Russia GDP Growth Continues to Lose Steam

July 2, 2025 6:43 PM UTC

Bottom Line: According to Ministry of Economic Development figures, Russia's GDP expanded by 1.2% YoY in May following a 1.9% rise the previous month, which marked one of the lowest pace of growth since the economy resumed expansion in Q2 2023, driven by military spending, higher wages and fiscal

Preview: Due July 17 - U.S. July Retail Sales - Mostly subdued

July 2, 2025 3:20 PM UTC

We expect a 0.1% increase in June retail sales to follow two straight declines, with a 0.3% incase ex autos that will reverse a 0.3% May decline. Ex autos and gasoline, we also expect a 0.3% increase, after a 0.1% May decline that followed a 0.1% April increase. 

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

July 2, 2025 1:01 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

South Africa: Coalition Under Pressure After President Ramaphosa Fires DA Deputy

July 2, 2025 12:25 PM UTC

Bottom Line: The political tension between the African National Congress (ANC) and Democratic Alliance (DA) has peaked as of late June after President Ramaphosa sacked DA’s deputy minister Andrew Whitfield due to an unauthorized trip to the U.S. at the end of February. Following the dismissal, DA

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

Preview: Due July 15 - U.S. June CPI - A little more from tariffs

July 1, 2025 6:42 PM UTC

We expect June CPI to increase by 0.3% overall and by 0.3% ex food and energy, with the overall pace close to 0.3% before rounding but the core rate rounded up from 0.27%. This would still be the strongest core rate since January and reflect tariffs starting to feed through, something expected by Fe

Trump Tariffs: Poker Face?

July 1, 2025 12:55 PM UTC

Our central scenario (but less than 50%) is towards a scenario of compromise, with some agreements in principle or trade framework deals, delays for most other negotiating in good faith but with one or two countries seeing a reciprocal tariff rise e.g. Spain and/or Vietnam.  This could still be fol

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

U.S. and Asia Defense Partners

June 30, 2025 7:30 AM UTC

 ·        Japan, S Korea and Australia could eventually agree to some extra commitment to increase (self) defence spending in the next 5-10 years though perhaps not targets like NATO countries.  This could come as part of the trade deal negotiations currently underway.  Japan and S Korea

U.S. Q2 GDP to see only a modest rebound from a decline in Q1

June 27, 2025 6:05 PM UTC

The release of advance May trade and inventory data, plus May consumer spending, provides us with clearer signals on Q2 GDP, even if we have not yet seen any data for June. We currently expect a modest annualized gain of 1.4%, following a 0.5% decline in Q1, leaving a subdued first half of the year.

UK Labor Market: Now not Less Tight but Genuinely Loose

June 27, 2025 8:30 AM UTC

It is clear(er) that the labor market is the key variable that the BoE is looking at to assess policy amid a backdrop where the official view is that current demand weakness may not be creating much, if any, slack as the supply side is equally anaemic.  In this regard, it is also clear(er) that the

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

June Outlook: Trump’s Fluid Policies

June 25, 2025 10:00 AM UTC

All chapters of the June Outlook are now available and simply click the link below. 

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

June 25, 2025 8:05 AM UTC

·       The Chinese Yuan (CNY) will likely remain stable while trade negotiations with the U.S. continue.  We see a trade deal in our baseline (probably Q4) and then a small rise in CNY v USD due to general USD weakness. 
·       In terms of total returns for the remainder of 2025, th

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

EZ HICP Preview (Jul 1): Headline Stays Below Target as Services Inflation Rises Back?

June 24, 2025 8:57 AM UTC

Inflation – now below target – is very much a side issue for the ECB at present, albeit with oil prices possibly accentuating Council divides.  Indeed, we see the flash June HICP staying at May’s below-consensus, eight-month low and below-target 1.9% (Figure 1).  More notably, having jumped

Iran: Measured Next Steps?

