View:

May 24, 2024

...
Banxico Minutes: Unanimous Pause, Diverging Cuts
Paying Article

May 24, 2024 9:24 PM UTC

Banxico maintained the policy rate at 11%, reflecting a cautious stance amid persistent inflation and economic uncertainty. The board was unanimous in this decision but divided on the timing of future cuts. Despite expectations for a rebound in economic activity, concerns about inflationary pressure

U.S. May Final Michigan CSI - Less weak than the preliminary, with less of a bounce in inflation expectations
Paying Article

May 24, 2024 2:21 PM UTC

May’s preliminary Michigan CSI showed a substantial fall in confidence and a significant rise in inflation expectations. The final data shows a slightly smaller fall in confidence and less evidence of rising inflation expectations.

Canada March Retail Sales - Soft month, subdued quarter, but stronger April expected
Paying Article

May 24, 2024 1:26 PM UTC

Canada’s 0.2% decline in March retail sales  was a little weaker than the preliminary unchanged estimate given with February’s report, and the detail looks weaker still, with sales down by 0.6% ex autos and overall sales down by 0.4% in real terms. The preliminary signal for April however is po

U.S. April Durable Goods Orders - Rise fully on defense but some underlying improvement
Paying Article

May 24, 2024 12:58 PM UTC

April durable goods orders are stronger than expected, and while the gains of 0.7% overall and 0.4% ex transport are moderate, they are a little above recent trend. While the overall rise came fully on defense, gains in non-defense capital ex aircraft orders of 0.3% and shipments of 0.4% suggest bus

...
UK Sales Weakness Curbing Pricing Power?
Paying Article

May 24, 2024 7:05 AM UTC

Ending an interesting week of UK data, retail sales slumped in April, partly due to what was a wet month.  Notably, sales volumes fell by 2.3% m/m following a broadly flat February and March 2024 and were down by 2.7% y/y and 3.8% below their pre-pandemic level.  This weaker-than-expected outcome

May 23, 2024

...
As Expected, CBRT Kept Key Rate Unchanged at 50%
Paying Article

May 23, 2024 7:30 PM UTC

Bottom Line: As predictions were centred around no change, Central Bank of Turkiye (CBRT) kept the policy rate stable at 50% on May 23 despite galloping inflation which edged up to 69.8% in April, up from 68.5% in March. CBRT said in a statement on May 23 that "(...)considering the lagged effects of

...
Brazil: Activity Surprises Again in the First Quarter
Paying Article

May 23, 2024 3:07 PM UTC

Brazil's Q1 2024 economic performance shows a promising 1% GDP growth, driven by a 3.5% year-over-year activity increase. Retail trade grew by 2.5%, reflecting strong internal demand and improved labor market conditions. Industrial production saw a modest 0.3% growth, with manufacturing stagnation o

U.S. May S&P PMIs - Rebounding from weaker April, Services to a 12-month high
Paying Article

May 23, 2024 2:01 PM UTC

May’s stronger preliminary S and P PMIs contrast April data which suggested a loss of momentum in the economy entering Q2, with manufacturing rising to 50.9 from 50.0 and services seeing quite a sharp bounce to 54.8 from 51.3, more than fully reversing three straight declines.

Preview: Due May 24 - U.S. April Durable Goods Orders - Underlying trend remains near flat
Paying Article

May 23, 2024 1:10 PM UTC

We expect April durable goods orders to fall by 0.8% after a rise of 0.9% in March (after annual revisions were released on May 14) with a 0.3% increase ex transport to follow an unchanged March. Underlying trend remains close to flat. 

U.S. Initial Claims suggest any labor market slowing is marginal
Paying Article

May 23, 2024 12:45 PM UTC

Initial claims at 215k have fallen from 223k, a second straight fall from the 232k outcome two weeks ago that was the highest since August 25 2023. The latest data is not much above the trend seen before the spike of two weeks ago, suggesting that while the labor market may be easing slightly, it is

...
Eurozone: PMIs Offer More Positive Gimmers – Still Too Good to be True?
Paying Article

May 23, 2024 9:19 AM UTC

The latest PMI data suggest the EZ economic recovery gained further momentum in May as the composite index rose to 52.3 in May from 51.7 in April, thereby implying positive private sector growth for the third consecutive month.  We remain wary about the messages from the data (see below and Figure

...
Support to ANC is on the Rise
Paying Article

May 23, 2024 6:24 AM UTC

Bottom line: We continue to foresee two possible outcomes of South African presidential elections on May 29, either an African National Congress (ANC) win (40% probability) or a coalition government (60% probability). According to recent polls, ANC continues to be at the risk of losing its majority

