Eurozone: ECB Feels it Has More Reason to ‘Wait and See’?

August 21, 2025 10:02 AM UTC

To suggest that recent EZ real economy indicators, such as today’s August PMI flashes, have been positive would be an exaggeration.  But, at the same time, the data (while mixed and showing conflicts - Figure 1) have not been poor enough to alter a probable current ECB Council mindset that the ec

South Africa Inflation Surges: 3.5% YoY in June

August 20, 2025 11:12 AM UTC

Bottom Line: Statistics South Africa (Stats SA) announced on August 20 that annual inflation rose to 3.5% YoY in July from 3.0% in June due to elevated prices of food and non-alcoholic beverages; housing and utilities; and restaurants and accommodation services. MoM prices surged by 0.9% in July, m

U.S./China Trade Deal: Slow Progress

August 20, 2025 10:25 AM UTC

·        Overall, we would attach a 50% probability to a trade framework deal being announced in Q4, though this is unlikely to be comprehensive and could merely be a collection of measures. Even so, the risk also exists of trade negotiations dragging onto 2026 and then reaching a deal or fa

Sweden Review: Riksbank Still Flagging Final Rate Cut?

August 20, 2025 8:37 AM UTC

Although matching nearly all expectations, we are disappointed that the Riksbank did not deliver a further and probably final 25 bp rate cut this time around, especially given its repeated suggestion of prob a cut later this year. Now, there are three more policy verdicts before year-end and we thin

UK CPI Review: Special Factors Pull Inflation Even Higher, but is that an Excuse?

August 20, 2025 6:47 AM UTC

After the upside (and broad) June CPI surprise, CPI inflation rose further, up another 0.2 ppt to 3.8% in July, higher than the consensus but matching BoE thinking. And still the highest since January last year.  The notable further 0.3 ppt rise in services inflation to 5.0% was also largely in lin

UK Labor Market: Is the BoE too Complacent?

August 19, 2025 10:10 AM UTC

Unlike the Fed, which has dual mandate of curbing inflation and promoting employment, the BoE remit is purely the former.  But it is clear that labour market considerations weigh heavily on the dovish contingent of the MPC and possibly increasingly so.  However, we feel that the BOE is not fully e

China Slow Diversification: Gold And Others

August 19, 2025 8:05 AM UTC

 China’s diversification from U.S. Treasuries appears to be at a slow pace.  Gold is the obvious alternative if geopolitical tensions were to rise or skyrocket in the scenario of a China invasion of Taiwan.  However, Gold holdings are merely creeping higher and suggesting no urgency from China

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

August 18, 2025 9:05 AM UTC

The U.S. short average term to maturity is a structural fiscal weakness if higher rates lift U.S. government interest costs close to the nominal GDP trend.  Hence, Trump’s pressure for fiscal dominance of the Fed to deliver lower policy rates and reduce U.S. government interest rate costs. Howeve

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

China Slowdown In July

August 15, 2025 7:03 AM UTC

 •    Retail sales sluggishness reflects households cautious due to the hit to housing wealth and uncertainty over jobs and wage growth.  Investment softness reflects not only residential property weakness, but also a slowdown in government infrastructure. This weakness could see a top up fi

CBRT Kept Its End-Year Inflation Forecast at 24%, and Announced Its New Interim Targets

August 14, 2025 4:01 PM UTC

Bottom Line: Central Bank of Turkiye (CBRT) released its third quarterly inflation report of the year on August 14, and kept its inflation forecast constant at 24% for 2025, 16% by the end of 2026 and 9% by end-2027. CBRT governor Karahan said the regulator decided to separate the targets from its i

Preview: Due August 15 - U.S. July Retail Sales - Trend losing momentum

August 14, 2025 1:31 PM UTC

We expect a 0.1% increase in July retail sales to follow two straight declines, with 0.1% decline ex autos and an unchanged outcome ex autos and gasoline. This would restore a slowing trend after June saw a correction from declines in April and May.

U.S. Markets: Soft Versus Hard Landing

August 14, 2025 1:02 PM UTC

      A mild recession would likely trigger the Fed to ease quickly to 2.0-2.5%, which would produce yield curve steepening but would likely drag 10yr yields down to 3.50-3.75%.  The S&P500 would likely fall to 5000 in this scenario, as corporate earnings are axed; buybacks slow and the price/ea

Russian Economy is Slowing: GDP Growth Continued to Lose Steam in Q2 2025

August 14, 2025 9:23 AM UTC

Bottom Line: According to Russian Federal Statistics Service (Rosstat) figures, Russia's GDP expanded by 1.1% YoY in Q2, the slowest pace of growth since the economy resumed expansion in Q2 2023, driven by military spending, investments, higher wages and fiscal stimulus. We think Central Bank of R

Norges Bank Review (Aug 14): Job Concerns Growing?

