Trump-Putin Summit: No Ceasefire Agreement, Possible Concessions Discussed

August 18, 2025 12:29 PM UTC

Bottom Line: U.S. President Trump and Russian President Putin met in Alaska on August 15 to discuss the fate of war in Ukraine. The meeting lasted three hours, but did not yield an immediate ceasefire agreement as we expected. After the meeting, Trump and Putin both signaled what could happen next i

U.S. July Retail Sales - Resilient entering Q3

August 15, 2025 12:51 PM UTC

July retail sales with a 0.5% increase are in line with expectations, with net upward revisions totaling 0.4%. Ex auto sales rose by 0.3% also with 0.4% in upward revisions while ex auto and gasoline sales rose by 0.2%, here with revisions of only 0.2%.  The data suggest consumer spending is holdin

UK GDP Review: Fresh Upside Growth Surprise But Partly Inventory Driven?

August 14, 2025 7:02 AM UTC

To what extent better in June GDP, not least it having been the warmest even such month in England, lay behind the fresh upside surprise that saw the economy grow 0.4%, twice generally expected and with the falls of the two previous months pared back so that a clearer uptrend has emerged (Figure 1).

September Fed ease now more likely than not, but far from assured

August 13, 2025 3:29 PM UTC

A September FOMC easing now looks more likely than not, but remains far from a done deal. We are however revising our call to two 25bps FOMC easings this year, in September and December, from just one, in December. 2026 is harder still to call given threats to Fed independence, but we continue to ex

RBA Review: A Expected

August 12, 2025 5:37 AM UTC

The RBA meeting on August 12th cut rates to 3.6% and continue to point toward data dependency

RBA Preview: Locked and Loaded

August 11, 2025 4:44 AM UTC

The RBA meeting on August 12th will cut rates to 3.6% and indicates more cut to come if data allows

Mexico: Further 25bps Cuts Ahead

August 8, 2025 6:44 AM UTC

Banxico forward guidance, plus trade policy risks with the U.S. now see us forecasting an end 2025 policy rate at 7.25% with two 25bps cuts in September and December. We now feel that the risks to 2026 growth will encourage Banxico to move the policy rate down to 6.5% by spring 2026 by two 25bps rat

BoE Review: The (Fiscal) Elephant in the Room as the BoE Splits

August 7, 2025 12:48 PM UTC

The widely expected 25 bp Bank Rate cut (to 4% and the fifth in the current cycle) duly arrived although the anticipated three-way split on the MPC was not quite as expected. It is puzzling how policy makers, faced obviously with both the same array of data and the same remit, can think so relativel

UK GDP Preview (Aug 14): Small GDP Rises Hardly Worth Shouting About?

August 6, 2025 2:48 PM UTC

There are some better signs as far as June GDP is concerned, not least it having been the warmest even such month in England.  But we see only a 0.1% m/m rise (Figure 1), even with slightly better property and retail signals for the month.  However, such an outcome, while a contrast to the two suc

Indonesia Q2 GDP Beats Expectations

August 5, 2025 9:45 AM UTC

Q2’s outperformance gives Indonesia’s economic planners breathing space. Investment recovery is a strong positive signal, but sustaining growth in H2 will depend on policy agility, export resilience, and keeping domestic consumption robust.

Tariffs and Tensions: India Holds Its Ground Amid US Pressure

August 4, 2025 5:17 AM UTC

India has responded firmly to US tariff escalation, defending its strategic autonomy on Russian oil and domestic market protections. The economic hit is manageable, but the geopolitical signal is clear: India won’t yield under pressure. Talks will continue, but New Delhi won’t trade core interes

U.S. July Employment - Revisions to May and June mean trend has slowed significantly

August 1, 2025 1:06 PM UTC

July’s non-farm payroll is weaker than expected not only with the 73k headline and 83k rise in the private sector, but also with large downward revisions totaling 258k for May and June. Unemployment remains low but edged up to 4.2% from 4.1% while average hourly earnings were on consensus at 0.3%,

BoJ Review: As expected

July 31, 2025 5:20 AM UTC

The BoJ kept rates unchanged at 0.5% in the July 31st meeting with inflation forecast revised higher

