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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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Mexico: Political Noise Amplifies Market Fears Amid Sheinbaum's Win
Freemium Article

June 12, 2024 9:07 PM UTC

Claudia Sheinbaum's election win was expected, but MORENA's strong victory was surprising. This led to market concerns, significant peso depreciation, and fears of anti-market policies under Sheinbaum's possibly more radical government. Lopez-Obrador's proposed judicial reforms added to market worri

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FOMC delivers hawkish 2024 dots, but statement slightly more optimistic on inflation
Paying Article

June 12, 2024 6:26 PM UTC

The Fed’s statement is slightly more optimistic on inflation on June than in May, tough continues to require greater confidence that it is moving towards target before easing. The dots are significantly more hawkish than in March, with a median of only one 25bps easing in 2024 rather than three, t

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U.S. May CPI Loses Momentum, Most Notably in Transport Services
Paying Article

June 12, 2024 1:10 PM UTC

May CPI has come in softer than expected, unchanged overall with a 0.2% increase ex food and energy, with the latter up only 0.163% before rounding, which is the softest since August 2021. If sustained this would be consistent with inflation returning to target though the Fed will treat one soft mon

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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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China CPI: Core Slows and 10bps June 17 MLF Cut?
Paying Article

June 12, 2024 7:34 AM UTC

 China disinflation is clear in the latest numbers for May, with core falling 0.2% on the month.  Further stimulus will likely arrive in the form of monetary easing.  While it is a close call, we look for a 10bps cut in the medium-term lending facility rate (MLF) from 2.50% on June 17.    

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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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DM Fiscal Consolidation Problems: Politics/Central bank QT and Low Nominal GDP
Paying Article

June 11, 2024 2:10 PM UTC

 Some governments are politically reluctant to restrain government expenditure growth or in the U.S. case raise taxes.  This means that intermittent fiscal stress and concerns can be seen in the coming years.  However, to get to crisis levels would require a government that abandons any attempts

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Brazil CPI Review: 0.5% Rise in May and Worsening Conditions
Paying Article

June 11, 2024 1:55 PM UTC

Brazil’s CPI grew by 0.46% in May, exceeding expectations. Year-over-year CPI rose to 3.9%, driven by significant increases in food and beverage prices. Services inflation also increased. Strong labor market demand and supply disruptions from floods are pushing prices up. With the BRL devaluation

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Preview: Due June 12 - U.S. May CPI - Slower overall, another 0.3% for the core
Paying Article

June 11, 2024 12:27 PM UTC

We expect May CPI to rise by 0.1% overall, which would be the slowest since October 2023, but with a second straight 0.3% increase ex food and energy, to follow three straight gains of 0.4% during Q1. Before rounding we expect the core rate to be very close to 0.3% but the headline to be on the firm

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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 10, 2024

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European Parliament Election Results: A Swing to the Centre Right But Further Right in France
Paying Article

June 10, 2024 8:52 AM UTC

This week-end’s European Parliament elections produced the widely expected swing to the right, albeit more an electoral rebuff for incumbent ruling parties as voters registered their protests against current governments.   Hard-right parties largely did well but there were clear exceptions (Belg

June 07, 2024

Mexico CPI Review: Some Pressure in Services
Paying Article

June 7, 2024 5:10 PM UTC

INEGI reported a 0.2% CPI decrease in May, with annual CPI stable at 4.7%. Electricity prices dropped, contributing to the decline. Core CPI rose 0.2%, while Non-Core fell 1.3%. Persistent Services CPI and food price shocks may sustain inflation. Peso volatility could also pressure inflation, likely

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FOMC Preview For June 12: Hawkish Dots, Flexible Press Conference
Paying Article

June 7, 2024 3:29 PM UTC

Bottom Line: The FOMC meets on June 12 and looks sure to leave the target range unchanged at 5.25%-5.50%. The tone of the statement may be influenced by the May CPI that will be released on the morning of the decision, but even if CPI surprises on the downside is unlikely to give any hints easing is

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U.S. May Employment - Trends still firm in payrolls and average hourly earnings
Paying Article

June 7, 2024 1:05 PM UTC

May’s non-farm payroll is clearly stronger than expected with a 272k increase and only 15k in negative back month revisions, with private payrolls up by 229k. Average hourly earnings are also on the firm side of consensus with a rise of 0.4%. Despite unemployment edging up to 4.0% from 3.9% with w

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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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Asia and EM/Europe and CIS: Select Country Risk Ratings
Paying Article

June 7, 2024 9:00 AM UTC

We provide country risk reviews for Asia and EM Europe/CIS countries. 

