📰 Macro-News round-up
#MarketNews
🔺 Last week was particularly interesting. Three members of the Federal Reserve in three separate statements alluded to interest rates, suggesting that they should be held or even raised until inflation slows. However, US stock markets seemed undeterred.
📈 The SP500 futures are over 5200 points and on track to reach the all-time high of 5400 points as of Friday’s Wall Street closing. It’s possible that two macroeconomic data factors sparked this optimistic surge. The US GDP grew at a slower rate than anticipated the next week, and non-farm payrolls and unemployment rates indicated a worsening of the labour market, despite Powell’s remarks discouraging the stock markets. Additionally, the University of Michigan consumer sentiment data on Friday showed a surprisingly sharp drop, data showed a considerably weaker reading of 67.4 in May, down from 77.2 in April and much below the 76.2 forecast, which, under normal circumstances, could crater stocks and bonds. The Fed need these subpar macroeconomic indicators in order to enable more affordable loans. Wall Street is again aware of this.
💡 For us, the message from the Fed is clear, only when the US economy shows signs of slowing will they have sufficient assurance that rates can be cut. And precisely this week has a significant importance, tomorrow we will know the PPI index (data that usually precedes future inflation), and on Wednesday we will know the CPI index, retail sales, the GDPNow leading growth indicator of the Atlanta Fed and we will have several statements of FOMC members. therefore, volatility in the markets may begin with Tuesday’s data.
🇬🇧 UK: The UK GDP unexpectedly increased on Friday, above consensus estimates by 0.4% to come in at 0.6% QoQ. The unexpected strength was mostly derived from business investment strength. Tomorrow UK will publish the average income index. A data that could shed more light not only on the state of private consumption, but also on potential future inflation.
🌐 Trade War: The EU and US are leading a global effort to boost semiconductor manufacturing, funneling $81 billion toward next-gen chips to counter China’s rise.
Biden will quadruple tariffs on Chinese electric vehicles, from 27.5% to 102.5% and increase levies on other key industries this week. The total review of China’s tariffs has taken nearly two years to complete.
📆 Top Earnings announcements:
Tuesday: Tencent, Home Depot.
Wednesday: Cisco System, Mitsubishi Financial Group.
Thursday: Walmart, Siemens Ag.
🌍 Geopolitics:
⚔️ Israel war: State Department spokesperson Blinken cautioned that if an operation fails to eliminate every Hamas fighter, it might lead to an insurrection and said Israel lacked a “credible plan” to safeguard the 1.4 million residents in Rafah. In a study, the Biden administration suggested that Israel’s use of weaponry supplied by the US during its Gaza campaign might have broken international law. Fearing significant civilian casualties in Rafah, Blinken supported delaying the deployment of bombs to Israel.
🇷🇺 Ukranie War: Sergei Shoigu, a longtime supporter, was replaced as defence minister by civilian economist Andrei Belousov, who specialises in economics and shares Putin’s vision of innovatively constructing a powerful Russian state. Putin wants Belousov to better integrate defence spending into the economy, as it represents an increasing portion of the GDP. Important military figures such as Gerasimov continue to serve, with Gerasimov now answering directly to Putin in his capacity as commander-in-chief.
Weekly Calendar:
📅 Monday:
💼 Euro Group Meeting.
📅 Tuesday:
🇬🇧 UK: Average Earning Index.
🇩🇪 Germany: CPI Index, ZEW Economic Sentiment.
🇺🇸 US: PPI, Core PPI, Fed Powell Speaks.
💰 Earnings announcements: Tencent, Home Depot.
📅 Wednesday:
🇫🇷 France: CPI Index.
🌍 Europe: GDP, Industrial Production.
🇺🇸 US: CPI Index, Core CPI, Retail Sales, Atlanta GDPNow indicator. FOMC Members Speaks.
💰 Earnings announcements: Cisco System, Mitsubishi Financial Group.
📅 Thursday:
🇯🇵 Japan: GDP, GDP Price Index, Industrial production.
🇺🇸 US: Housing Prices, Initial Jobless claims, Industrial production, FOMC member Speaks.
💰 Earnings announcements: Walmart, Siemens Ag.
📅 Friday:
🇨🇳 China: Fixed Assets Investment, Industrial production, Unemployment Rate.
🇺🇸 US: New House Price Index, Fed Wallet Speaks.
