Macro-News round-up:

#MarketNews

  • EE.UU: BREAKINGNEWS, The employment market could turn the markets and the Fed around again. The US economy added 199,000 jobs in November 2023, surpassing the 150,000 added in October and exceeding market expectations of a 180,000 gain. Nonetheless, it marked the second consecutive month with job additions below the average monthly gain of 240,000 observed over the past year
  • Europe looking for new fiscal rules.

    France and Germany still differ on how to sustain investment when the budget deficit is above EU limits, and other countries, roughly in two camps behind Paris and Berlin, are wrangling over issues including the minimum pace of annual debt reduction.

    A reform of the rules, which underpin the euro currency by setting limits on government debt at 60% of GDP and for deficits at 3%, is necessary because a surge in public debt after the COVID-19 pandemic made the existing framework unrealistic.

    EU governments also have to find ways for the rules to allow for large public investment needed to fight climate change, a challenge the old system does not address.

    Meanwhile, The Consumer Price Index in Germany decreased 0.40% in November of 2023 over the previous month. Inflation rate decreased to 3.20% in November from 3.80% in October of 2023.
  • What to expect from the ECB next week?

    The ECB has already raised rates to everyone’s surprise, in July 2022, when the vast majority assume a dovish stance to the ECB, the ECB raised rates. The ECB has provided forward guidance on interest rates, indicating that rates will remain at their current levels for an extended period.

    However, this guidance is not as explicit as that of the Fed, and leaves room for interpretation. Moreover, the ECB has a single inflation target of “close to but below 2%”, which is lower than the Fed’s 2% target. This suggests that the ECB may be less inclined to adopt ultra-dovish policies.
  • Will the FED and BoE change the market perception next week?

    As they get ready to announce decisions next week, neither the Federal Reserve nor the Bank of England want to support openly the recent increase in rate cut expectations in financial markets. Let the market continue to believe in it, it is beneficial for the financial industry. Governor of Bank of England, Andrew Bailey said in recent days that he is pushing back “against assumptions that we’re talking about cutting interest rates”.

  • Japan: The BOJ’s Governor, Kazuo Ueda, met with Prime Minister Fumio Kishida to discuss monetary policy, and Ueda mentioned that the BOJ hopes to check whether wages will rise sustainably and whether higher wages will push up service prices. The BOJ Deputy Governor, Ryozo Himino, also spoke about the economic benefits of exiting the ultra-loose monetary policy, which fueled speculation about a possible pivot in the coming meeting December 18-19.

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