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June 13, 2024

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Norges Bank Preview (Jun 20): Continued Caution?
Paying Article

June 13, 2024 9:25 AM UTC

Given the thrust of recent data and the Board’s clear caution, the Norges Bank is very likely to leave the policy rate at 4.5% for a fourth successive meeting at its next Board meeting with the decision due on June 20.  It is also likely to retain the thinking first aired at the December meeting,

June 12, 2024

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BoE Preview (Jun 20): Data Dependent Easing Bias Makes BoE Decision Unclear
Paying Article

June 12, 2024 10:42 AM UTC

After Bank Rate was kept at 5.25% for the sixth successive MPC meeting last month, Governor Bailey remarked that then market rate pricing may be too cautious.  He also accepted that a rate cut at the next MPC verdict on June 20 was a distinct possibility, but underscored the importance of the data

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SNB Preview (Jun 20): Another Cut Likely but How Large an Inflation Target Undershoot
Paying Article

June 12, 2024 9:26 AM UTC

Along with market thinking, we see the SNB on June 20 repeating the 25 bp policy rate cut that it surprised many with three months ago.  This would take the policy rate to 1.25% and where the very clear below-target inflation picture in both recent actual numbers and the outlook flagged by the SNB

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UK GDP Review: Flat April - How Resilient is the Economy?
Paying Article

June 12, 2024 6:31 AM UTC

The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is much clearer than any expected with GDP growth notably positive, albeit with some continued volatility.  Indeed, coming in more than expected, and despite industrial action, GDP rose by 0.4% m/m

June 11, 2024

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UK CPI Inflation Preview (Jun 19): Inflation Falls To Target?
Paying Article

June 11, 2024 9:57 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 especially with April’s signs of resilient services (and particularly in regard to eating out) very mu

June 07, 2024

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CBR Kept the Key Rate Stable at 16% despite Increasing Inflation
Paying Article

June 7, 2024 12:57 PM UTC

Bottom Line: Central Bank of Russia (CBR) announced on June 7 that it decided to keep the policy rate unchanged at 16% for the fourth meeting in a row, but signalled that a rate hike is possible in the near term to tame the stubborn price pressures stemming from high military spending, tight labour

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China Excess Production: Exports Going Cheap?
Paying Article

June 7, 2024 8:45 AM UTC

China excess of production over domestic demand is causing disinflation pressures in China, but also leading to a fall in export prices as China companies seek buyers for production.  Though this is a helpful factor to the global inflation debate, it is causing trade tensions with the U.S. and EU o

June 03, 2024

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UK GDP Preview (Jun 12): Fresh Correction on the Cards?
Paying Article

June 3, 2024 1:52 PM UTC

The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is much clearer than any expected with GDP growth notably positive.  Indeed, coming in more than expected, and despite industrial action, GDP rose by 0.4% m/m in March accentuating the upgraded boun

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Turkiye’s Inflation Hits 75.5% in May
Paying Article

June 3, 2024 11:49 AM UTC

Bottom Line: Turkish Statistical Institute (TUIK) announced on June 3 that Turkish CPI ticked up 75.5% annually and 3.4% monthly in May due to increases in education, housing, restaurant & hotel prices. We foresee favourable base effects, tightened monetary and fiscal policies, additional macro prud

May 31, 2024

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South Africa Elections: A Coalition Government is on the Horizon
Paying Article

May 31, 2024 3:03 PM UTC

Bottom line: As we forecasted in our previous pieces, it seems a coalition government with an ANC-lead will be formed following the presidential elections on May 29, according to the preliminary results. It is very likely that ANC will be losing its majority dipping below 50% as it is currently the

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Turkish Economy Grew by a Strong 5.7% in Q1
Paying Article

May 31, 2024 12:18 PM UTC

Bottom Line: Turkish Statistical Institute (TUIK) announced on May 31 that Turkish economy expanded by 5.7% in Q1 driven by the buoyant demand, invigorated private consumption and government spending. Despite strong Q1 figure, we expect the pace of the GDP growth to decelerate in the rest of 2024 du

