy is subdued at 0.2% following four straight gains of 0.3%, and a downside surprise is quite comfortable with the gain before rounding being 0.225%. Price data did however pick up in Jan

Mexico’s Plan: An Eye on Nearshoring and Displacing China in U.S.

January 15, 2025 1:17 PM UTC

President Claudia Sheinbaum’s “Mexico Plan” targets USD 270 billion in investments, aiming to reduce poverty, boost sustainability, and expand Mexico’s economy. Key goals include nearshoring, increasing domestic production, and fostering U.S. trade relations. However, private investment stag

FX Daily Strategy: N America, January 15th

January 15, 2025 10:08 AM UTC

US and UK CPI the main focus
USD biased lower given the strong post-election performance and minimal Fed easing now priced in
GBP also has downside risks as inflation data support a more dovish BoE view