📈 Macro-News round-up

🇺🇸 The US PCE inflation rate released on Friday came in slightly below expectations, with core inflation coming in at 0.2% versus the expected 0.3%. This data, although insignificant, was the moral granddaddy of stock markets, which saw it as positive, as it allayed fears of tighter Fed policy.

📈 Stock markets responded accordingly. The SP500 regained the 5300 points, above which it is currently trading. The Nasdaq 100 rebounded above 18,500 points, currently trading at 18600. The US 2-year bond, which was almost at 5% yield, has fallen to 4.87%. The dollar DXY which last week conquered 105 points again, fell back to below 104.50 after the data. Gold continues to cool and appears to be making supports above $2300.

Today’s data:

🇯🇵 Japan: early this morning, Japan’s capital expenditure data came out weaker than expected. It was expected at 12.2% and we got 6.8%. This would indicate an economic slowdown in the world’s third largest economy. Let us not forget, that the first quarter growth figures for Japan this year gave – 0.5% growth. Meanwhile, its currency continues to weaken and is reaching worrying levels against the dollar, currently hovering above 157 USDJPY. On Thursday we will have a statement from one of the BoJ members, Nakamura.

🇨🇳 China: Caixin manufacturing PMIs come out slightly better than expected at 51.7, indicating economic expansion and setting a positive tone.

🇪🇺 Europe: Europe PMIs, with the exception of Spain and the UK, all come out below 50 worse than expected, indicating once again that the euro zone is in an economic slump.


⚠️ This week we will have US labour market data. This data is highly correlated to Fed policy. As we have explained in previous reports, the persistent inflation in the US is mostly driven by the employment-intensive service sector. Therefore, bad labour market data would be a relief for inflation, and therefore stock markets will respond in a bullish manner.

🌎 Geopolitics: 

🇮🇱 US President Biden laid out a three-phase Israeli proposal for a Gaza ceasefire including Israeli withdrawal and prisoner releases. Phase 1 includes a 6-week ceasefire, partial prisoner swap, and 600 aid trucks daily to Gaza. Phase 2 is a full prisoner exchange and permanent ceasefire beginning as negotiations continue. Phase 3 covers major Gaza reconstruction and return of remaining remains to families. Hamas responded positively. Netanyahu has said it is not a good deal, but Israel accepts it.  

🇺🇦 Ukraine, the business continues: Stoltenberg called for NATO members to spend €40 billion per year for Ukraine, giving up on a multi-year plan but ensuring long-term perspective. NATO members have spent around €40 billion annually since Russia’s attack, according to Stoltenberg. Renewing funding yearly risks unpredictability from changing governments’ willingness to support Ukraine long-term. Hungary has already signaled opting-out, and the US may see Trump return, potentially altering spending priorities. Details require discussions with finance ministers, but there is time before the July NATO summit decision.

🗓️ Weekly Calendar: 

🗓️ Monday:

🇯🇵 Japan: Capital Spending.
🇨🇳 China: Caixin Manufacturing PMI.
🇪🇺 Europe: Manufacturing PMI.
🇬🇧 UK: Manufacturing.
🇺🇸 US: Manufacturing PMI, ISM.

🗓️ Tuesday:

🇩🇪 Germany: Unemployment Rate.
🇧🇷 Brazil: GDP
🇺🇸 US: Factory Orders.

🗓️ Wednesday:

🇦🇺 Australia: GDP
🇨🇳 China: Caixing PMI Services.
🇪🇺 Europe: PMI services.
🇬🇧 UK: PMI Services.
🇺🇸 US: PMI services, ADP polls NF employment Change, ISM non-manufacturing prices.

🗓️ Thursday:

🇯🇵 Japan: BoJ member Nakamura speaks.
🇩🇪 Germany: Factory orders.
🇬🇧 UK: construction PMI.
🇪🇺 ECB: Interest Rate decision, Europarlament elections, Monetary policy statement, Lagarde Speaks.
🇺🇸 US: Initial Jobless Claims, Trade Balance.

🗓️ Friday:

🇬🇧 UK: House price index.
🇩🇪 Germany: Industrial production, Trade balance.
🇪🇺 Europe: GDP Q1, ECB Schnabel speaks.
🇺🇸 US: Average Hourly earnings, NFP, Unemployment Rate.
🇪🇺 Europe: Lagarde speaks.
🇨🇳 China: Trade Balance.