May 30, 2024

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SARB Held the Key Rate Stable at 8.25%
Paying Article

May 30, 2024 3:06 PM UTC

Bottom line: As widely expected, South African Reserve Bank (SARB) kept the key rate constant at a 15-year high of 8.25% on May 30 despite inflation rate fell for a second consecutive month in April due to less severe power cuts (load shedding), a firmer South African rand (ZAR) coupled with lower f

May 24, 2024

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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

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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

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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

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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

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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

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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

May 21, 2024

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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

May 20, 2024

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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 16, 2024

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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 14, 2024

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UK Labor Market: Further Signs of Resilient Wage Pressure But Soggier Activity More Notable
Paying Article

May 14, 2024 8:40 AM UTC

As we have underscored repeatedly, the BoE has come to regard the official ONS average earnings data with some suspicion given response rates to the surveys that have fallen towards just 10%.   But the BoE will not be able to dismiss the latest earnings data given that alternative (and more author

May 13, 2024

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UK CPI Inflation Preview (May 22): Inflation to Fall Further and More Broadly
Paying Article

May 13, 2024 12:10 PM UTC

It is very clear that labor market and CPI data are crucial to BoE thinking about the timing and even existence if any start to an easing cycle.  But perhaps the CPI data is the most crucial making the looming April data all the more important for markets as they weigh the chances of an initial rat

May 10, 2024

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Asset Allocation 2024: Tricky Seven Months Remaining
Paying Article

May 10, 2024 1:06 PM UTC

Fed easing expectations for 2025 and 2026 can shift from a terminal 4% Fed Funds rate towards 3%, as the U.S. economy slows due to lagged tightening effects.  Combined with Fed easing starting in September this should mean a consistent decline in 2yr yields.  However, 10yr U.S. Treasury yields wil

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UK GDP Review: Clearer Growth Momentum But Mainly Import Led?
Paying Article

May 10, 2024 6:26 AM UTC

The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is much clearer than any expected with GDP growth notably positive.  Indeed, coming in more than expected, and despite industrial action, GDP rose by 0.4% m/m in March accentuating the upgraded boun

May 09, 2024

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BoE Review: Data Dependent Easing Bias Clearer?
Paying Article

May 9, 2024 12:52 PM UTC

There was little surprise that Bank Rate was kept at 5.25% for the sixth successive MPC meeting, nor that the dissent in favor of an immediate rate cut doubled to two as a result of Dep Gov Ramsden confirming more dovish leanings.  The updated projections at least validated the rate path discounted

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CBRT Lifts End-Year Inflation Forecast to 38%
Paying Article

May 9, 2024 10:22 AM UTC

Bottom Line: Central Bank of Turkiye (CBRT) released the second quarterly inflation report of the year on May 9, and lifted end-year inflation prediction from 36% to 38% citing that the rebalancing process for demand will be more delayed compared to what was projected that in the first inflation rep

May 08, 2024

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Ukraine War Update: Major Russian Offensive is Expected This Summer Despite U.S. Military Aid
Paying Article

May 8, 2024 12:06 PM UTC

Bottom Line: The offensives at the front lines started to pick up steam after March/April as the Russian forces plan for their larger summer 2024 offensive operation, aiming to seize more territory before the U.S. presidential elections in November. In the meantime, U.S. approved a $61 billion warti

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Sweden Riksbank Review: Biting the Bullet
Paying Article

May 8, 2024 8:24 AM UTC

It very much seemed to be a question of when, not if, as far as policy easing is concerned for the Riksbank.  In this regard, albeit surprising in terms of timing, the Riksbank delivered, cutting its policy rate by 25 bp (to 3.75%), despite clear concerns it has flagged about recent and continued k

May 03, 2024

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Russian Economy Expands by 4.2% YoY in March, and 5.4% in Q1
Paying Article