May 22, 2024

...
FOMC Minutes from May 1 - Data expected to slow, but alert to risks
Paying Article

May 22, 2024 6:54 PM UTC

FOMC minutes from May 1 do not show a very hawkish view of the economy, with inflation and the economy still expected to slow, though with the former seen at a slower pace and with less confidence. Policy is seen as data-dependent, and the potential for a more hawkish turn if data disappoints can be

...
UK: July Election Called
Paying Article

May 22, 2024 4:27 PM UTC

In a somewhat surprise announcement, PM Sunak has called a general election for July 4, somewhat earlier than the autumn timetable that had been previously hinted at.  He is doing so with his Conservative Party lagging severely in the polls.  However, especially after recent local election results

Preview: Due May 23 - U.S. April New Home Sales - Looking close to a peak
Paying Article

May 22, 2024 2:16 PM UTC

We expect an April new home sales total of 665k, equal to the average of March’s stronger 693k and February’s weaker 637k. We believe a recent modest improvement in trend is close to a peak. 

U.S. April Existing Home Sales - Extending correction from strong February rise
Paying Article

May 22, 2024 2:11 PM UTC

April existing home sales with a 1.9% decline to 4.14m follow a 3.7% decline in March in a continued correction from a surge of 9.5% in February. 2023 also saw a strong rise in February and a steady slowing in the months that followed.

Preview: Due May 23 - U.S. May S&P PMIs - Slippage seen, particularly in Manufacturing
Paying Article

May 22, 2024 1:22 PM UTC

We expect May’s S and P PMIs to show slippage, manufacturing quite significantly to 48.5 from 50.0, but services only marginally to 51.0 from 51.3. 

...
EZ HICP Preview (May 31): Core Disinflation Continues?
Paying Article

May 22, 2024 11:10 AM UTC

Very much having affected ECB thinking, there has been repeated positive EZ news in the form of falling EZ HICP inflation and somewhat broadly so. This abated in April, with the headline staying at 2.4% but with the core down a further 0.2 ppt to a 27-mth low of 2.7%, as higher fuel prices were offs

...
South Africa’s Inflation Softened to 5.2% in April, the Lowest Reading in Four Months
Paying Article

May 22, 2024 10:54 AM UTC

Bottom Line: According to the inflation figures announced by Department of Statistics of South Africa (Stats SA) on May 22, the inflation eased to 5.2% YoY in April down from 5.3% in March due to less severe power cuts (load shedding), a firmer South African rand (ZAR) coupled with lower food and no

...
Bank Indonesia Holds Firm on Rates: A Steady Hand for Currency Stability
Paying Article

May 22, 2024 9:29 AM UTC

Bank Indonesia in a pro-stability move decided to maintain the key policy rate at 6.25% today. The move comes at a time when the wakness in the Indonesia Rupiah has abated and headline inflation has edged down. Despite improving stability, a rate cut is not in sight in the near term. 

...
UK CPI Inflation Review: Inflation Falls Further Amid More Signs of Price Persistence
Paying Article

May 22, 2024 6:57 AM UTC

It is very clear that labor market and CPI data are crucial to BoE thinking about the timing and even the existence of any start to an easing cycle.  But perhaps the CPI data is the most crucial with more signs of resilient services (and particularly in regard to eating out) very much questioning w

RBNZ Review: Higher Rates for Longer
Paying Article

May 22, 2024 5:18 AM UTC

RBNZ kept rates unchanged at 5.5% but revised OCR path in 2025 almost one 25bps hike higher

May 21, 2024

Preview: Due May 30 - U.S. Preliminary (Second) Estimate Q1 GDP - Slower still on retail and inventories
Paying Article

May 21, 2024 4:03 PM UTC

We expect the second (preliminary) estimate for Q1 GDP to be revised lower to 1.2% annualized from the advance estimate of 1.6%. This will remain the slowest quarter since a decline in Q2 2022. Our current estimate for Q2 is for a rise of 2.0%. 

Preview: Due May 22 - U.S. April Existing Home Sales - No signals for a strong move
Paying Article

May 21, 2024 3:09 PM UTC

We expect existing home sales to be unchanged at 4.19m in April, pausing after a 4.3% decline in March corrected a strong 9.5% increase in February. We expect to see trend move lower in the coming months, but there are no clear signals for a second straight decline in April. 

