Japan
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May 02, 2024
China Politburo: Help for Housing, But No Game changers
May 2, 2024 10:50 AM UTC
Politburo statement in late April suggests extra support for residential property. However, we see this as being incremental rather than any game changers and we still see residential investment remaining a negative drag on 2024 GDP growth.
April 29, 2024
China: Depreciation Rather Than Devaluation
April 29, 2024 1:00 PM UTC
We feel that a devaluation of the Yuan is unlikely in 2024, both to avoid potentially politically destabilizing capital outflows but also to avoid upsetting the next U.S. president. Policy is geared more towards controlled depreciation to help competiveness but reduce other risks. The Yuan has a
April 26, 2024
Headwinds To Long-term Global Growth
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
BoJ's Intervention and its impact
April 25, 2024 6:24 AM UTC
In the period of time when JPY significantly weakens or strengthens, BoJ will intervene in the FX market either through verbal or actual intervention. As JPY weakened significantly in the past months, once again we found ourselves in the proximity of FX intervention with unknowns for anonymity is ke
April 22, 2024
BoJ Preview: Showing no hurry
April 22, 2024 6:13 AM UTC
Our central forecast is for the BoJ to remain on hold for interest rate and signals the market they are in no rush to further tighten while allowing trend inflation data to lead policy direction in their forward guidance. BoJ has moved interest rate to 0% and officially removed YCC in March, citing
April 17, 2024
Markets: Fed Rather Than Middle East Worries
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
April 03, 2024
April 02, 2024
Asset Allocation: Pausing for Breath
April 2, 2024 9:00 AM UTC
Into Q2, data and policy (actual and perceived) will dominate DM markets. The ECB will likely take the spotlight with a 25bps cut on June 7, as the Fed face a better growth/more fiscal policy expansion and a tighter labor market than the EZ but also with a better productivity backdrop and outlook to
March 27, 2024
Japan: 10yr JGB Yields To Exceed 1% in 2024?
March 27, 2024 10:00 AM UTC
Though BOJ soothed markets with last Tuesday’s rate hike and scrapping of yield curve control, we see scope for 10yr JGB yields to rise through 1% by summer/autumn. The current pace of net JGB purchases is a lot lower than H1 2023, while Ueda noted that this pace could be slowed in the future.
March 26, 2024
March 25, 2024
Japan Outlook: Beginning of A New Era?
March 25, 2024 4:54 AM UTC
Bottom Line:
Forecast changes: We revised 2024 GDP lower to +0.8% from +0.9% because private consumption is now expected to contract in Q1 2024. 2024 CPI is revised higher to +2.1% from +1.7% to address the stronger wage hike Japanese unions secured.
March 22, 2024
March 19, 2024
March 13, 2024
BoJ Preview: 50-50
March 13, 2024 3:17 AM UTC
Our central forecast is for the BoJ to change forward guidance in March, indicating trend inflation will be achieving target and ultra-ease monetary policy is no longer necessary and hike interest rate to 0% in April as wage growth has accelerated and the latest wage negotiation is likely to ensure
March 12, 2024
Japanese Equities: Yen Headwind Rather than Tailwind
March 12, 2024 11:23 AM UTC
Bottom Line: Japanese equities tailwind from a weak JPY boosting corporate earnings will likely go into reverse, as the extreme JPY undervaluation ebbs with small BOJ rate hikes and Fed easing. We also forecast less nominal GDP growth in 2024 and 2025 than the market consensus. As this come thro
February 26, 2024
January 30, 2024
January 23, 2024
January 18, 2024
Japan: 10yr JGB Yields set to Rise Moderately
January 18, 2024 10:15 AM UTC
The more subdued profile of Japanese wages, plus a delay in the 1st BOJ hike, has prompted us to lower the forecast of a rise in 10yr JGB yields in 2024 – though we still see a rise above 1% (Figure 1). As BOJ tightening stops, we see 10yr JGB yields falling back again in 2025.