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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 06, 2024

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Preview: Due June 18 - U.S. May Retail Sales - Trend losing some momentum
Paying Article

June 6, 2024 4:51 PM UTC

We expect a modest 0.2% increase in May retail sales with ex auto sales increasing by only 0.1%. The data will however be restrained by lower gasoline prices and ex autos and gasoline we expect an increase of 0.3%.

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Preview: Due June 7 - U.S. May Employment (Non-Farm Payrolls) - Stronger than April but trend may be starting to slow
Paying Article

June 6, 2024 2:22 PM UTC

We expect a 205k increase in May’s non-farm payroll, a little stronger than April’s below trend 175k but closer to that than March’s above trend 315k. We expect average hourly earnings with a 0.3% increase to also be a little stronger than in April, when a below trend 0.2% increase was seen, b

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ECB Review: Clearly No Policy Pre-Commitment But Policy Entering New Phase
Paying Article

June 6, 2024 2:11 PM UTC

As has been the case with many recent ECB verdicts, markets are keener to hear what is being said by the Council rather than what has been done.  In regard to the latter, and given the almost unanimous hints from Council members, all policy rates were cut by the expected 25 bp, with the key deposit

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Country Risk in MENA
Paying Article

June 6, 2024 9:00 AM UTC

Country risk in Middle East and North Africa is impacted by the ongoing war in Gaza, alongside reviews of Saudi Arabia and Iran.     

June 05, 2024

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Bank of Canada Eases by 25bps on Improved Inflation Picture
Paying Article

June 5, 2024 4:49 PM UTC

The Bank of Canada delivered a 25bps easing to 4.75% as expected and the tone of the statement and particularly the press conference was somewhat dovish, giving some detail on why it is pleased with progress on inflation. However easing at each of the remaining four meetings this year looks unlikely

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France Downgrade: Warning for the U.S./UK?
Paying Article

June 5, 2024 9:30 AM UTC

 French politics makes it difficult for President Macron to improve the underlying budget deficit and government debt after the S&P downgrade to AA-.  The National Rally could also do well in this week’s European parliamentary elections and put further pressure on Macron.  Meanwhile, though rat

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Sub Sahara Africa: Country Risk Ratings
Paying Article

June 5, 2024 9:00 AM UTC

We provide country risk reviews for Sub Sahara Africa countries including Ethophia/Kenya and Ghana.  

June 04, 2024

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Brazil: GDP Grows 0.8% in the First Quarter
Paying Article

June 4, 2024 5:21 PM UTC

The Brazilian GDP grew by 0.8% in Q1 2024, surpassing market expectations but below forecast. Internal demand, fueled by higher consumption and government initiatives, drove the growth. Consumption rose by 1.5%, and investments surged by 4.4%. Services and Agriculture sectors showed notable growth,

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Preview: Due June 12 - U.S. May CPI - Slower overall, another 0.3% for the core
Paying Article

June 4, 2024 1:31 PM UTC

We expect May CPI to rise by 0.1% overall, which would be the slowest since October 2023, but with a second straight 0.3% increase ex food and energy, to follow three straight gains of 0.4% during Q1. Before rounding we expect the core rate to be very close to 0.3% but the headline to be on the firm

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European Parliament Election: A Swing to the Right?
Paying Article

June 4, 2024 9:09 AM UTC

This week-end (Jun 6-9 actually) sees fresh European Parliament elections, with it likely that that compared to the last (2019) result, there will be a clear swing to right-wing and/or populist parties.  However, polls do not suggest anything like enough of swing away from the current parliamentary

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Central and Latin America: Country Risk Ratings
Paying Article

June 4, 2024 9:00 AM UTC

We provide country risk reviews for select Central America countries.  

