BoE Review: Data Dependent Easing Bias Clearer?

May 9, 2024 12:52 PM UTC

There was little surprise that Bank Rate was kept at 5.25% for the sixth successive MPC meeting, nor that the dissent in favor of an immediate rate cut doubled to two as a result of Dep Gov Ramsden confirming more dovish leanings.  The updated projections at least validated the rate path discounted

CBRT Lifts End-Year Inflation Forecast to 38%

May 9, 2024 10:22 AM UTC

Bottom Line: Central Bank of Turkiye (CBRT) released the second quarterly inflation report of the year on May 9, and lifted end-year inflation prediction from 36% to 38% citing that the rebalancing process for demand will be more delayed compared to what was projected that in the first inflation rep

Ukraine War Update: Major Russian Offensive is Expected This Summer Despite U.S. Military Aid

May 8, 2024 12:06 PM UTC

Bottom Line: The offensives at the front lines started to pick up steam after March/April as the Russian forces plan for their larger summer 2024 offensive operation, aiming to seize more territory before the U.S. presidential elections in November. In the meantime, U.S. approved a $61 billion warti

Sweden Riksbank Review: Biting the Bullet

May 8, 2024 8:24 AM UTC

It very much seemed to be a question of when, not if, as far as policy easing is concerned for the Riksbank.  In this regard, albeit surprising in terms of timing, the Riksbank delivered, cutting its policy rate by 25 bp (to 3.75%), despite clear concerns it has flagged about recent and continued k

Russian Economy Expands by 4.2% YoY in March, and 5.4% in Q1

May 3, 2024 2:14 PM UTC

Bottom Line: According to the figures announced by the Russian Ministry of Economic Development, Russia's GDP grew by 4.2% YoY in March owing to strong fiscal stimulus, high military spending, invigorating consumer demand and investments. We now foresee Russian economy will expand by 2.6% in 2024

Norges Bank Review: Even More Caution?

May 3, 2024 8:46 AM UTC

Surprising few, the Norges Bank Board left the policy rate at 4.5% for a third successive meeting at its latest Board meeting.  It also retained the thinking first aired at the December meeting, namely ‘policy to stay on hold for some time ahead’ rhetoric, this more formally evident in what wer

Turkiye’s Inflation Continues to Jump in April with 69.8%

May 3, 2024 7:40 AM UTC

Bottom Line: Turkish Statistical Institute (TUIK) announced on May 3 that Turkish CPI ticked up 69.8% annually and 3.2% monthly in April due to increases in transportation, restaurant & hotel and education prices, coupled with the lingering impacts of the wage hikes on the services sector. We feel u

BoE Preview (May 9): Easing Bias Clearer?

May 2, 2024 11:06 AM UTC

In flagging no need to be dominated by Fed policy, we think that the BoE is not only moving towards rate cuts but the MPC majority may be overtly advertising such a likelihood.  But we do not see any move at the looming May 9 verdict, with Bank Rate again likely to remain at 5.25%. But the accompan

South Africa’s Fiscal Outlook Under Spotlights as the Elections Are Approaching

May 1, 2024 6:45 PM UTC

Bottom line: South Africa policy makers remain concerned about government debt trajectory, large domestic and international financing needs and elevated country risk premium before fast-approaching elections on May 29. We think South Africa’s general government fiscal balance and debt trajectory w

Sweden Riksbank Preview (May 8): When, Not If?

May 1, 2024 8:09 AM UTC

It seems to be a question of when, not if as far as policy easing is concerned.  Even at it previous policy assessment in February it was clear(er) that the Riksbank accepted that it could and should make its policy stance less contractionary, at least in conventional terms.  But its last decision

UK GDP Preview (May 10): Fragile Sideways-Moving Activity Continues?

April 30, 2024 2:19 PM UTC

The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is hardly much better with GDP growth only modestly positive.  Admittedly, coming in as largely expected, and despite industrial action, GDP rose by 0.1% m/m in February accentuating the upgraded 0.

UK Consumers: Rent the Growing Hit to Spending Power

April 29, 2024 2:02 PM UTC

The UK has faced a series of cost-of-living shocks in the last few years.  Some such as the surge in food prices may even be reversing, while it now looks likely the BoE hiking cycle may also start to reverse, although rising market rates may mean little further fall in effective mortgage rates in

CBR Kept the Key Rate Stable at 16%

April 26, 2024 1:12 PM UTC

Bottom Line: As widely expected, Central Bank of Russia (CBR) announced on April 26 that it decided to keep the policy rate unchanged at 16% for the third meeting in a row. CBR made critical changes in its key rate and inflation forecasts as it lifted its 2024 inflation forecast to 4.3-4.8% from 4-4

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

CBRT Kept Key Rate Unchanged at 50%

April 25, 2024 3:25 PM UTC

Bottom Line: As predictions were centred around no change, Central Bank of Turkiye (CBRT) kept the policy rate stable at 50% on April 25 despite galloping inflation, and pressure on FX lately. According to the CBRT statement, monetary policy stance will be tightened in case a significant and persist

Norges Bank Preview: Nothing New to Note?