Bank of Canada - Consensus to hold, but cautious bias towards easing

July 30, 2025 3:34 PM UTC

Bank of Canada Governor Tiff Macklem stated that there was a clear consensus to leave rates steady at 2.75% at the latest meeting, as was also the case in June.  There does however appear to be scope for further easing ahead. We still expect rates to bottom at 2.25% and end 2026 at 2.5%, but we now

EZ Real Economy – Diverging Sentiment Indictors Complicate Outlook

July 29, 2025 9:26 AM UTC

The ECB contends that the EZ economy has shown resilience of late.  Maybe so, albeit where GDP data (likely to average a satisfactory 0.3% q/q performance so far this year) are probably offering a misleading picture of underlying trends in real activity.  Indeed, recent GDP data gains have been pr

Indonesia’s 2026 Blueprint: Growth Goals Amid a Shaky Global Backdrop

July 28, 2025 5:54 AM UTC

Indonesia’s newly approved 2026 macroeconomic framework targets robust growth, fiscal discipline, and poverty eradication. However, external headwinds—including unresolved US tariff risks—and tepid domestic consumption pose serious execution risks. Without sharper prioritisation and institutio

CBR Reduced its Key Rate to 18% as Inflation Softens

July 25, 2025 11:41 AM UTC

Bottom Line: As we expected, Central Bank of Russia (CBR) reduced policy rate by 200 bps to 18% on July 25 taking into account that inflation slowed to 9.4% in June from 9.9% in May; MoM price growth marked the lowest hike after August 2024; and the inflation expectations declined to 13% in June fro

Easing Cycle Restarts: CBRT Reduced the Key Rate to 43% on July 24

July 24, 2025 2:15 PM UTC

Bottom Line: As we expected, Central Bank of Republic of Turkiye (CBRT) reduced the policy rate by 300 bps to 43% during the MPC meeting on July 24 taking the deceleration trend in inflation and relative TRY stability in June into account.  CBRT highlighted in its written statement that the underly

Japan: Mission Accomplished?

July 23, 2025 8:01 AM UTC

U.S.-Japan reached a trade deal with 15% reciprocal tariff

Eurozone Flash GDP Preview (Jul 30): A Pause that Does Not Refresh?

July 22, 2025 9:13 AM UTC

For an economy that has seen repeated upside surprises and above trend growth of 1.5% in the year to Q1, GDP data do not seem to have had much impact is shaping, let alone dominating, ECB policy thinking. We think this will continue to be the case even where the looming Q2 data may show a modest con

LDP Likely Lose Control of the Japan Upper House

July 21, 2025 2:00 AM UTC

Early exit pools suggest the ruling LDP coalition will likely lose majority

Trump’s and Fed Easing

July 18, 2025 9:34 AM UTC

•    Trump goal of substantially lower short-term rates could be achieved with a recession, but otherwise is unlikely even when Fed chair Powell is replaced.  The majority of voting FOMC members will make decisions based on economics not politics.  However, Trump fixation with lower rates an

Deal or Dilemma: What the US–Indonesia Trade Pact Really Means

July 17, 2025 5:46 AM UTC

The US–Indonesia trade deal marks a significant geopolitical and economic pivot, reducing a threatened 32% tariff to 19% in exchange for USD 34bn in US imports and open market access. While the agreement offers Jakarta temporary relief, it locks the country into a transactional trade model amid ri

ECB Preview (Jul 24, Part Two): Policy Pause Despite Tighter Financial Conditions

July 16, 2025 1:07 PM UTC

The next ECB Council meeting decision on Jul 24 looms but (as we noted in the part one preview) markets (understandably) sees no further cut, at least at that juncture.  However, we think that the ECB will ultimately still have to ease further - two more 25 bp cuts in H2 - and would not even rule o

China: GDP Resilient in Q2, But

July 15, 2025 7:30 AM UTC

•    We do see H2 weakness relative to H1, as exports to the U.S. will slow again and the effects of the government consumption trade in programs fades.  However, H1 has been higher than our forecasts and thus we are revising 2025 GDP growth to 4.8% v 4.4% previously.  We keep 2026 GDP growt

UK BoE Hints of Faster Easing Backed up by Survey Data?