January 15, 2024
BoJ: The Pace of Exit
January 15, 2024 5:41 AM UTC
The BoJ has kicked the can down to the spring wage negotiation before another step in monetary policy. While current inflation forecast has exceeded BoJ's 2% target in all three items of headline, ex fresh food and ex fresh food & energy, the wage growth did not reach a "sustainable" level, which Ue
January 11, 2024
Webinar Recording December Outlook: Rate Cuts Into 2024
January 11, 2024 8:22 AM UTC
You can now access the webinar for the December Outlook here.
To read the individual chapters please see the weblink below.
Outlook Overview: Rate Cuts Into 2024 (here)
U.S. Outlook: Slower Growth to Sustain Improved Inflation Picture (here)
LatAm Outlook: Diverging Paths in 2024 (here)
China Outloo
January 09, 2024
Shipping Freight Cost Jump and Inflation – Some Perspectives
January 9, 2024 2:24 PM UTC
Figure 1: Freight Cost Surge in Perspective
Source: DataStream
How Long?
Houthi rebels have been attacking some ships in the Red Sea in recent weeks. The key question is how long this will last? One line of thinking is that the Houthi attacks are part of Iran axis of resistance alongside attacks
January 08, 2024
Charting our Views December Outlook
January 8, 2024 9:05 AM UTC
Outlook Overview: Rate Cuts Into 2024 (here)
Economic Scenarios
U.S. Outlook: Slower Growth to Sustain Improved Inflation Picture (here)
LatAm Outlook: Diverging Paths in 2024 (here)
Brazil Policy Rate and CPI Inflation (YoY, %)
China Outlook: Headwinds To China Growth (here)
Japan Outlook: Normalizing
January 03, 2024
AI and Technology Impact on Growth and Inflation
January 3, 2024 10:30 AM UTC
Bottom Line: The full benefits of the latest AI wave will likely not kick in until the late 2020/early 2030’s.However, 5G over the last couple of years has been enabling more connectivity via the Internet of Things and allowing more big data analysis, including AI tools and algorithms. In the 2hal
January 02, 2024
December Outlook: Rate Cuts Into 2024
January 2, 2024 9:53 AM UTC
Outlook Overview: Rate Cuts Into 2024 (here)
U.S. Outlook: Slower Growth to Sustain Improved Inflation Picture (here)
LatAm Outlook: Diverging Paths in 2024 (here)
China Outlook: Headwinds To China Growth (here)
Japan Outlook: Normalizing Monetary Policy Soon (here)
Asia/Pacific (ex-China/Japan) Outlook:
December 19, 2023
Japan Outlook: Normalizing Monetary Policy Soon
December 19, 2023 9:00 AM UTC
Macroeconomic and Policy Dynamics
Japanese headline inflation continues to moderate throughout 2023 as post COVID pent up demand fades and as supply chain disruption dissipates still further. However, the pace of moderation has been on a rocky road for food inflation (record chicken culling on bird f
Preview: BoJ to Announce New Forward Guidance
December 19, 2023 12:00 AM UTC
The BoJ meeting on December 18-19 is going to announce a change in forward guidance by suggest BoJ will be ready to exit ultra-loose monetary policy as trend inflation is in close sight of 2% target. Some hawkish market participants maybe anticipating an immediate hike from the BoJ to bring rates to
December 18, 2023
Outlook Overview: Rate Cuts Into 2024
December 18, 2023 3:42 PM UTC
· Uncertainty still prevails around this central view. The impact of lagged monetary tightening could be greater than our estimates and deliver mild recessions in some DM countries. We also feel that the disinflationary process could be stronger and this would help bring inflation back
December 15, 2023
Equities Outlook: Rate Cuts To Help in 2024
December 15, 2023 11:00 AM UTC
Equities Outlook: Rate Cuts To Help in 2024
· For other DM equity markets, EZ and UK are undervalued in contrast to the U.S., but are in or close to recessions and economic recovery will likely be weak and disappointing. Though the ECB and BOE will likely ease in Q2 with the Fed, we
December 08, 2023
This week's five highlights
December 8, 2023 10:34 AM UTC
U.S. November NFP Likely firmer due to returning strikers
USD/JPY Slumped on Ueda's Speech
Bank of Canada Tightening Bias Persists but is Reduced
USD/CAD Slipping on Weak Oil
RBA Continue to be data dependent
We expect a 200k increase in November's non-farm payroll, stronger than October's 150k though ex
November 22, 2023
November 21, 2023
European Equities Outlook for 2024 and Into 2025
November 21, 2023 8:14 AM UTC
European Equities are faced with the prospect of a mild recession, but less valuations strains than U.S. equities.What is the outlook in 2024 and into 2025?