April 25, 2024 9:29 AM UTC

Surprising few, the Norges Bank Board is very likely to leave its policy rate at 4.5% for a third successive meeting when it gives it next verdict on May 3.  It is also likely to retain the thinking first aired at the December meeting, namely the ‘policy to stay on hold for some time ahead’ rhe

Sticky Inflation Causes Concerns over the Horizon

April 24, 2024 9:26 AM UTC

Bottom line: According to the Monetary Policy Review Report by the South African Reserve Bank (SARB) on April 23, the risk of higher inflation still remains and inflation returning to the midpoint of the target band is only expected in the last quarter of 2025. SARB highlighted in its report that ma

Short-end European Government Bonds Following U.S. But June Decoupling

April 22, 2024 1:15 PM UTC

The Fed’s shift to higher for longer has spilled over to drag European government bond yields higher through April.  This now looks overdone as a June ECB rate cut is not fully discounted and ECB officials/data clearly point towards a 25bps cut.  UK money markets are more out of line, with a Jun

UK: Services Inflation Resilience – An Alternative Perspective?

April 22, 2024 10:03 AM UTC

Although still with three members openly resistant to cutting Bank Rate, it does seem as if an MPC majority is nevertheless edging toward easing policy conventionally.  This reflects a view among the less hawkish and more pliable MPC members that risks to persistence in domestic inflation pressures

Recent Polls in South Africa: ANC’s Popularity Continues to Decline

April 19, 2024 1:14 PM UTC

Bottom line: We continue to foresee two possible outcomes of South African presidential elections on May 29, either an African National Congress (ANC) win or a coalition government. According to recent polls, ANC is at the serious risk of losing its majority dipping below 50%, even as low as 37% acc

Services Surplus and Decreasing Trade Deficit Partly Heal Turkish Current Account Deficit

April 19, 2024 12:18 PM UTC

Bottom Line: Turkiye’s annualized current account deficits (CAD) stood at $31.8 billion as of February 2024 when compared to $37.6 billion a month earlier, driven by a marginal increase in the services surplus, a reduction in the gold trade deficit, and a recovery in net energy trade. We envisage

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

South Africa’s Inflation Softened to 5.3% in March

April 17, 2024 11:38 AM UTC

Bottom Line: According to the inflation figures announced by Department of Statistics of South Africa (Stats SA) on April 17, the inflation softened to 5.3% YoY in March from a four-month high of 5.6% YoY due to lower food and non-alcoholic beverages (NAB), alcoholic beverages & tobacco, transporta

UK CPI Inflation Review: Inflation Fall Further, But Services Momentum Still Evident

April 17, 2024 6:52 AM UTC

UK headline and core inflation have been on a clear downward trajectory in the last few months, the former having peaked above 10% in February last year and the latter at 7.1% In May. After a pause in the preceding three months, this downtrend seemingly resumed in the February CPI numbers and clearl

UK GDP Review: Less Fragile Recovery to Fuel BoE Hawks?

April 12, 2024 6:50 AM UTC

The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is hardly much better with GDP growth only modestly positive.  Admittedly, coming in as largely expected, and despite industrial action, GDP rose by 0.1% m/m in February accentuating the upgraded 0.

Russian Economy Expands by a Strong 7.7% YoY in February

April 11, 2024 7:38 PM UTC

Bottom Line: According to preliminary figures announced by the Russian Ministry of Economic Development, Russia's GDP grew by 7.7% YoY in February after expanding by 4.6% in January, owing to strong fiscal stimulus, high military spending, invigorating consumer demand and investments. We foresee R

How Durable are Better UK Housing Market Signs?

April 11, 2024 9:45 AM UTC

Amid some mixed remarks from one the MPC hawks, the BoE will be noting more positive housing market signs.  The latest RICS survey very much points to a clear pic-up in housing demand, something that chimes with the results in the just-published BoE Credit Conditions Survey (CCS), which also sugges

Russia’s Inflation Remained Steady at 7.7% in March

April 10, 2024 8:21 PM UTC

Bottom Line: After hitting 7.4% YoY in January and December, the inflation rate remained stable at a one-year peak of 7.7% YoY in March after February. We think stubborn price pressures continue to be strong due to high military spending, currency weakening particularly after March 11, tight labour

UK CPI Inflation Preview (Apr 17): Inflation to Fall Broadly Further, But Momentum Still Evident

April 8, 2024 2:12 PM UTC

The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is hardly going to feel much better with GDP growth hardly positive.  Admittedly, coming in as largely expUK headline and core inflation have been on a clear downward trajectory in the last few mont

BoE Forecast Report: Uncertain How to Assess Uncertainty?

April 5, 2024 8:14 AM UTC

A long-awaited review of BoE forecasting techniques and goals is due on Apr 12 with a report commissioned by the BoE but authored by ex-Fed Chair Ben Bernanke.  It is set to offer alternatives to the way the MPC currently produces and communicates its outlook and has been prompted by marked forecas

UK GDP Preview (Apr 12): Fragile Recovery?