May 3, 2024 2:14 PM UTC

Bottom Line: According to the figures announced by the Russian Ministry of Economic Development, Russia's GDP grew by 4.2% YoY in March owing to strong fiscal stimulus, high military spending, invigorating consumer demand and investments. We now foresee Russian economy will expand by 2.6% in 2024

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Norges Bank Review: Even More Caution?
Paying Article

May 3, 2024 8:46 AM UTC

Surprising few, the Norges Bank Board left the policy rate at 4.5% for a third successive meeting at its latest Board meeting.  It also retained the thinking first aired at the December meeting, namely ‘policy to stay on hold for some time ahead’ rhetoric, this more formally evident in what wer

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Turkiye’s Inflation Continues to Jump in April with 69.8%
Paying Article

May 3, 2024 7:40 AM UTC

Bottom Line: Turkish Statistical Institute (TUIK) announced on May 3 that Turkish CPI ticked up 69.8% annually and 3.2% monthly in April due to increases in transportation, restaurant & hotel and education prices, coupled with the lingering impacts of the wage hikes on the services sector. We feel u

May 02, 2024

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BoE Preview (May 9): Easing Bias Clearer?
Paying Article

May 2, 2024 11:06 AM UTC

In flagging no need to be dominated by Fed policy, we think that the BoE is not only moving towards rate cuts but the MPC majority may be overtly advertising such a likelihood.  But we do not see any move at the looming May 9 verdict, with Bank Rate again likely to remain at 5.25%. But the accompan

May 01, 2024

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South Africa’s Fiscal Outlook Under Spotlights as the Elections Are Approaching
Paying Article

May 1, 2024 6:45 PM UTC

Bottom line: South Africa policy makers remain concerned about government debt trajectory, large domestic and international financing needs and elevated country risk premium before fast-approaching elections on May 29. We think South Africa’s general government fiscal balance and debt trajectory w

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Sweden Riksbank Preview (May 8): When, Not If?
Paying Article

May 1, 2024 8:09 AM UTC

It seems to be a question of when, not if as far as policy easing is concerned.  Even at it previous policy assessment in February it was clear(er) that the Riksbank accepted that it could and should make its policy stance less contractionary, at least in conventional terms.  But its last decision

April 30, 2024

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UK GDP Preview (May 10): Fragile Sideways-Moving Activity Continues?
Paying Article

April 30, 2024 2:19 PM UTC

The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is hardly much better with GDP growth only modestly positive.  Admittedly, coming in as largely expected, and despite industrial action, GDP rose by 0.1% m/m in February accentuating the upgraded 0.

April 29, 2024

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UK Consumers: Rent the Growing Hit to Spending Power
Paying Article

April 29, 2024 2:02 PM UTC

The UK has faced a series of cost-of-living shocks in the last few years.  Some such as the surge in food prices may even be reversing, while it now looks likely the BoE hiking cycle may also start to reverse, although rising market rates may mean little further fall in effective mortgage rates in

April 26, 2024

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CBR Kept the Key Rate Stable at 16%
Paying Article

April 26, 2024 1:12 PM UTC

Bottom Line: As widely expected, Central Bank of Russia (CBR) announced on April 26 that it decided to keep the policy rate unchanged at 16% for the third meeting in a row. CBR made critical changes in its key rate and inflation forecasts as it lifted its 2024 inflation forecast to 4.3-4.8% from 4-4

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Headwinds To Long-term Global Growth
Paying Article

April 26, 2024 9:30 AM UTC

Bottom line: While much focus is on the cyclical economic position to determine 2024 monetary policy prospects, the 2025-28 structural growth trajectory differs to the pre 2020 GDP trajectory for major economies.  While global fragmentation has a role to play, aging populations are already having a

April 25, 2024

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CBRT Kept Key Rate Unchanged at 50%
Paying Article

