The Weekly Briefing from Capital Economics

Who was Rachel Reeves really speaking to when she hinted at higher taxes this week? How much of a threat is the Supreme Court to Treasury tariff revenues? And how useful is “G2” as a lens for the new global order? Group Chief Economist Neil Shearing unpacks these big global macro questions in the latest episode of The Weekly Briefing from Capital Economics. Also on the show, Chief Markets Economist John Higgins assesses whether this week’s sell-off marks the end of the great AI-driven US equity boom, or was just a wobble on the way to new highs.Analysis and events referenced in this episodeRead: UK Autumn Budget 2025 PreviewRead: How could the Budget influence UK housing?Drop-In: India at the geo-economic crossroadsDrop-In: Commercial Property Outlook - What to watch out for in 2026Read: Reliance on tech is a double-edged swordRead: What to make of the mixed reaction to this week’s big-tech results

The Fed is trying to calibrate policy in the midst of a government shutdown that’s effectively cut off the flow of data. Jerome Powell says that when you’re driving in fog, you should slow down – but there’s still a case for the FOMC to follow this past week’s rate cut with another move in December, says Deputy Chief North America Economist Stephen Brown. He talks to David Wilder about why the state of the US economy argues for another cut this year, but fewer in 2026 than markets currently expect.That Fed meeting wasn’t the week’s only big event. In Korea, Donald Trump held the first face-to-face meeting of his second term with Xi Jinping. The one-year truce resulting from that meeting has eased near-term US-China trade tensions, but much could still go wrong, warns China Economist Leah Fahy. She discusses what might plunge bilateral relations back into crisis, the health of China’s economy, and why – even if Washington clears Chinese firms to buy cutting-edge AI chips – they may not do so.Analysis and events referenced in this episode:Drop-In: The Fed, ECB and Bank of England – Latest decisions and policy outlookCapital Economics EventsRead: Fed cuts and ends QT, but further loosening not guaranteedRead: Bank of Canada cuts but thinks it has done enoughXi-Trump talks buy China time to decouple at its own paceThe economic and market impact of AI

Out of the darkness of a shuttered US government comes a rare data release – and it’s a CPI report that’s given markets some relief as the week draws to a close. But does September’s inflation data really clear the way for Fed rate cuts in December as well as October, as investors now expect?In this week’s episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing explains why the Fed is likely to stay cautious, previews key upcoming central bank meetings, and looks ahead to next week’s much-anticipated Donald Trump-Xi Jinping summit in South Korea.Also on the show, the US Treasury’s new sanctions on Russia’s two biggest oil exporters have brought a key risk to our below-consensus oil price forecasts to the fore. Chief Climate and Commodities Economist David Oxley discusses how much this move could shake up the outlook – and whether Trump will actually follow through with full enforcement.Analysis and events referenced in this episode:Read: China ramping up use of export controlsDrop-In: Argentina’s mid-term elections – A referendum on Milei’s reformsDrop-In: The Fed, ECB and Bank of England – Latest decisions and policy outlook

In just a few days, US–China relations have taken a troubling turn. How did we go from the goodwill of the London and Madrid bilaterals to the current war of words, the threats and the counter-threats? Is this simply pre-APEC brinkmanship, or the start of a more fundamental breakdown in relations between Washington and Beijing? And how great are the risks of a miscalculation that spills over into the global economy? In this special episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing and Head of China Economics Julian Evans-Pritchard discuss the past, present and future of US–China relations. They explore key questions, including:• What’s driving Beijing’s new controls on rare earths, and whether the government could reverse course• What’s wrong with US perceptions of China’s economic health – and why those perceptions could prove dangerous • How the global economy will need to keep adjusting to a fracturing US-China relationshipAnalysis referenced in this episodeThe fracturing of the Global EconomyUS may revive plans to curb financial ties with ChinaGlobal Economics Outlook: US leads, others lag, in uneven global economyCAP: Economy holding up, but growth remains weakChina’s push for innovation is not lifting productivity

How reliant is the US economy on the AI investment boom? It’s a question Group Chief Economist Neil Shearing keeps getting in client meetings. On this episode of The Weekly Briefing, he tells David Wilder why there’s more to the story than hype around a new technology. Neil also explains why France faces a political – but not an economic – crisis, and what to make of China’s toughest moves yet to control rare earth exports.Also on the show, six months after Liberation Day, Deputy Chief Markets Economist Jonas Goltermann assesses how predictions of the dollar’s demise have played out and unpacks the market’s striking response to Japan’s new LDP leader.Analysis and events referenced in this episode:Watch: US Outlook – Weighing the AI boom, labour constraints and the Fed’s next chapterRead: China tightens its grip on rare earths (again)Register: Markets Drop-In: Asset Allocation in 2026 – Why we don’t think the AI equities boom is overRead: Japan coalition talksRead: What would PM Takaichi mean for Japan?

