๐Ÿ“ˆ Macro-News round-up:

๐Ÿ”” Today we will have the announcement of the ECB rate decision as well as the speech of its president Lagarde. Everyone expects it to maintain its record 4.0% rate, and ECB officials will probably reiterate that they want more proof that inflation is under control and that raising wages further won’t provide them an advantage. For months, sources have been telling Reuters that since the ECB will not have access to key wage data until May, it is unlikely to lower borrowing costs before its June 6 meeting.

๐Ÿ“‰ Nevertheless, this year, investors anticipate 91 basis points of reductions in the 4% deposit rate. The first step would be taken in June, and there will be multiple stages with one or two pauses in between.

๐Ÿ“Œ Important. Note the following, the inflation rate falls sharply in 2023, but since June in the US, and since October in Europe, the inflation rate has done nothing but sideways, even showing in some periods a slight rebound. This is what makes central banks so hesitant to cut rates. The latest published inflation rate in Europe is 2.6%. The November 2023 inflation rate was 2.4%. Sticky inflation.

๐Ÿ‡ฉ๐Ÿ‡ช Germany: Industrial orders in Germany fall by -11.3% against the expected -6%. Yet another worrying data which adds to the list of recession indicators in Germany.

๐Ÿ‡บ๐Ÿ‡ธ US: At the Wall Street Journal event on Wednesday, Minneapolis Federal Reserve Governor Neel Kashkari stated that he anticipates his forecast will reflect the same number of interest rate cuts (two), “or possibly one fewer,” when Fed officials present updated estimates at their meeting in mid-March.

๐Ÿ’ผ This week’s five Fed speakersโ€”among them Jerome Powellโ€”barely made an impression. Reiterating that the economy is robust, the Fed Chair is delaying action for the time being while they wait for additional information.

๐Ÿ“˜ The conclusions of the Federal Reserve’s Beige Book publication, yesterday, are along the same lines. They seem to insist that over 6 to 12 months economic activity is solid, indicating growth. At the same time, they also emphasised wage growth, which as we have said in previous reports, is probably the reason why the Fed is afraid to cut rates now.

๐Ÿ’ก It would be interesting to note at this point that Powell made a mysterious comment about the IA. He said that it had the capacity to augment or replace labour. Is he thinking that AI will generate an oversupply of jobs and solve their wage problem?

๐Ÿ‡ฏ๐Ÿ‡ต Japan: A Bank of Japan board member’s comments and salary data increased expectations that the central bank will hike interest rates this month, which caused government bonds to decline and Japanese bank shares to rise. Japan’s wage growth picked up speed at its quickest rate since June as the BOJ keeps a tight eye on whether rising wages contribute to inflation. People with knowledge of the situation claim that a number of government officials are in favour of raising interest rates in the near future, and central bank board member Junko Nakagawa stated that the country’s economy is gradually moving closer to the authority’s 2% price target.

๐Ÿ‡จ๐Ÿ‡ณ China: The trade balance sheet was published today. A positive figure that reduces fears of a global slowdown. Exports increased 7.1% YoY to $528.01 billion in January-February 2024, exceeding market estimates of a 1.9% increase and coming after a 2.3% gain in December 2023. This suggests that international commerce is beginning to rebound.

๐Ÿ“Š Market: Yesterday US stocks increased by roughly 0.5 percent yesterday. Chinese equities were not clear. The CSI 300 fell 0.41% while the Hang Seng increased 1.7%. While the 10Y yield dropped 5.1bp to 4.102%, the 2Y yield only decreased by 0.4 basis points. The EURUSD increased above 1.09. but lost them again some time later, now trading at 1.0895.

๐ŸŒ Geopolitics: Yesterday, a Russian missile struck port infrastructure in the Black Sea city of Odesa, narrowly missing the prime ministers of Greece and Ukraine by hundreds of meters