📈 Macro-News round-up:
#MarketNews
📉 On Monday, US markets lost more ground. Still, Chinese stocks were up on the day. The CSI 300 increased by 1.25% and the Hang Seng by 1.43%.
📊 Today, the US inflation data will be released. According to the Bloomberg consensus, the headline CPI index will rise by 0.4% MoM, leaving inflation at 3.1% YoY. To reduce core inflation from 3.9% to 3.7%, the core index should grow by a somewhat smaller 0.3% MoM. It goes without saying how important this data is, as it is almost the main variable for the Fed’s decision regarding the rate cut expected by the market.
💱 The Fed’s preferred measure of inflation, PCE inflation, was expected to average 2.2% this year and 2.0% in 2025 and 2026, per the poll. However, until at least 2026, other inflation indicators, such as the core PCE, core CPI, and consumer price index (CPI), continued to be over target.
💰 A larger majority of economists in the most recent Reuters poll predict that the U.S. Federal Reserve will lower its benchmark interest rate in June. Financial market traders are more in line with remarks made by Fed officials, with rate futures currently pricing for a first rate drop in June. The first cut would occur in March, and traders would then shift their bets to May.
🏦 Last week, Federal Reserve Chair Jerome Powell said Congress that the bank was “not far” from having enough confidence in falling inflation to cut interest rates. We will have some more clarifying clues for the next Fed meet on March 19-20. In the interim before the PCI data, US Treasury yields are stable and the dollar index is flat.
💼 In the other hand, the extremely competitive labour market that emerged during the epidemic may be beginning to revert to normal, as evidenced by the jobs report for February, which revealed that the jobless rate increased to 3.9% from 3.7% and that wage growth slowed month over month. Notably, the details of the jobs data indicate that the increase in the unemployment rate was caused by more people entering the workforce, which is normally an indication of confidence and strength in the economy.
🌍 Europe: Germany’s inflation rate met consensus in February 2024, falling from 2.90% in January to 2.50%. The UK’s unemployment rate surpassed the consensus estimate of 3.8% in January 2023, rising to 3.90% from 3.80% in December 2023.
💶 The ECB will decide whether to maintain the reserve requirements approved during the Covid era. The European Central Bank is expected to hold lenders’ reserve requirements at 1 per cent, according to a press report on Monday, a move that would provide relief for bank profitability. These measures, after all, are not unlike those implemented by the People’s Bank of China to alleviate the pressure on the markets from the real estate sector.
⛽ Ahead of OPEC’s monthly report and industry data on US stocks, traders in commodities saw an increase in oil prices. From a record high, gold began to drop. After breaking beyond that barrier on Monday for the first time, Bitcoin was trading just above $72,000.
🌍 Geopolitics: President Biden is entering at a dead end street. Most of his voters disapprove of US bellicose support for Israel. But, by not showing unconditional support for Israel, the Biden administration will have the Israeli lobby in the US against them, which will destabilise them in the elections. Meanwhile, the Israeli population is protesting against compulsory military service, especially the orthodox community.
🔥 On the other hand, another trouble spot seems to be opening up more and more every day. In northern Israel, Hezbollah guerrillas and the Israeli army are more and more openly at loggerheads. Yesterday, Hezbollah attacks overran the Golan Heights in retaliation for the Baalbek attack.