June 23, 2025 3:17 PM UTC

  A measured or modest Iran retaliation could be used by the U.S. to seek a path back towards negotiation.  Israel would likely want to continue to degrade Iran nuclear and military facilities, but the U.S. could eventually pressure Israel to stop.  This is our baseline, though the military attac

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

Hawkish Stance Maintained: CBRT Held the Key Rate Stable at 46% Despite Softening Inflation

June 19, 2025 7:49 PM UTC

Bottom Line: Central Bank of Turkiye (CBRT) held the policy rate unchanged at 46% during the MPC on June 19 despite inflation continues to ease. CBRT highlighted in its written statement that the tight monetary stance will be maintained until price stability is achieved via a sustained decline in in

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

Norges Bank Review: Coming (Very) Late to the Party

June 19, 2025 8:57 AM UTC

Although we thought the Norges Bank would not start to ease until its next (Aug) meeting, we think the surprise 25 bp policy rate cut (to 4.25%) announced today is very much warranted, as are the further cuts (Figure 1) being flagged in the updated Monetary Policy Report (MPR) – ie two more such m

SNB: Cut to Zero, But Negative Rates an Option

June 19, 2025 8:00 AM UTC

 The SNB would probably prefer to consolidate the effects of previous rate cuts, but the low inflation forecast and downside risk to inflation means that a cut to -0.25% is feasible at the September or December meetings.  The SNB will also hope that the threat of negative rates restrains the CHF s

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

Fed: Hold Then Cautious Easing

June 18, 2025 7:27 PM UTC

Though the SEP reduced growth forecasts and boosted inflation, the guidance from the Fed remains that policy is on hold in the coming meetings.  Though the FOMC median still has two 2025 cuts, the breakdown shows that this was a close call and a lot of members see no cut or only 25bps. We look for

FOMC more pessimistic than March forecasts but not compared to May statement

June 18, 2025 6:23 PM UTC

The FOMC has left rates unchanged at 4.25-4.50% as expected. The median rate forecast is unchanged at 3.9% for end 2025 but the FOMC now sees only 25bps of easing in 2026 rather than 50bps, with 2027 still seeing 25bps, but the end 2027 rate is now seen at 3.4% from 3.1%, leaving a slightly hawkish

South Africa Inflation Stayed Unchanged in May 2.8% YoY

June 18, 2025 9:50 AM UTC

Bottom Line: Annual inflation stayed stable at 2.8% in May after April as food prices rose, remaining below the lower bound of South African Reserve Bank’s (SARB) target range of 3% to 6%. We think unpredictable outlook for the global economy, and return of power cuts (loadshedding) pressurized do

Sweden: Riksbank Cuts and Flags Possible Further Move?

June 18, 2025 8:26 AM UTC

As widely expected, the Riksbank cut its policy rate by a further 25 bp to a new cycle low of 2.0%.  Moreover, as we hinted at, the Board even then suggest that a further move is possible (Figure 1).  Given that even with substantial paring back of its growth forecast in its updated Monetary Polic

UK CPI Review: Services Inflation Falls Clearly

June 18, 2025 6:40 AM UTC

As for the UK, the main near-term inflation story was (and remains) what would happen after the April data when a series of energy, utility, post office and some other regulated and service price rises fell due, albeit now offset somewhat by a fall in petrol prices.  The result was a notch higher t

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. 

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.

China: Retail Sales Reasonable

June 16, 2025 7:25 AM UTC

•    Retail sales in May was helped by government trade in programs, but the overall retail sales momentum is reasonable.  The industrial production slowdown looks to have been driven by the U.S. tariff chaos in April/May, which has become less adverse after the Geneva trade truce with the U.

Russian GDP Growth Loses Steam in Q1

June 14, 2025 8:54 AM UTC

Bottom Line: Russia's GDP expanded by 1.4% YoY in Q1, the slowest pace of growth since the economy resumed expansion in Q2 2023 driven by military spending, higher wages and fiscal stimulus. The softening of growth figures demonstrates monetary tightening, sanctions, supply side constraints and hi

BOE QT: Slowdown in September?

June 13, 2025 8:15 AM UTC

BOE QT is part of the reason behind both a steeper yield curve and subdued M4 and lending growth. The MPC in September will likely accept that to avoid impacting the monetary transmission mechanism that annual rundown of gilts needs to be slowed from GBP100bln pa to GBP75bln.  Internal differences

Inflation in Russia Continued to Moderately Decelerate in May: 9.9% YoY

June 12, 2025 7:43 PM UTC

Bottom Line: According to Russian Federal Statistics Service (Rosstat) data, inflation stood at 9.9% YoY in May after hitting 10.2% in April, the softest in four months. Despite CPI remained above the Central Bank of Russia’s (CBR) midterm target of 4%, the deceleration was remarkable as prices i

BoE Preview (Jun 19): Splits to Continue?

