📰 Macro-News round-up
📊 #MarketNews
🇺🇸 US: As predicted in our reports, following the announcement of strong economic statistics, all three main US indexes closed in the negative on Tuesday, and Treasury yields increased as investors became more concerned about the future trajectory of US interest rates.
🌍 The case of Europe is completely different. Its economy, with very poor results in recent months, has more reason than the United States to cut rates. However, the European Central Bank authorities seem to be considering two possible scenarios. One, that there is an improvement in global economic conditions influenced mainly by the United States, and thus preserve the joker of cutting rates for when the situation may require it more urgently, such as in a bear market. Option two would be that, given the low inflation already approaching 2%, to begin to release interest rates, facilitating an improvement in macroeconomic and credit conditions. Especially considering that it is also an election year in Europe, and they want a positive atmosphere.
🔮 Even in the absence of any rate changes, the meeting the following week may offer some fascinating glimpses into the ECB’s future plans. The market seems to be discounting a rate cut in June. In any case, if the rate cut happens, it will be gradual, possibly a 25 basis point quarterly cut. It is clear that the current war conflicts could be a catalyst for further increases in fuel prices, and this in turn would trigger a further pickup in inflation, forcing them to have to raise rates again. So they will be very cautious if they said they would cut rates.
🇪🇺 Europe: Germany’s inflation rate dropped from 2.50% in February 2024 to 2.20% in March. It was the lowest rate of inflation since May 2021 and was getting closer to the 2.0% target set by the European Central Bank. In March 2024, the CPI grew by 0.40% from the previous month.
💰 Commodities: Gold reaches new all-time highs once again. During yesterday’s session, it approached the $2,300 per ounce zone. Demand is especially strong from Asia, following the earthquake in Taiwan and fears of a tsunami. Some of the factors that seem to be fueling gold’s rise are the geopolitical risks between the war in Ukraine and the Middle East conflict, but also the growing doubts about how the Fed’s promised rate cut will be implemented.
🛢️ Oil: If during the last few days we have reported that attacks against Russian refineries by Ukrainian drones could be causing volatility in the crude oil market. Yesterday’s statements by the Iranian government, promising punishment for the attack of its consulate in Syria by the Israeli army, also increase the tension in the crude oil market. Remember that Iran years ago threatened to cut off crude oil export routes from the Strait of Hormuz if they were attacked. In addition to this, yesterday, the United States announced a larger than expected reduction in its crude oil inventories. Also, according to Bloomberg, Pemex Mexico has announced that it will reduce crude oil exports by 400,000 barrels per day. With respect to OPEC+, its members are expected to maintain limited oil production until the end of June, at least. Finally, we must not forget the demand side. The Chinese economy seems to have been positive for 2 months, but if it were to slow down, the fall in its demand for fuel could affect the global market, reducing the price of crude oil on international markets.
🌎 Geopolitics: The Russian Prosecutor General’s Office requests by letter to Cyprus, France, Germany and the United States to share the relevant information they have regarding the explosion of Nord Stream 2 or terrorist acts that occurred in Russia.
⚔️ With regard to the war in Ukraine, NATO and the European Union this week planning new steps. One of the measures is the creation of a 100 billion euro fund to finance the conflict in the future. Possibly, they are seeking to commit such a large sum of money anticipating that in a few months, they will no longer be able to count on the United States, given the imminent victory of Donald Trump, who has insisted that this war is motivated by the Biden administration and the “warmongers” that form it. If so, the key question is, will Europe be left alone after having been pushed by the U.S. to confront Russia? Before the conflict, Russia was the largest strategic partner of German-European industry. The U.S. political influence over Ukraine since 2014 and its insistence on NATO membership may have been determining factors behind the Russian invasion.
🔥 In the Middle East, Israel seems to be more and more openly at war against all its regional enemies. The frequency with which it carries out attacks in regions such as Lebanon or Syria, and against various paramilitary groups, possibly financed by Iran, makes it clear that the conflict is not only in Gaza. Iran has again vowed a retaliatory response to Israel’s bombing of its consulate in Syria.