While EZ corporate earnings hopes for 2024 will likely be trimmed by a sluggish economic outlook, ECB rate cuts and relief that inflation is fal
November 16, 2023
Long-term Forecasts to download in Excel
November 16, 2023 10:38 AM UTC
We present our annual forecasts that go out to 2030 for GDP Growth, Inflation, and Monetary Policy and to 2028 for Exchange Rates. The file contains five sheets: a Country Coverage summary page and a sheet for each of the four indicators.
The forecasts are consistent with the Long-term Forecasts: DM
November 07, 2023
U.S. Equities Bounce, But What About the Overvaluation
November 7, 2023 9:05 AM UTC
Figure 1: S&P500 12mth Forward P/E Ratio and U.S. 10yr Real Bond Yield (%)
Source: Datastream/Continuum Economics (using 10yr breakeven inflation for real bond yields)
The decline of 10yr U.S. Treasuries from 5% is bringing some relief for the battered U.S. equity market over the last week. Prospect
November 06, 2023
U.S. Yield Movements and Prospects for Bunds/JGB’s
November 6, 2023 10:03 AM UTC
Though rising U.S. yields since the summer had dragged up government bond yields elsewhere, 10yr government bond spreads became wider versus the U.S. for other major DM government bond markets. This has now started to reverse after last week yield drop and what are the prospects into 2024?
Figure
September 28, 2023
Equities Outlook: Diverging Earnings and Valuations
September 28, 2023 6:33 AM UTC
Risks to our views: Larger than expected effects from DM monetary tightening could cause downside surprises on U.S./EZ growth and hurt the global economy and earnings outlook. Equities would see a volatile 2024, with downside and then a rebound (on more aggressive policy easing) but less overall net
September 27, 2023
Japan Outlook: The First Step to Exit
September 27, 2023 6:00 AM UTC
Macroeconomic and Policy Dynamics
Japanese headline inflation has been moderating for 2023 so far, as global supply chains swing back to normal and energy prices rotates lower before the recent bounce. However, the pace of moderation has been hindered by stronger food prices (record chicken culling o
September 25, 2023
Long-Term U.S. Bond Yields and Little Primary Budget Deficit Progress
September 25, 2023 12:14 PM UTC
Figure 1: Primary Deficit Projections (% of GDP)
Source: IMF April Fiscal Monitor
U.S. 2020’s Structural Budget Deficit
The U.S. is making no real attempts to reduce the structural budget deficit build up over the COVID period, with the primary deficit projected to remain close to 4% into the lat
September 06, 2023
Trump: Policy Issues on Re-election
September 6, 2023 12:57 PM UTC
The current odds are around 40% Joe Biden to win the November 2024 presidential election and 33% Donald Trump, with the rest of the field some way distant. As we progress into 2024, more questions will be asked about what happens in the scenario that Trump is re-elected.
Our central scenario remain
September 04, 2023
DM Government Bonds Diverging
September 4, 2023 9:31 AM UTC
As DM policy tightening nears a peak, 10yr government bond spreads are starting to diverge.What is driving this and how much further can they diverge?
Figure 1: 10yr U.S. Treasury-Bund Spread and Fed Funds-ECB Depo Rate (%)
Source: Datastream/Continuum Economics
U.S. Soft Landing and EZ/UK Recess