July 14, 2025 8:38 AM UTC

Somewhat ironically, just as BoE Governor Bailey suggested that signs of increasing labor market slack might prompt faster rate cuts, more such evidence accumulates.  In fact, as monthly survey compiled by Markit pointed to not only weaker pay pressures, falling job rolls (Figure 1) and a steep ris

High Stakes and Heavy Metals: The Geopolitics of the US–Indonesia Tariff Deal

July 11, 2025 7:37 AM UTC

As the U.S. sharpens its protectionist stance, Indonesia is scrambling to avert a 32% tariff by offering a USD 34bn investment-anchored trade package, including energy and agricultural imports, Boeing orders, and sovereign wealth fund commitments. This negotiation goes far beyond trade—it is a hig

Preview: Due August 1 - U.S. July Employment (Non-Farm Payrolls) - Slower overall, but stronger in the private sector

July 10, 2025 2:53 PM UTC

We expect a 125k increase in July’s non-farm payroll, slightly slower than in each month of Q2 but slightly stronger than in each month of Q1. We expect a 110k rise in private sector payrolls, up from 74k in June but slower than in April and May. An unchanged unemployment rate of 4.1% and a 0.3% r

Eurozone: Damage Limitations on Tariffs, Uncertainty to add to Banks' Caution??

July 9, 2025 9:37 AM UTC

It remains unclear just how much of a movable feast the new U.S. tariff deadline of Aug 1 actually is.  Trade deals with the US were supposed to be agreed by today, or face the reciprocal tariffs as outlined in April. But that has now been deferred to, with US Treasury Secretary Bessent, hinting ac

RBA Review: Shows no urgency

July 8, 2025 6:34 AM UTC

The RBA meeting on July 8th hold rates at 3.85% and shows no urgency in cutting

Putting Names to the FOMC Dots

July 7, 2025 5:35 PM UTC

There are nineteen FOMC dots. Seven hawks expect no easing this year, and two expect only one 25bps move. Eight are on the median seeing two 25bps moves, while two doves are looking for three. While only two have clearly signaled what their personal dot is, reasonable estimates can be made to identi

China: Housing Still A Headwind

July 4, 2025 9:00 AM UTC

Last October, China’s government support package has helped turn residential property less negative and our baseline is that residential property will likely deduct around 0.75% from 2025 growth and 0.5% from 2026.  However, the risks for the economy could turnout worse than our baseline view on

U.S. June Employment - Some signs of slowing activity, but lower unemployment suggests no urgency for Fed easing

July 3, 2025 1:09 PM UTC

June’s non-farm payroll is surprisingly strong overall with a rise of 147k, with 16k in net upward revisions, but private payrolls at 75k are weaker than expected, with 16k in net negative revisions. Unemployment unexpectedly fell to 4.1% from 4.2%, but average hourly earnings are weaker than expe

UK: Tax Rises Looming?

July 2, 2025 8:34 AM UTC

The politically damaging climb-down on welfare spending yesterday also saw the government face an additional fiscal hole after the fiscal watchdog (the Office for Budget Responsibility, OBR) hinted it has been repeatedly overestimating growth.  Indeed, in its annual Forecast Evaluation Report, it s

EZ HICP and ECB Strategy Review: Headline Up to Target as Services Inflation Rises Back?

July 1, 2025 9:32 AM UTC

Despite its updated its monetary policy strategy detailed yesterday, inflation – now at target – is very much a side issue for the ECB at present, albeit with oil prices possibly accentuating Council divides.  Admittedly, the flash June HICP rose a notch to 2.0% matching the -consensus, but up

German Data Review: Services Dip Further Despite Calendar Effects?

