🌍 Macro-News round-up
#MarketNews
🇬🇧 UK: Governor Andrew Bailey stated on Thursday that the British economy is getting close to the stage where the Bank of England can begin lowering interest rates. “We’re not yet at the point where we can cut interest rates, but things are moving in the right direction.”
💼 The fact that not a single member of the Monetary Policy Committee (MPC) voted in favour of an increase was a first since September 2021 and illustrates how inflation has decreased from a peak of more than 11% in 2022 to 3.4% in the year ending in February.
💰 The BoE stated that rate cuts might not change the restrictive nature of monetary policy. Additionally, once again, the Bank of England also made reference to the labour market, explaining that it remained tight, as its unemployment rate remains below 4%, similar to the U.S. case, and believe that a tightening of the labour market will eventually cool wages and contain inflation. Obviously, the pound’s response has been to continue the USDGBP downtrend we discussed in our previous reports, currently trading around 1.2585 GBPUSD.
🛍️ Today, the core Retail Sales in UK resulted in better than expected numbers, 0.2% vs -0.1%.
🇨🇭 Switzerland: Neither FED nor ECB, the lead was taken by the Swiss National Bank, which surprisingly cut its interest rate by 25 basis points from 1.75%. Pushing the USDCHF higher, entering a technical kebab range from 0.8850 to just over the Swiss franc dollar parity, currently above 0.90.
💹 Equity: Apple lost more than 100 billion in market capitalization yesterday and trails a year-to-date drop of 10%. the reason is the Justice Department’s accusations of Apple violating antitrust law. on the other hand, it faces similar legal tensions in Europe, where regulators are investigating whether it is complying with the Digital Markets Act.
🇨🇳 China: The CSI300 fell 0.12% while the Hang Seng had a strong day, climbing 1.93%.
🇺🇸 Yesterday, the US PMIs were released. they continue to show economic strength, somewhat weaker in the services sector than in the manufacturing sector, but both above 50 points.
🇪🇺 However, for Europe, the French and German PMIs are still below 50. Of particular concern is the German manufacturing PMI, which has fallen to 41.6.
🇬🇧 The United Kingdom, which was supposed to collapse out of the European Union after Brexit, presents better PMIs, more similar to those of the United States, with a composite PMI above 50.
🇯🇵 Japan: On Wednesday, we learned that Japan’s export data improved considerably. On the other hand, the BoJ finally took the step of raising interest rates, although it also announced that it would continue to buy Japanese bonds by intervening in the market.
💱 Last night, Japan’s core inflation figure rose to 2.8% from 2% in the previous period, breaking the streak of declines. Unfortunately, for Japan, this means that the BoJ is going to have to continue its rate hike. We will see how they manage to maintain financial equilibrium and contain inflation simultaneously.
🌐 Geopolitics: In an interview with the French media, Le Parisienne. Macron seems to have admitted that he will not send troops to France. “Maybe at some point – I don’t want it, I won’t take the initiative – we will have to have operations on the ground, whatever they may be, to counter the Russian forces,”
💪 An article published in the Stretegic Culture Foundation suggests the idea of creating a hybrid army of mercenaries: The United States taking the risk and funding a private army composed of people from several countries would be the most plausible scenario. To be clear that this is not a NATO conflict, the proposal would still need to be prepared for the media and even Russia.
🇺🇸🇨🇳 On the other hand, far from resolving the Ukraine conflict, the Biden administration seems to be seeking to open an additional front with China. Yesterday, Admiral John Aquilino, head of the Indo-Pacific Command, was quoted in various media as saying that China’s military is preparing to invade Taiwan. Of course, these statements are accompanied by new U.S. weapons offers for Taiwan, thus opening up a new line of business for the world’s largest arms producer, “an endless war to feed the business”.
