📰 Macro-News round-up
📊 #MarketNews
🇺🇸 US: Atlanta’s GDP Now indicator yesterday anticipated possible growth of 2.5% for Q1 2024. On the other hand, yesterday’s US jobless claims were slightly higher than expected, 221k vs. 213k.
💼 Today will undoubtedly hold the keys to the US labor market. Weak employment data will reinforce confidence in the Fed’s message. Equities will respond positively and bond yields will fall. However, if the employment data shows a strong labor market, we are likely to see the opposite scenario.
🇪🇺 Europe: The largest economy in Europe is still being negatively impacted by sluggish manufacturing demand, as seen by the fact that German industrial orders rose more slowly in February than anticipated. For this reason, the demand for German industrial goods is still trending lower.
🇫🇷 France: The manufacturing output in France increased by 0.9% in February, marking a recovery. But this recovery does not offset the extremely steep decline that occurred in January (-1.5%). Leading indicators point to a potential continuation of the industrial production recovery in the upcoming months. But the recovery is probably going to be gradual, taking several more months, and it would only help GDP growth in the second quarter.
🇬🇧 UK: Halifax, a mortgage institution, released data on Friday showing that British house prices dropped 1.0% in March, marking the first decline since September 2023. But according to BoE data released on Tuesday, February saw the most mortgage approvals since September 2022, as wage growth started to surpass inflation and the prospect of BoE rate reduction became more real. As we have stated numerous times in our earlier reports, the stickiness of certain underlying inflation indicators has caused financial markets to grow less sanguine about the extent and timing of rate decreases.
🇯🇵 Japan: Governor of the Bank of Japan Kazuo Ueda gave the strongest indication yet that another rate hike may be forthcoming when he predicted that inflation will accelerate from “summer towards autumn” as a result of massive wage increases driving up prices, as reported by the Asahi newspaper on Friday. Once again, these comments are crucial and predict that there will be a strong move in the currency. The Yen is at lows of over 30, and the USDJPY is at an exchange rate near highs not seen since April 1990 with USDJPY at 160.
💹 Market: The declines in the DXY dollar index and U.S. bond yields, prompted by Fed Chairman Gerome Powell’s remarks, appear to be over. the last few hours both assets have recovered slightly.
🌎 Geopolitics: The Trade War remains. Yellen’s visit addressed China’s massive export boom, particularly in the clean energy sector (think solar panels, batteries, and electric vehicles). In relation with Solar Panel market, she said: “Is currently leading to production capacity that significantly exceeds China’s domestic demand, as well as what the global market can bear,”. During Tesla’s most recent earnings call, CEO Elon Musk stated, “They [Chinese automakers] will pretty much demolish most other car companies in the world if there are no trade barriers established.”
🇮🇷 Iran: Last night, mysterious images of objects crossing the southern Iranian sky towards Iraq were shared on social networks and news networks. This raised fears that a promised military retaliation by Iran against Israel may be taking place. In fact, Bloomberg reported that GPS signals over Telaviv had been scrambled in the face of a possible Iranian attack and several warnings of possible attacks were issued over the weekend to the population.
🛢️ The price of crude oil rose, and still remains high. The SP500 was down considerably at the close, perhaps also influenced by these geopolitical factors, but it still remains above 5.200 points.
🇷🇺 Yesterday we heard comments by Sergei Lavrov, Russia’s top diplomat, that Russia’s relations with NATO have descended to a level of direct confrontation. A strange announcement by the U.S. Secretary surprised, assuring that Ukraine would become a member of NATO. Again, Lavrov’s words in this regard: “First, they wanted Ukraine in NATO because they claimed that Russia would never attack a NATO country. Now they say it’s exactly Russia’s plan: to attack NATO directly. There is no logic in their statements.”
🇮🇱 Finally, the United Nations said yesterday that “Gaza is the first genocide broadcast to the world”. Surprisingly, Biden said the humanitarian situation in Gaza is unacceptable, and warned Israel to fix the situation or face consequences. But in recent hours, according to some media reports, Israel has responded to the US that it “welcomes the clarification that the ceasefire is dependent on the release of hostages”.