Our new Global Economic Outlook has just been published – and it makes for a striking contrast. In the US, the drag from Trump’s policy agenda looks set to be outweighed by an AI-driven investment boom that may already be lifting productivity. In Europe, by contrast, the optimism seen earlier this year has faded as structural headwinds continue to hold growth back.In this episode of The Weekly Briefing, Group Chief Economist Neil Shearing explores how AI may be transforming America’s potential, even as Europe struggles with long-standing weaknesses.Plus, a decade on from a devastating market crash, Asia-Pacific Markets head Thomas Mathews unpacks what’s been driving China’s equity boom this year – despite the broader economic weakness – and how sustainable it really is.Analysis and events referenced in this episodeGlobal Economic Outlook: US leads, others lag, in uneven global economyDrop-In: US Outlook – Weighing the AI boom, labour constraints and the Fed’s next chapterDrop-In: China Outlook – Can policy reverse economic weakness?The economic and market impact of AIMore upside for China’s stock market as its AI+ plan gets going

Tariffs are back in the headlines after Donald Trump’s latest announcements – but how much of a threat do these new levies really pose? Could they fuel inflation pressures, and is Trump’s trade policy really bringing manufacturing jobs back?Neil Shearing joins David Wilder to assess Trump’s tariff threats, explain why Stephen Miran’s call for US rates to be halved doesn’t add up, and examine what’s driving the divergence between inflation in the US and Europe/UK.Also on the show, Latin America Economist Kimberley Sperrfechter looks at an extraordinary week in Argentina, where markets have steadied after Washington intervened. What drove the Trump administration to act so forcefully, and will the support work?Analysis and events referenced in this episode:Data: Tariff Impact ModelRead: US Tariff AnnouncementRead: Japanese manufacturers starting to shift production to USRead: Euro-zone inflation risks now to the downsideDrop-In: From bonds to equities – The great pensions switch and its risksDrop-In: Where is r* heading? Catching up on equilibrium real ratesDrop-In: UK Outlook – More tax rises to add to economy’s woes​​Read: Mapping China’s presence in Latin America​

There’s plenty of talk about a possible settlement in US-China relations, but Group Chief Economist Neil Shearing urges caution. Ahead of a call between Donald Trump and Xi Jinping, he spoke with David Wilder about how a deal might be struck – and why it would fall short of easing the deeper tensions driving the fracturing of the global economy.Also on the show, with crime rising in Latin American countries once seen as relatively safe, Chief Emerging Markets Economist William Jackson discusses its economic costs and influence on upcoming elections.Plus, in an exclusive clip from our central bank Drop-In briefing, we look at how the Fed’s latest rate projections compare with ours, and why the Bank of England is growing more sensitive to inflation risks.Analysis and events referenced in this episode:Event: Fracturing in the Age of Trump - New York October 2025Read: China's Nvidia ban signals strong push for chip self-sufficiencyRead: Counting the cost of crime in Latin AmericaLatAm Outlook: Slowdown sets the stage for dovish surprisesWatch: Central Bank Drop-In - Unpacking the Fed, ECB and Bank of England September meetings

The Fed meets this coming week to decide how much monetary relief the US economy really needs. Group Chief Economist Neil Shearing says that, employment data aside, the evidence argues for fewer rate cuts than markets are pricing in. He talks to David Wilder about the health of the economy, whether the surge in AI investment is making a difference, and previews the Bank of England meeting, where the pace of quantitative tightening may be slowed by a still-febrile bond market. Also on the show, Chief Climate and Commodities Economist David Oxley assesses the oil price outlook in light of the week's geopolitical developments in Qatar and Poland, and ahead of OPEC’s 65th anniversary.Analysis and events referenced in this episodeUS economy is doing better than weak payrolls suggestNo more BoE cuts this year, but rates to fall to 3.00% next yearLabour market slump to prompt BoC to resume cutsWeak labour demand forces Fed off the sidelinesThe economic and market impact of AIData: GDP NowcastsOPEC at 65: shifting market dynamics expose frailties