April 3, 2024 1:26 PM UTC

The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is hardly going to feel much better with GDP growth hardly positive.  Admittedly, coming in as largely expected, and despite industrial action, GDP rose by 0.2% m/m in January more than reversing th

Turkiye’s March Inflation Ticks Up to 68.5% Despite Continued Tightening

April 3, 2024 9:16 AM UTC

Bottom Line: Turkish Statistical Institute (TUIK) announced on April 3 that Turkish CPI surged to 68.5% annually and 3.2% monthly in March, and annual inflation swung to a 16-month high due to increases in food and education prices, coupled with the lingering impacts of the minimum wage hike on the

March Outlook: Europe in Focus, Then Elections Around the World

April 3, 2024 9:00 AM UTC

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

Beware of Inflation: SARB Held the Key Rate Stable at 8.25%

March 27, 2024 3:26 PM UTC

Bottom line: As widely expected, South African Reserve Bank (SARB) kept the key rate constant at 8.25% on March 27. It appears the decision targeted to anchor inflation expectations around the target midpoint, and enhance confidence in achieving the inflation goal as SARB signalled that its fight to

Sweden Riksbank Review: Early Easing to Allow Gradual Moves

March 27, 2024 9:58 AM UTC

Even at it previous policy assessment in February it was clear(er) that the Riksbank accepted that it could and should make its policy stance less contractionary, at least in conventional terms.  But its latest decision, again keeping the policy rate at 4%, and no change to the pace of bond sales,

March Outlook: Europe in Focus, Then Elections Around the World

March 27, 2024 9:00 AM UTC

EMEA Outlook: Elections Set the Scene in Q2

March 25, 2024 2:00 PM UTC

·     Unlike South Africa and Russia, Turkiye continued with tightening monetary policy in Q1 due to stubborn inflation, pressure on FX and reserves. Meanwhile, Russia and South Africa halted their tightening cycles as of 2024 and will likely start cutting interest rates in Q3 depending on how

Outlook Overview: Europe in Focus, Then Elections Around the World

March 25, 2024 11:15 AM UTC

Equities Outlook: Cyclical Recovery Versus Structural Headwinds

March 25, 2024 9:00 AM UTC

 ·        In the U.S., a tug of war between momentum and U.S. exceptionalism on the one side versus valuations and any deviations from the U.S. goldilocks scenario now means volatility and a risk of a correction.  We feel that the U.S. equity market recovery can push onto 5250 for the S&P5

DM Rates Outlook: Rate Cuts Arriving and Positive Yield Curves

March 22, 2024 2:00 PM UTC

CBR Keeps the Key Rate Constant at 16%

March 22, 2024 10:55 AM UTC

Bottom Line: As we envisaged, Central Bank of Russia (CBR) announced on March 22 that it decided to keep the policy rate unchanged at 16% for the second meeting in a row, despite inflationary pressures remaining elevated, and currency weakening continued. We expect the CBR to hold the key rate stab

Inflationary Pressures Caused CBRT to Restart Tightening Cycle and Hike Key Rate to 50%

March 21, 2024 4:26 PM UTC

Bottom Line: Despite predictions were centred around no change, Central Bank of Turkiye (CBRT) increased the policy rate by 500 bps to 50% on March 21 due to strong inflation, and pressure on FX and reserves lately. According to the CBRT statement, the current level of the policy rate will be mainta

BoE Review: Easing Bias Continues

March 21, 2024 1:12 PM UTC

Although no shock that the BoE vote to keep policy on hold this month, there was some surprise that all hawkish dissents ended, with the one MPC member instead still again calling for a cut.  But despite recent CPI underlying falls, the majority continue to focus on assessing how ‘persistent’ a

Commodities Outlook: A Promising Horizon

March 21, 2024 11:00 AM UTC

Norges Bank Review: Unrevised Rate Cutting Hints?

March 21, 2024 10:10 AM UTC

Surprising few, the Norges Bank Board left the policy rate at 4.5% for a second successive meeting and even retained the thinking first aired at the December meeting, namely the ‘policy to stay on hold for some time ahead’ rhetoric.  It accepted a softer recent inflation backdrop but revised up

Switzerland: SNB Surprise with 25bps Rate Cut

March 21, 2024 9:01 AM UTC

The SNB became the first DM central bank to cut rates with a 25bps reduction to 1.50%, which reflects an even larger forecast inflation undershoot and to counterbalance the strong Swiss Franc (CHF).  The inflation forecasts for 2024 and 2025 were significantly lowered even with the new 1.50% policy

South Africa’s Inflation Hits 4-Months High in February

March 20, 2024 1:37 PM UTC

Bottom Line: According to the inflation figures announced by Department of Statistics of South Africa (Stats SA) on March 20, the inflation jumped to 5.6% YoY in February due to higher housing & utilities, miscellaneous goods & services, food and non-alcoholic beverages and transport prices, couple