August 14, 2025 8:52 AM UTC

After the surprise 25 bp rate cut in June, it was back to humdrum predictability with the widely expected stable policy decision at 4.25%.  Regardless, the Board could be attacked for plagiarism given the manner in which the updated press release mimics that seen in June, save for the fact that bot

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).

Bank of Canada Minutes from July 30 - Differences of opinion on whether further easing would be needed

August 13, 2025 7:32 PM UTC

The Bank of Canada has released minutes from its July 30 meeting, which saw rates left unchanged at 2.75% with Governor Macklem stating after the meeting that there was a clear consensus to do so. However the minutes show that some felt the rate had been reduced sufficiently, while others felt that

Deceleration in Inflation Resumes in Russia: 8.8% YoY in July

August 13, 2025 7:28 PM UTC

Bottom Line: According to Russian Federal Statistics Service (Rosstat) data on August 13, inflation stood at 8.8% YoY in July after hitting 9.4% YoY in June, ignited by higher non-food and services prices. Despite inflation eased for a fourth straight month, we foresee inflation will continue to st

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

China: Echoes of Japan?

August 13, 2025 8:05 AM UTC

     Overall, some of China’s private businesses and households are suffering from Japan’s style balance sheet recession.  Combined with slowing productivity and a shrinking workforce, this points to slower trend growth in the coming years.  However, fiscal stimulus and the clean-up of Loca

U.S. July CPI - Core rate, particularly services, a marginal disappointment

August 12, 2025 1:02 PM UTC

July’s CPI is in line with consensus at 0.2% overall, 0.3% ex food and energy, but the core rate of 0.322% before rounding is a little high for comfort. The detail shows the acceleration from June was more in services than goods, so the story is not a simple one of tariffs. 

UK CPI Preview (Aug 20): Services Inflation Fall Afresh r as Headline Stabilises?

August 11, 2025 2:24 PM UTC

After the upside (and broad) June CPI surprise, we see CPI inflation steady at 3.6% in July, 0.2 ppt below BoE thinking.  Our relatively lower estimate factors in lower services inflation (Figure 1) and a fall back in that for food, the former allowing the core rate to unwind the increase to 3.7% s

Preview: Due August 12 - U.S. July CPI - Tariff impact slowly building

August 11, 2025 1:10 PM UTC

We expect July CPI to increase by 0.2% overall and by 0.3% ex food and energy, with the overall pace close to 0.2% even before rounding but the core rate rounded up from 0.26%. This would still be the strongest core rate since January and reflect a further feed through of tariffs, something that is

Sweden Preview (Aug 20): Riksbank to Cut for Final Time?

August 11, 2025 12:42 PM UTC

We see the Riksbank delivering a further 25 bp rate cut on Aug 20, taking the policy rate to new cycle low of 1.75%.  This would chime with the hints after the last meeting and cut in July of a further move is possible.  And with both real activity and CPI data having delivered downside news and s

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

EM Rates: Domestic Fundamentals Dominate

August 7, 2025 9:30 AM UTC

Once trade is agreed with the U.S., the good fundamentals actually argue for a 10yr Mexico-U.S. spread close to 400bps and this is our favored strategic risk reward for big EM government bonds. In Brazil a case can be made for a 12.75% policy rate end 2026 and 10% in 2027, but this could only mean 1

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

U.S. Immigration Slowdown and the Labor Market

August 6, 2025 7:58 AM UTC

Overall, slower illegal and legal immigration will likely slow employment growth and curtail the rise in the unemployment rate from the U.S. economic slowdown.  More older workers or an increase in the percentage of female workers would help, but are not a priority for the Trump administration and

Preview: Due August 15 - U.S. July Retail Sales - Trend losing momentum

August 5, 2025 3:55 PM UTC

We expect a 0.1% increase in July retail sales to follow two straight declines, with 0.1% decline ex autos and an unchanged outcome ex autos and gasoline. This would restore a slowing trend after June saw a correction from declines in April and May.

Norges Bank Preview (Aug 14): Amid Very Restrictive Stance, A Policy Pause – Already?