Group Chief Economist Neil Shearing tackles that weak US August Employment report, previews the coming week’s inflation data, talks about what’s been happening in the bond market and explains just what recent get-togethers in China signal about a new world order.Also on the show, ahead of a crunch vote for France’s government, Chief Europe Economist Andrew Kenningham talks about why the French political establishment is struggling to break out of its fiscal logjam, and what this all means for the outlook for the government bond market. Analysis and events referenced in this episode:Read: French borrowing costs may soon exceed Italy’sDrop-In: France’s political turmoil and the fragility of global bond marketsDrop-In: What’s really holding up the commercial real estate recovery?Fracturing in the Age of Trump - London September 2025Fracturing in the Age of Trump - New York October 2025

What tensions will yet erupt as the US–China economic relationship unravels? What will the global economy look like in 2040? And what should business and government leaders be doing now to adapt to an era of economic fracturing?The Fractured Age: How the Return of Geopolitics Will Splinter the Global Economy is published on 28 August. In this special episode, author and Group Chief Economist Neil Shearing joins David Wilder to unpack the book’s key lessons and to show how today’s headlines reveal the deeper forces driving economic fracturing. Explore Capital Economics' data and analysis on global economic fracturing and sign up for our fracturing events this September/October:Singapore (3rd Sept)Hong Kong (4th Sept)London (17th Sept)New York (9th Oct)

China’s government is making louder noises about boosting consumption, a shift that’s critical not just for rebalancing its investment-heavy economy, but also for easing global imbalances. But are these signals part of a real policy pivot? China Economist Leah Fahy talks to David Wilder about the latest in China’s rebalancing story and what it means for the trajectory of its economic growth. Also in this episode: July’s US jobs report was a shock, but it’s part of a wider slowdown across advanced economies. Chief Global Economist Jennifer McKeown explains what’s driving the weakness and how it could shape central bank decisions ahead.Events and analysis referenced in this episode:Read: Chinese overcapacity is a disinflationary gift and a geopolitical threatRead: Millions in China are about to see their take-home pay fallRead: Consumer loan subsidies are a step in the right directionRead: Labour markets weakening in most DMs, not just USData: US Labour MarketData: UK Labour Market IndicatorsKey Issue: The economic and market impact of AIFed Chair Powell at Jackson Hole (Aug 2025)

Group Chief Economist Neil Shearing tackles the week’s biggest macro and market questions, including: what could Beijing do after more weak China data? Why tariffs aren’t showing up more in the US economy? How much have the latest inflation reports shifted the Fed’s rate-cut debate – and should the Treasury Secretary be taking shots at central banks?Also: Chief Markets Economist John Higgins on why we’ve lifted our S&P 500 forecasts, the limits of valuation metrics, and the risks markets face from an unpredictable – and increasingly emboldened – president.Plus: In a clip from our online Drop-In client briefing, Shilan Shah on what’s gone wrong in India-US relations and how 50% tariffs could hit India’s economy.Analysis and events referenced in this episode:CAP: Growth slows in Q2 despite resilient industryIn-person events: Fracturing in the age of TrumpS&P 500: onwards and upwards for this year and nextDrop-In: India in Trump’s firing line – What’s at stake for the economy and markets

After an extraordinarily divisive Bank of England policy meeting, Group Chief Economist Neil Shearing explores why it’s become so difficult to get a clear read on the UK economy. Part of the problem lies with the data – an issue now making headlines in the US following Donald Trump’s dismissal of the Bureau of Labor Statistics commissioner. Neil explains what this means for the credibility of official data and what to watch for in the upcoming BLS inflation release, which could prove pivotal for the Fed’s September decision. Plus, Thomas Ryan from our US team looks at why Trump’s promises to restore American manufacturing are likely to fall far short of reality.Analysis and events referenced in this episode:Read: Miran a good pick for the FedRead: Integrity of economic data safe for nowUS Drop-In: Are higher tariff rates fuelling inflation – and how should the Fed respond?Data: UK Employment IndicatorRead: Tariffs will not fix decades-long manufacturing decline

Does July's grim US jobs report vindicate the Fed's dissenters who pushed for rate cuts this week? Deputy Chief North America Economist Stephen Brown and Deputy Chief Markets Economist Jonas Goltermann unpack what the latest data reveal about the health of the US economy, the Fed’s strategy and how markets are reacting. Plus, with AI's global rollout pointing to formidable energy demands, Climate and Commodities Economist Olivia Cross explains where the supply will come from.Analysis and events referenced in this episode:Read: Tariff impact on inflation slowly buildingData: Tariff Impact ModelData: China-US Rerouting dashboardRead: How the AI race will reshape global energy marketsKey Issue: The economic and market impact of AI