June 30, 2025 12:30 PM UTC

Germany’s disinflation process continues, with the lower-than-expected June preliminary numbers refreshing and reinforcing this pattern, with a 0. Ppt drop to 2.0%, a 10-mth low (Figure 1)!  Previously but there have been signs that the downtrend was flattening out and this impression may have be

Mexico: Back Toward Neutral Policy Rates

June 27, 2025 6:56 AM UTC

Banxico has cut by 50bps to 8.00%, while also signalling in its statement that further easing will now be data dependent. Our forecast is for easing to move to a 25bps pace and to come once a quarter – most likely in September and December. Some improvement in the monthly inflation trajectory woul

Ukraine War Update: War Continuing Probability is Now at 70%

June 26, 2025 11:06 AM UTC

Bottom Line: Our baseline scenario (70%) is based on the war continuing after talks fail since president Putin insists on his peace terms. President Trump is reluctant to threaten or implement of secondary tariffs on Russia oil buyers, that would really pressure president Putin. The U.S. financing o

EM FX Outlook: USD Less in Favor, but EM Mixed

June 25, 2025 8:05 AM UTC

•    EM currencies face cross currents on a spot basis.  The USD downtrend against DM currencies can be a positive for undervalued or strong EM currencies.  This could benefit the Brazilian Real (BRL), Mexican Peso (MXN) and Indonesian Rupiah (IDR), though moves will be choppy with occasiona

Tariffs and the Timing of FOMC Easing

June 24, 2025 6:06 PM UTC

While two Fed Governors. Waller and Bowman, have suggested a July easing could be appropriate, testimony from Chairman Powell suggests a move that early is unlikely, though September is possible if inflation data continues to show a lack of feed through from tariffs. We, and Powell, expect some acce

German Data Preview (Jun 30): Calm Before the Storm?

June 23, 2025 10:29 AM UTC

Germany’s disinflation process continues, but there have been signs that the downtrend was flattening out and this impression may have been accentuated by the small and lower than expected (ie 0.1 ppt) drop in the headline in May to 2.1%, still an eight-month low (Figure 1).  Adjusted data also s

Preview: Due July 3 - U.S. June Employment (Non-Farm Payrolls) - Increasing signs of slowing, but not a recession

June 20, 2025 4:29 PM UTC

We expect a 75k increase in June’s non-farm payroll, significantly slower than May’s 139k though consistent with a slowdown in growth rather than an economy entering recession. We expect an in line with trend 0.3% increase in average hourly earnings and an uptick in unemployment to 4.3% after th

Canada April retail sales resilient but May seen much weaker

June 20, 2025 1:04 PM UTC

Canadian retail sales saw a 0.3% increase in April, slightly less than the preliminary estimate of 0.5% made with March’s data. The preliminary estimate for May is for a 1.1% decline, which suggests US tariffs are starting to weaken the Canadian economy.

BoE Review : Labour Market Softness Triggers a Dovish Hold

June 19, 2025 11:51 AM UTC

A stable BoE policy decision was always the most likely (Bank Rate staying at 4.25%) as the MPC discussed its two alternative scenarios still, but possibly where hawks have been forced into diluting what were previous concerns about a ‘tight’ labor market.  In fact, partly based on what was see

Brazil: Last Hike And Then Long Hold

June 19, 2025 6:33 AM UTC

Though the BCB surprised and hiked by 25bps to 15%, the statement signalled that policy will now go on hold for a very long period.  Some economists feel that by year-end, that the BCB will be confident enough to move from very restrictive to restrictive and lower the SELIC rate.  We would suspect

U.S. May Retail Sales - Two straight declines as confidence slides

June 17, 2025 12:50 PM UTC

May retail sales with a 0.9% decline are slightly weaker than expected. The ex auto data at -0.3% and ex auto and gas at -0.1% are negative too, though the control group which contributes to GDP was resilient with a 0.4% rise. 

BoJ Preview: Little Cues Expected

June 17, 2025 12:19 AM UTC

The BoJ will keep rates unchanged at 0.5% in the June 17th meeting with anticipation for another two year plan on bond purchase tapering 

Preview: Due June 17 - U.S. May Retail Sales - Autos to correct lower, underlying momentum subdued

June 16, 2025 12:07 PM UTC

We expect a 0.7% decline in May retail sales as auto sales show a sharp reversal from recent strength. Ex autos we expect a subdued 0.1% increase, with a 0.2% rise ex autos and gasoline. Both of these outcomes would match those of April.

India CPI Review: CPI at 2.82%: Disinflation Deepens, But Risks Linger

June 13, 2025 7:18 AM UTC

India’s retail inflation dropped to a six-year low of 2.82% in May, driven by easing food prices and supported by favourable base effects. While disinflation continues to create monetary space, RBI's next rate cut will be data driven.