πŸ“ˆ Macro-News round-up

MarketNews

πŸŽ™οΈ This afternoon we will have Powell’s speech. It will give some more clues as to where the markets are going, discounting those rate cuts. The most recent message is that they are in no hurry to do it, why did they announce it in December then?

πŸ“‰ The US equities markets are starting to exhibit signs of trepidation. Yesterday saw 1.65% declines on the NASDAQ and 1.02% declines on the S&P 500. US equities futures point to a modest increase at the opening of today.

πŸ“Š In any case, nervousness will be on the rise as we await the final February US jobs data with the NFP and unemployment rate. Bad data is eagerly awaited to underpin the rate cut talk. If positive, it will sow more speculation about when to start cutting rates. Job postings on the JOLTS may offer additional, albeit retroactive, data regarding the status of the US labour market.

πŸ’Ό The secret that is likely to cause problems within the Federal Reserve is the persistence of high service inflation as a result of the tight labour market and the ensuing increase in labour costs. As a result, inflation is not declining in the direction of the 2% target. This suggests that the Fed must maintain a strict monetary policy in order to weaken the labour market and relieve wage pressure.

🌍 Europe

πŸ‡ͺπŸ‡Ί In Europe we will have tomorrow the words of the president of the ECB. Although a rate easing is more urgently needed in Europe, as it is in clear recession, there are factors that could prevent this rate cut from taking place.

πŸ’Ά While the inflation of goods has virtually disappeared, the inflation of services is still too high. The labor-intensive nature of services and the extremely tight labour markets, where wages are rising faster than prices, constitute the problem. The UK, the Eurozone, and the US all exhibit these tendencies.

πŸ’± The cost of non-energy industrial items increased by 0.3% from the previous month and by just 1.6% from a year ago. In the meantime, service costs increased by 0.8% from the previous month and 3.9% from a year ago. The trouble is in services.

πŸ‡©πŸ‡ͺ Germany

πŸ“ˆ Finally good news. Germany’s struggling economy received a positive boost as exports surged. In January, foreign sales increased by 6.3%, surpassing all estimates in a Bloomberg survey. This significant rise in exports suggests a potential easing of the industrial weakness that has been impacting Europe’s largest economy.

πŸ‡¬πŸ‡§ UK

πŸ—οΈ This economy also seems to be showing positive signs. Construction PMIs rise to 49.7, down but clearly recovering from 45 in Sep 2023 and 48.8 last month.

πŸ‡¨πŸ‡³ China

πŸ’° Investors were eagerly following China’s National People’s Congress, the country’s rubber-stamp parliament that sets economic goals for the upcoming year, as it convenes annually on Tuesday. The country intends to create more than 12 million new urban jobs, therefore a 5.5% unemployment rate and a GDP growth target of “around 5%” (with a CPI of roughly 3%) were stated.

πŸ“‰ Despite certain indicators of a slowdown in the Chinese economy, open signs of concern from its authorities, launching fiscal and monetary stimulus plans and the delicate situation of the real estate sector show that investment funds are still interested in China.

πŸ“ˆ Nevertheless, yesterday’s Chinese stocks were rather erratic. The CSI 300 managed to gain 0.7% as the Hang Seng dropped 2.61%.

🌐 Geopolitics

βš”οΈ In an effort to present a “unified front” and develop practical ideas to strengthen support for Kyiv, France has invited NATO’s secretary general, as well as Ukraine’s principal allies’ foreign and defence ministers, to take part in a video conference on Thursday.

πŸ•΅οΈβ€β™‚οΈ Sergei Naryshkin, chief of Russia’s Foreign Intelligence Service (SVR), was questioned over Macron’s proposal to send soldiers to Ukraine on National TV: β€œThis shows the high degree of political irresponsibility of Europe’s leaders today, in this case, the president of France”.

πŸ’¬ Macron emphasised that “we mustn’t be cowards” during his speech to the French community in Prague yesterday, drawing a comparison to the USSR era

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