Donald Trump and his trade war are symptoms, not causes, of a deeper shift in the global economic order. The world has fractured into rival blocs, with the US and China emerging as the poles of competing systems, vying for resources, technological dominance and geopolitical influence. Now, with Trump back in office, long-held assumptions about American leadership are once again in question. What does his return mean for the trajectory of this fracturing, and how has the balance of risks evolved?In this special edition of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing and Chief Asia Economist Mark Williams explore the fracturing of the global economy. Ahead of the publication of fresh analysis about how fracturing has developed since Trump's return, they talk to David Wilder about how this process began long before the president was elected in 2016,  how it’s accelerating under his second term and where it might lead. Topics covered in this 30-minute episode include:The inevitability of US–China economic rivalry – and the scope for détenteHow fracturing is fuelling a global tech arms raceWhether Trump’s unilateralism could further strain or even break Western alliances.Events and analysis referenced in this episode:Fracturing under Trump – Register now:Singapore, 3rd SeptemberHong Kong, 4th SeptemberLondon, 17th SeptemberNew York, 9th OctoberRead: The fracturing of the global economyRead: The US, China and the Fractured Age

Group Chief Economist Neil Shearing sifts through a deluge of DM inflation data to highlight where tariff effects are coming through, where price pressures look too hot and which central banks are best positioned to press on with policy easing. He also talks to David Wilder about what China’s manufacturing overdrive is doing to the global inflation picture.Also on the show, how serious is Donald Trump about forcing out Jerome Powell? Deputy Chief North America Economist Stephen Brown talks about the market response to the latest attacks on the Fed chief, why forcing him out could prove counterproductive for a president wanting cheaper borrowing costs, and what to watch as the White House steps up the pressure. Events and analysis referenced in this episode:ECB Watch: A pause, or an end, to the easing cycleGlobal Drop-In: Fed, ECB and Bank of England – Unpacking the latest rate movesDrop-In: Could South Africa be about to see a big bond rally?Read: What happens if Trump fires Powell?

Tariffs stormed back into the headlines this week as the pause on ‘Liberation Day’ levies expired with a flurry of warnings about steep rate hikes unless deals are struck by 1st August. Group Chief Economist Neil Shearing unpacks the implications, while Head of China Economics Julian Evans-Pritchard provides the view from Beijing. They also explore with David Wilder why inflation is a risk in the US but deflation looms in China, and what policymakers are (and aren’t) doing to fix it.Also on the show: As warnings mount over AI-driven job losses, Senior Economic Adviser Vicky Redwood separates hype from reality and explains what’s happening now in labour markets, and what the future may hold.Analysis and events referenced in this episode:Data: US-China Trade ReroutingRead: Tackling Chinese overcapacity will require demand-side stimulusRead: Fears about AI-driven job losses are overdoneRead: The economic and market impact of AIUpcoming Drop-Ins

On the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing joins David Wilder to unpack the key developments in global macro and markets, including:What to expect as the ‘Liberation Day’ tariff pause approaches expiryWhether the US and EU can strike a trade deal in timeWhy China is central to the US–Vietnam trade agreementWhat’s really troubling about the passage of Trump’s “big, beautiful” tax billWhat moves in gilt and sterling markets this week revealed about the UK Labour Party’s fiscal credibilityAlso on the show, Senior Global Economist Ariane Curtis discusses her new in-depth report on the outlook for global trade amid rising tariffs. She explains why her forecasts challenge the narrative of deglobalisation and also shares highlights from our latest Global Economic Outlook, including China’s looming slowdown and India’s relative outperformance.Analysis and data referenced in this episode:Data: China-US Trade ReroutingData: Tariff Impact ModelRead: What do tariffs mean for global trade?Data: Euro-zone Debt Sustainability Monitor

A ceasefire in the Middle East. A US-China deal. Relatively benign dataflow. The S&P 500 back at a record high. But are things really looking up? Group Chief Economist Neil Shearing is on The Weekly Briefing from Capital Economics to talk to David Wilder about fragilities under the surface of the global economy. He discusses worldwide fiscal risks, why there’s less to see with that US-China deal and those divisions on the FOMC. Also on the show, BYD and DeepSeek may be in the spotlight, but their rise reflects deeper structural flaws in China’s economy. They’re a sign of economic success, but also of the growing distortions in the government’s industrial strategy – weaknesses that are increasingly evident in China’s dismal productivity data. Chief Asia Economist Mark Williams has been delving into the details of Xi Jinping’s industrial roadmap and the productivity data to tell David what this all says about China’s economic outlook.Events and analysis referenced in this podcast:Read: China’s push for innovation is not lifting productivityRoundtable: One year on: Is the UK government boosting growth?Read: Fed independence not a concern for markets, yetRead: APAC Commercial Property Outlook: Values to fall as region’s markets struggle to recoverData: APAC Commercial Property