April 25, 2024 3:25 PM UTC

Bottom Line: As predictions were centred around no change, Central Bank of Turkiye (CBRT) kept the policy rate stable at 50% on April 25 despite galloping inflation, and pressure on FX lately. According to the CBRT statement, monetary policy stance will be tightened in case a significant and persist

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Norges Bank Preview: Nothing New to Note?
Paying Article

April 25, 2024 9:29 AM UTC

Surprising few, the Norges Bank Board is very likely to leave its policy rate at 4.5% for a third successive meeting when it gives it next verdict on May 3.  It is also likely to retain the thinking first aired at the December meeting, namely the ‘policy to stay on hold for some time ahead’ rhe

April 24, 2024

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Sticky Inflation Causes Concerns over the Horizon
Paying Article

April 24, 2024 9:26 AM UTC

Bottom line: According to the Monetary Policy Review Report by the South African Reserve Bank (SARB) on April 23, the risk of higher inflation still remains and inflation returning to the midpoint of the target band is only expected in the last quarter of 2025. SARB highlighted in its report that ma

April 22, 2024

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Short-end European Government Bonds Following U.S. But June Decoupling
Paying Article

April 22, 2024 1:15 PM UTC

The Fed’s shift to higher for longer has spilled over to drag European government bond yields higher through April.  This now looks overdone as a June ECB rate cut is not fully discounted and ECB officials/data clearly point towards a 25bps cut.  UK money markets are more out of line, with a Jun

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UK: Services Inflation Resilience – An Alternative Perspective?
Paying Article

April 22, 2024 10:03 AM UTC

Although still with three members openly resistant to cutting Bank Rate, it does seem as if an MPC majority is nevertheless edging toward easing policy conventionally.  This reflects a view among the less hawkish and more pliable MPC members that risks to persistence in domestic inflation pressures

April 19, 2024

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Recent Polls in South Africa: ANC’s Popularity Continues to Decline
Paying Article

April 19, 2024 1:14 PM 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 or a coalition government. According to recent polls, ANC is at the serious risk of losing its majority dipping below 50%, even as low as 37% acc

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Services Surplus and Decreasing Trade Deficit Partly Heal Turkish Current Account Deficit
Paying Article

April 19, 2024 12:18 PM UTC

Bottom Line: Turkiye’s annualized current account deficits (CAD) stood at $31.8 billion as of February 2024 when compared to $37.6 billion a month earlier, driven by a marginal increase in the services surplus, a reduction in the gold trade deficit, and a recovery in net energy trade. We envisage

April 17, 2024

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Markets: Fed Rather Than Middle East Worries
Paying Article

April 17, 2024 12:34 PM UTC

Global markets are being driven by a scale back in Fed easing expectations and we see a 5-10% U.S. equity market correction being underway.  However, with the market now only discounting one 25bps Fed cut in 2024, any downside surprises on U.S. growth or better controlled monthly inflation numbers

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South Africa’s Inflation Softened to 5.3% in March
Paying Article

April 17, 2024 11:38 AM UTC

Bottom Line: According to the inflation figures announced by Department of Statistics of South Africa (Stats SA) on April 17, the inflation softened to 5.3% YoY in March from a four-month high of 5.6% YoY due to lower food and non-alcoholic beverages (NAB), alcoholic beverages & tobacco, transporta

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UK CPI Inflation Review: Inflation Fall Further, But Services Momentum Still Evident
Paying Article

April 17, 2024 6:52 AM UTC

UK headline and core inflation have been on a clear downward trajectory in the last few months, the former having peaked above 10% in February last year and the latter at 7.1% In May. After a pause in the preceding three months, this downtrend seemingly resumed in the February CPI numbers and clearl

April 12, 2024

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UK GDP Review: Less Fragile Recovery to Fuel BoE Hawks?
Paying Article

April 12, 2024 6:50 AM UTC

The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is hardly much better with GDP growth only modestly positive.  Admittedly, coming in as largely expected, and despite industrial action, GDP rose by 0.1% m/m in February accentuating the upgraded 0.