June 03, 2024

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Mexico Elections: Sheimbaum Wins as Expected but the Surprise is in the Legislative
Freemium Article

June 3, 2024 3:03 PM UTC

The Mexican election saw Sheinbaum from MORENA likely securing 57-60% of the votes, a significant lead over Xóchitl Gálvez. The MORENA coalition is projected to gain a two-thirds majority in the Chamber of Deputies but may fall short in the Senate. This result raises concerns over potential anti-m

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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

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China Finance Weakest Links: Small Banks and Property Finance
Paying Article

June 3, 2024 9:19 AM UTC

China authorities appear to have the financial stability spill over from the property sector until control currently, through a combination of direct support for housing and forced mergers of weak banks (mainly rural so far).  This game plan will likely be followed for the next few years. However,

May 31, 2024

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Bank of Canada to Deliver a Cautious 25bps Easing on June 5
Paying Article

May 31, 2024 4:34 PM UTC

The Bank of Canada meets on June 5 and we believe they will see recent inflationary data as having delivered sufficient progress to justify a 25bps easing, to 4.75%. The statement will however be careful to state that inflation remains too high and give no strong signals for future moves, which will

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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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H1 2025 Fiscal Stress or Crisis?
Paying Article

May 31, 2024 2:30 PM UTC

We see the U.S. facing fiscal stress in H1 2025.  Either a re-elected President Biden would be restrained by Republicans over raising the debt ceiling or a president Trump would want to make the lapsing parts of the 2017 tax cuts permanent.  Rating agencies would be unhappy with either scenario an

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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

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EZ HICP Review: Core Disinflation Unwinds as Services Resilience Persists?
Paying Article

May 31, 2024 9:42 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 last month and even more so in these May numbers, with the headline moving up from the unchanged 2.4% reading to a three-month high of 2.6%,

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

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ECB Preview (June 6): D-Day
Paying Article

May 30, 2024 10:44 AM UTC

Given the almost unanimous hints from Council members, something unexpected is needed to prevent the ECB from starting to cut its policy rates on June 6, most notably the key deposit rate currently at an unprecedented 4.0%. The question markets are considering is how/when this widely expected 25 bp

May 29, 2024

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Mexico Elections Update: Sheimbaum to Confirm Government Continuity
Freemium Article

May 29, 2024 1:55 PM UTC

On June 2, Mexicans will vote for a new President, 500 deputies, and 128 senators. Claudia Sheinbaum from MORENA is favored to win, supported by incumbent President Lopez-Obrador's high approval rating. However, MORENA is unlikely to secure a two-thirds majority in Congress, limiting drastic policy

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U.S. Financial Stress: Select Issues Not Widespread
Paying Article

May 29, 2024 10:00 AM UTC

Higher U.S. interest rates are still feeding through with a lag, which can cause weaker corporates and households problems but point to divergence within consumption and investment rather than anything more serious. High leverage for hedge funds/issues for a small subset of banks and high holdings o

May 28, 2024

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Preview: Due June 7 - U.S. May Employment (Non-Farm Payrolls) - Stronger than April but trend may be starting to slow
Paying Article

May 28, 2024 6:06 PM UTC

We expect a 205k increase in May’s non-farm payroll, a little stronger than April’s below trend 175k but closer to that than March’s above trend 315k. We expect average hourly earnings with a 0.3% increase to also be a little stronger than in April, when a below trend 0.2% increase was seen, b

May 27, 2024

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Fed Easing Expectations: Volatile and Data Driven
Paying Article

May 27, 2024 12:05 PM UTC

 Bottom Line: Fed easing expectations have been reset to higher for longer.  However, softer real sector data, plus less worrying inflation monthly outcomes, can rebuild easing expectations.  We see the first 25bps coming at the September 19 FOMC meeting and around this time a noticeable increase

May 24, 2024

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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

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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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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

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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