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The Week Ahead - 16 - 20 December 2024
These are the Key Macro Events for the upcoming week.
Global manufacturing shows further improvement
Global manufacturing PMI rises back to ‘neutral’. EM outperformance continues, Demand picks up (also driven by EMs), and global excess supply continues. Subcomponents for input and output prices up, but remain far below 2021/22 peaks.
Key views Global Outlook 2025
The return of president Trump to the White House is likely to mean a significant rise in US import tariffs in 2025. China will bear the brunt, but Europe will also be hit. Global trade and growth will initially benefit from a frontloading ahead of the tariff rises, before slowing sharply later in 2025. Against this backdrop, domestic demand is recovering in the eurozone and China, helped by falling interest rates and targeted fiscal measures in China, while in the US, deregulation and tax cuts will help blunt the real income shock from tariff rises. Inflation in the US is expected to reaccelerate, but to fall below target in the eurozone. All of this is likely to drive a divergence in Fed & ECB policy, with slower and fewer Fed rate cuts, and the ECB deposit rate ultimately falling to 1%. This is expected to push the euro towards parity against the dollar in the course of 2025.
The week ahead - 4 - 8 November 2024
These are the Key Macro Events for the upcoming week.
Key views Global Monthly October 2024
The US is cooling, China is still weighed by the weak property sector, and the eurozone recovery is in danger of going into reverse. Our base case remains for the global economy to converge to more trend-like growth as we move into 2025, but downside risks – particularly in the eurozone – have increased. A sharp rebound is unlikely while rates remain restrictive. More aggressive Fed & ECB rate cuts, and China stimulus measures may help, but downside risks remain from possible new trade tariffs should Trump be re-elected in November. Inflation remains well behaved, with falling oil prices helping, though wage growth and services inflation remains too high in the eurozone. The ECB and Fed have started lowering interest rates, and we expect both central banks to continue cutting rates until a more neutral level of rates is reached later next year. Still, lags in pass-through mean that it will take time for rate cuts to meaningfully lift growth.
Key views Global Monthly September 24
The US is cooling, China is still weighed by the weak property sector, and the eurozone recovery is in danger of going into reverse. Our base case remains for the global economy to converge to more trend-like growth as we move into 2025, but downside risks – particularly in the eurozone – have increased. A sharp rebound is unlikely while rates remain restrictive. More aggressive Fed & ECB rate cuts, and China stimulus measures may help, but downside risks remain from possible new trade tariffs should Trump be re-elected in November. Inflation remains well behaved, with falling oil prices helping, though wage growth and services inflation remains too high in the eurozone. The ECB and Fed have started lowering interest rates, and we expect both central banks to continue cutting rates until a more neutral level of rates is reached later next year. Still, lags in pass-through mean that it will take time for rate cuts to meaningfully lift growth.
The week ahead: 16 - 20 September 2024
These are the Key Macro Events for the upcoming week.
Global manufacturing struggles, weakness in DMs deepens
Global manufacturing PMI back in contraction territory. Weakness in developed economies deepens. Our global supply bottleneck index confirms global excess supply conditions continue. Container tariffs down again; industrial input/output price components well below 2021/22 peaks.
UK Election - A shift to the left, but brace for a right-wing re-alignment
After 14 years of Tory rule, the British are ready for change this Thursday. The Liz Truss debacle, healthcare waiting lists, teacher shortages, and scarce housing drive voters to Labour. Tories may even end third, after Reform UK. An alignment of the two parties after the elections is conceivable. The next Labour government lacks fiscal space for fundamental policy changes, nor will it reconsider Brexit. The change in government will therefore not affect growth and inflation prospects, indeed, stubborn inflation will limit the Bank of England’s plan to lower interest rates.
Global Monthly - Five themes to watch over the summer
As we approach the summer holiday period, we preview five major themes to watch. We start with the repricing of central bank rate cuts, which we think has further to run. This will likely be helped along by our second theme – the US economic slowdown. We also preview upcoming elections, explore the drivers of the recent rise in shipping freight tariffs, and finally, we flag the potential for eurozone services activity to see a boost from summer cultural events. As is customary in summer, we will take a break in July, resuming publication in late August.