U.S. Fed's Waller - Several months of good inflation needed for easing
Paying Article

May 21, 2024 1:18 PM UTC

...
BOE: August Expected But Could be June and Not Enough Discounted
Paying Article

May 21, 2024 11:11 AM UTC

The market is not discounting enough BOE easing in the next 6-18 months during which we see a cumulative 175-200bps of cuts.  The BOE is swinging from a reactive to proactive policy stance and will take account of the prospects of further wage and service inflation slowing.  UK fiscal tightening w

The Aussie Chapter 4: Chinese Proxy
Paying Article

May 21, 2024 12:00 AM UTC

In "The Aussie", we will look into the "well-known "correlation among the Aussie and well-known benchmark to give our readers a closer look towards factors that have been affecting the movement of the Australian Dollar. In Chapter 4, we will look into the performance of the Aussie relative to the Ch

May 20, 2024

...
FOMC Minutes from May 1 to Suggest Restrictive for Longer
Paying Article

May 20, 2024 7:15 PM UTC

FOMC minutes from May 1 are due on May 22. The minutes are likely to be a more hawkish than those from the March 20 meeting released on April 10, given the strength of data released between the two meetings. Restrictive policy for longer so likely to be the message, but with no clear timetable. Soft

U.S. Fed's Jefferson - Progress less than would have liked but encouraged by April CPI
Paying Article

May 20, 2024 3:01 PM UTC

U.S. Fed's Barr - Need to allow tight policy further time
Paying Article

May 20, 2024 1:27 PM UTC

Fed's Barr appears to have become less dovish in response to Q1 inflation data.

Preview: Due May 21 - Canada April CPI - Headline stable but core rates falling
Paying Article

May 20, 2024 12:15 PM UTC

April CPI will be closely watched as the last CPI release before the June 5 Bank of Canada meeting. We expect the yr/yr pace to be unchanged at March's 2.9% pace which was also the pace in January before February saw a brief dip to 2.8%. However we expect continued steady downward progress in the Bo

...
ECB: June Rate Cuts Too Trigger More Rate Cut Expectations for 2024/25
Paying Article

May 20, 2024 10:50 AM UTC

However much the Council will resist fueling discussion of possible easing path, confirmation of a 1 cut normally increases speculation over further easing in subsequent quarters and we see 25bps in June followed by 25bps in September and December.  The market could discount some more easing over t

May 17, 2024

...
Preview: Due May 31 - U.S. April Personal Income and Spending - Core PCE Prices to round down to 0.2%
Paying Article

May 17, 2024 4:04 PM UTC

April’s core PCE price index looks set to come in close to 0.25% before rounding, though we expect the index to be rounded down to 0.2%, while overall PCE prices are rounded up to 0.3%. We expect a subdued 0.2% increase in personal income to underperform a 0.4% increase in personal spending.

May 16, 2024

U.S. Fed's Mester - Prudent to hold rates for longer, but welcomes April CPI
Paying Article

May 16, 2024 5:45 PM UTC

Preview: Due May 23 - U.S. May S&P PMIs - Slippage seen, particularly in Manufacturing
Paying Article

May 16, 2024 3:26 PM UTC

We expect May’s S and P PMIs to show slippage, manufacturing quite significantly to 48.5 from 50.0, but services only marginally to 51.0 from 51.3. 

Brazil: Possible Impacts of the Floods
Paying Article

May 16, 2024 1:07 PM UTC

Unprecedented floods in Rio Grande do Sul, a state that contributes 6.4% to Brazil's GDP and 13.3% to its agricultural production, have submerged several cities. The immediate halt in economic activity may reduce Brazil's Q2 GDP by up to 0.4%. The federal government is increasing aid, potentially ra

U.S. Initial Claims, Housing Starts, Philly Fed - No real surprises but consistent with a modest slowing
Paying Article

May 16, 2024 1:00 PM UTC

The latest data is all close to consensus, initial claims partially correcting a sharp rise last week, housing starts correcting a sharp fall last month but permits seeing a second straight dip while the Philly Fed corrected from a strong preceding month but remains positive.  All this is consisten

...
France and Japan: Debt Fuelled Growth Problem
Paying Article

May 16, 2024 10:30 AM UTC

Most of the surge in debt/GDP in Japan and 40% in France is due to higher government debt and this should not be a binding constraint provided that large scale QT is avoided – we see the ECB slowing QT in 2025 and are skeptical about BOJ QT in the next few years.  The adverse impact of higher deb

May 15, 2024

Preview: Due May16 - U.S. April Industrial Production - A modest rise
Paying Article

May 15, 2024 2:42 PM UTC

We expect April industrial production to rise by 0.3% overall with a 0.2% increase in manufacturing. We expect utilities output to provide a lift but negatives from mining and autos.