August 5, 2025 1:48 PM UTC

Although surprised, we thought the Norges Bank’s unexpected easing in June was very much warranted, as are the further cuts being flagged in the Monetary Policy Report (MPR) that came alongside – ie two more such moves by end year.  We actually envisage up to three more moves this year and arou

August 5, 2025 9:50 AM UTC

U.S. Treasury spreads versus other DM government bond markets or 10-2yr U.S. Treasuries are not yet showing a risk premium from the Trump administration attacks on the Fed and economic data. Debate over whether the U.S. is seeing a soft or hard landing are reemerging and this will dominate the outlo

Preview: Due August 12 - U.S. July CPI - Tariff impact slowly building

August 4, 2025 12:47 PM UTC

We expect July CPI to increase by 0.2% overall and by 0.3% ex food and energy, with the overall pace close to 0.2% even before rounding but the core rate rounded up from 0.26%. This would still be the strongest core rate since January and reflect a further feed through of tariffs, something that is

Trump Tougher Posture with Russia

August 4, 2025 8:31 AM UTC

      We suspect that Trump will not follow-through with an across the board secondary sanction on importers of Russia oil, as it would freeze U.S./China trade again and could boost U.S. gasoline prices – high inflation is one main reason for Trump’s softer approval rating.  Trump could agre

EZ HICP and Jobs Review: Headline at Target as Services Inflation at Fresh Cycle-low

August 4, 2025 8:25 AM UTC

HICP, inflation – still at target – is very much a side issue for the ECB at present, albeit with the likes of oil prices and tariff retaliation and a low but far from authoritative jobless rate (Figure 3) possibly accentuating existing and looming Council divides.  Regardless, despite adverse

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%,

Reciprocal Tariffs: Some Hikes, Deals and Delays

August 1, 2025 8:40 AM UTC

 Though high reciprocal tariffs with some countries catches the headline, five of the top 10 countries with large bilateral deficits have reached framework trade deals, two have delays and three have higher tariffs imposed.  With exemptions on some USMCA Canada/Mexico goods, plus phones/ semicondu

SARB Cuts Key Rate to 7.0% Given Subdued Inflation; Lower CPI Goal Announced

July 31, 2025 3:32 PM UTC

Bottom Line: Despite the uncertainty around United States tariffs and rising domestic food inflation, South African Reserve Bank (SARB) reduced the policy rate by 25 bps to 7.0% during the MPC on July 31 as annual inflation hit 3.0% YoY in June coupled with eased core inflation, and a relatively sta

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

July 31, 2025 1:26 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

BoE Preview (Aug 7): Labour Market Softness to Trigger Further Cut, But Fiscal Risks Loom

July 31, 2025 7:14 AM UTC

After what was widely considered to be a dovish hold at the last (June) MPC meeting (Bank Rate staying at 4.25%) which saw three dissents in favor of easing at that juncture, a 25 bp reduction is very much on the cards for the August decision.  Likely to discuss its two alternative scenarios still,

Fed's Powell Remains Cautious Over Tariff Risk

July 30, 2025 7:34 PM UTC

The FOMC left rates unchanged at 4.25-4.5% as expected, though there were two dissenting votes for easing, from Governors Waller and Bowman, who had already given signals in that direction. The statement made a concession to the doves stating that growth moderated in the first half of the year, but

FOMC leaves rates unchanged, two dissents for easing, language more dovish on growth

July 30, 2025 6:16 PM UTC

The FOMC left rates unchanged at 4.25-4.5% as expected, though there were two dissenting votes for easing, from Governors Waller and Bowman, who had already given signals in that direction. The wording of the statement also contains a dovish shift, stating that growth moderated in the first half of

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

U.S. Q2 GDP - Subdued underlying growth, but with persistent price pressures

July 30, 2025 1:12 PM UTC

The advance estimate of Q2 GDP at 3.0% is stronger than expected though an above consensus outcome had looked likely after yesterday’s decline in June’s trade deficit. Given extreme volatility in net exports the Q2 data should be seen alongside Q1’s 0.5% decline, giving an average of an unimpr

Eurozone Flash GDP Review: Resilience or Irrelevance?

July 30, 2025 9:52 AM UTC

As we highlighted in our preview, for an economy that has seen repeated upside surprises and above trend growth, now some 1.4% in the year to Q2, 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 after

Turkiye Inflation will Slightly Soften in July: Tax Adjustments and Gas Price Hike in July Will Limit the Fall

July 30, 2025 8:35 AM UTC

Bottom line: After easing to 35.1% annually in June, we expect Turkiye’s consumer price index (CPI) will continue to soften moderately in July to 34.1%-34.3% as tax adjustments and energy price hikes in July will limit the downward trend. Despite tight monetary policy and moderately falling dema

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

China/U.S. Trade Talks Into the Autumn

July 29, 2025 8:20 AM UTC

·        Our baseline (Figure 1) remains that a U.S./China deal will be reached (most likely in Q4), but a moderate probability exists of no deal being done this year and China being stuck with 30% tariffs – the worst-case scenario of still higher tariffs is now less likely with Trump in a