The Weekly Briefing from Capital Economics

After the Fed supercharged the bond market’s recovery, Group Chief Economist Neil Shearing talks to David Wilder about issues around 2024’s flagged rate cuts, including the impact of loosening financial conditions as investors front-run policymakers, whether “team transitory” has been proved right, and why the ECB and Bank of England are still sounding decidedly hawkish.Plus, our EM team sees “unusually large” growth divergence coming for emerging market economies in 2024. Deputy Chief EM Economist Shilan Shah and Assistant Economist Leah Fahy highlight the key takeaways from our latest quarterly EM Economic Outlook – including how elections could shape these economies in the coming year.Finally, the agreement among participants of the UN Climate Conference in Dubai was described as “historic”, but what was actually achieved that will help meet climate goals? David Oxley, the head of our Climate Economics coverage, separates the reality from the hype to show why some of the cynicism around the deal isn’t entirely warranted, but also explains the challenges of building out renewables to meet COP28 commitments as well as the long-term impact of the green transition on the oil market.Click here to read the analysis referenced in this podcast episode.

The same questions kept coming up in our client briefings on the 2024 outlook and Group Chief Economist Neil Shearing tackles them in this latest episode of our weekly podcast. He talks about why economic resilience will be increasingly tested and which DM central banks are likely to cut rates first, but also talks about what could go wrong for our calls in the coming year. Deputy Chief UK Economist Ruth Gregory is also on the podcast to explain why the Bank of England won’t be in a hurry to ease policy next year and talk about how immigration is affecting the labour market. We’re also joined by Tom Ryan, who leads our coverage of the US housing market. Amid signs that a weird moment for the market is coming to an end, Tom talks about the outlook for mortgage rates and prices in a year that’s expected to see some hefty rate cuts from the Fed. Click here to explore the analysis and events referenced in this podcast.

Group Chief Economist Neil Shearing warns the potential threat to fiscal positions from higher rates is “perhaps the most important question hanging over the outlook for the next couple of years”. In this episode, he speaks to Head of Research Vicky Redwood and Andrew Kenningham, Chief Europe Economist, about the size and scope of that threat, including what governments need to do to keep markets onside, whether Italian and US debt positions are particular causes for concern and how a busy year for elections could shape the market’s perceptions of which issuers are at risk.Plus, after the FT’s Martin Wolf highlighted our unique analysis of global economic fracturing, Neil talks to Chief Asia Economist Mark Williams about why investors should be considering US-China competition in terms of blocs of aligned countries and territories rather than as individual economies. Mark shows how that economic competition looks very different when measured by these blocs, but also highlights the risks to our view that fracturing will remain a relatively benign process.Click here to read the analysis and register for the events referenced in this episode.

Group Chief Economist Neil Shearing tackles what we think will be the key themes for the global economy in 2024, including why the consensus for growth is too optimistic, how quickly the Fed could cut rates and how to think about the macro and market consequences of a full slate of elections. Plus, with COP 28 about to get underway in Dubai, Climate Economics head David Oxley and Climate Economist Hamad Hussain discuss why these high-level meetings aren’t the solution to a successful green transition and highlight just some of the key findings from our new CE Climate Reporting Tools. Click here to explore the analysis and events referenced in this episode. 

Does the surprise victory of Javier Milei in Argentina's presidential election mean the country is about to experience a raft of unorthodox economic policymaking to fix its ailing economy? How likely is Milei's dollarisation plan? What does this electoral victory mean for Argentina's negotiations with the IMF? In this special episode of The Capital Economics Weekly Briefing, Chief EM Economist William Jackson and Deputy Chief EM Economist Jason Tuvey get to grips with the potential risks around the election outcome and whether Javier Milei has what it takes to turn around the Argentine economy.Click here to explore our dedicated Argentina election hub page.    

After nearly two years of monetary tightening, debate rages over whether advanced economies are heading for recession. However, as Group Chief Economist Neil Shearing tells David Wilder in this latest episode, recessions come in more flavours than the two sequential quarters of negative growth that have come to define them. Plus, in the wake of that Joe Biden-Xi Jinping meeting in San Francisco, an exclusive clip from our Drop-In briefing on global fracturing explains why a broad agreement to fix US-China economic relations looks unlikely and what the potential return of Donald Trump to the White House could mean for the structure of the world economy.And Chief UK Economist Paul Dales and Deputy Chief UK Economist Ruth Gregory are on the show to preview the Chancellor’s Autumn Statement, including the core dilemma facing Jeremy Hunt and what the OBR’s latest forecasts might signal. Click here to explore the analysis and events referenced in this podcast.

Central bankers have a tough task when it comes to communicating with markets – just ask the Bank of England’s Huw Pill, who started the week hinting at rate cuts and ended it with an insistence that the current setting has to remain in place to quash inflation. In this week’s episode, Group Chief Economist Neil Shearing delves into the challenges that central banks face in articulating policy to the market, and what lies behind the relatively hawkish rhetoric of late. Neil also talks about some of our key calls for the global economy in 2024 and discusses how concerns about debt sustainability will play out next year. The departure of three pandas from a zoo in Washington also comes up in his conversation with David Wilder as they talk through the latest on the fracturing of the global economy. Plus, Deputy Chief EM Economist Jason Tuvey is on the show to talk about Saudi Arabia in a fracturing global economy, including what’s changed in the Kingdom’s relations with Beijing and Washington and how a return of Donald Trump to the White House could affect this diplomatic landscape. Click here to explore the analysis and events referenced in this episode.

Group Chief Economist Neil Shearing is back to discuss what the recent data say about the global economic outlook – including October US payrolls and China PMIs – and what to expect from the Fed, ECB and Bank of England following their decisions to keep rates unchanged over the past week. Neil also explains why a persistent focus on the threats to humanity posed by artificial intelligence is unhelpful. Franziska Palmas from our Europe team is also on the show to discuss her worrying new forecasts for Italy’s debt ratio and whether it could be a trigger for a crisis within the euro-zone. Plus, an exclusive clip from the latest monthly Drop-In briefing in which our Asia team talks through the Bank of Japan’s next steps after that latest tweak to its Yield Curve Control policy.Click here to explore the analysis referenced in this episode.

Fed week, US economic outlook, House Speaker impact on government shutdown, Israel-Hamas war's limited effect on markets, potential decrease in bond yields and risks in financial markets.

With the 10-year Treasury yield finally hitting 5%, Group Chief Economist Neil Shearing explains the macro risks around rising bond yields, telling David Wilder what this all means for central banks.  He also talks about how policymakers manage geopolitical uncertainty in light of Israel’s conflict with Hamas and talks about how events in the Middle East fit with the idea that the global economy is fracturing into competing US- and China-led blocs. Plus, Mark Williams tackles market talk that China is dumping its dollars and Bradley Saunders discusses his recent analysis on whether AI hype is fuelling a bubble in stock markets. Click here to explore the analysis and events referenced in this episode.