June 12, 2025 12:57 PM UTC

A stable BoE policy decision next Thursday is most likely (Bank Rate staying at 4.25%) as the MPC discusses various scenarios still, possibly with any hawks diluting what were previous concerns about a ‘tight’ labor market.  In fact, we see two dissents in favor of a 25 bp rate cut albeit where

Trump Tariffs: China and July 9 Reciprocal Deadline

June 12, 2025 7:17 AM UTC

 We attach a 65% probability to a U.S./China reaching a new trade deal that reduces the minimum overall tariff to 15-20% imposed by the U.S., most likely agreed in Q4 2025 and to be implemented in 2026.  However, a 35% probability exist of no deal and this could eventually mean higher tariffs (Fig

UK GDP Review: GDP Overstating Activity Less Clearly But Looking Weaker?

June 12, 2025 6:54 AM UTC

After two successive upside surprises, a correction back in monthly GDP could be expected for the April data, especially as Q1 numbers may have been boosted by added production destined for the U.S in anticipation of tariffs.  In addition, real estate activity seems to have dropped after the raisin

FOMC Preview for June 18: No change in rates or dots, only marginal changes to statement and forecasts

June 11, 2025 4:01 PM UTC

The June 18 FOMC meeting looks highly likely to leave rates unchanged at 4.25-4.5%. We expect only marginal changes to May’s statement and the Fed’s median forecasts from March, with no change at all in the median dots on rates.  Chairman Powell at the press conference may welcome recent signal

U.S. May CPI - Little tariff pass-through, with inflationary pressures elsewhere fading

June 11, 2025 12:59 PM UTC

May CPI has surprised significantly to the downside, up only 0.1% both headline and core, with the respective gains before rounding being 0.08% and 0.13%. The data is subdued across the board, with commodities ex food and energy unchanged despite tariffs and services ex energy on the low side of tre

SNB Preview (Jun 19): Toying With Being Negative?

June 11, 2025 9:23 AM UTC

A further 25 bp cut (to zero) in the SNB policy rate on Jun 19 now looks almost certain.  Weak(er) business surveys suggest that the tariff threat is both tangible and growing and this is before key Swiss pharmaceutical exports come under fire.  Meanwhile, there is the strong currency where FX int

UK CPI Preview (Jun 18): Services Inflation to Fall Clearly?

June 11, 2025 7:03 AM UTC

The UK and the rest of the DM world have been decoupling, at least in terms of inflation, where the UK has undergone a surge, (largely home-grown) just as W European sees their respective inflation fall back to, if not below.  Regardless, as for the UK, the main near-term inflation story was (and r

ECB: Time to Reassess and Slow QT?

June 10, 2025 2:25 PM UTC

Further ECB easing is on the cards, the question being whether this should start to encompass toning down quantitative tightening (QT) plans too! Notably, the two ppt fall in the discount rate cuts has come against a backdrop where the ECB has continued unconventional tightening by scaling back its

Norges Bank Preview (Jun 19): Policy Easing Schedule Clearer?

June 10, 2025 1:49 PM UTC

It is very unlikely that the Norges Bank will do anything at this month’s Board meeting other than to suggest the easing cycle will start later in the year and that the policy rate will thus remain at 4.5% - for the time being.  In fact, it will have to be more explicit about any such a timetable

Preview: Due June 11 - U.S. May CPI - Tariff impact still modest, but starting to build

June 10, 2025 1:03 PM UTC

We expect May CPI to increase by 0.2% overall and by 0.3% ex food and energy, the core rate still seeing a modest impact from tariffs given a Q1 inventory build up and uncertainty over low long tariffs will persist, though at 0.32% before rounding we expect the strongest rise in the core rate since

Sweden Preview (Jun 18): Riksbank to Cut and Reassess Policy Outlook?

June 10, 2025 10:05 AM UTC

We are even more convinced that the Riksbank will cut further and as soon as the next Board verdict on Jun 18.  Moreover, the Board may even then suggest that further moves are possible.  This may seem stretched given that the Riksbank has virtually called a halt to the easing cycle, albeit most r