πŸ“° Macro-News round-up:

MarketNews

πŸ“ˆ EE.UU: Non-farm payrolls increased by 275,000, significantly more than the predicted growth of 200,000. The net effect was, however, significantly less because the 167,000 data points from the preceding two months had been revised downward. Because there were 334,000 more unemployed people, the unemployment rate increased from 3.7% to 3.9%. While the average annual hourly wage growth rate decreased by 0.1 percentage points to 4.3% YoY, the average hourly wage rate only increased by 0.1%.

πŸ“‰ Nevertheless, the labor market remains strong. This is probably why the markets reacted negatively to these results. The NASDAQ plummeted 1.16 percent, while the S&P 500 dipped 0.65%. Chinese stocks performed better on Friday, with increases seen in the CSI 300 and the Hang Seng.

πŸ’΅ Interestingly, after Friday’s data, the logical weakening of the dollar DXY, as well as the drop in US bond yields, seemed to stop and started to recover from then until today. This behavior would indicate, once again, that it does not yet seem very clear that a rate cut will take place in the coming months.

πŸ’Ό For as we have already said, poor labor market results would be positive for the stock market, as they would imply a clear determination to cut rates. As long as the unemployment rate does not rise significantly, the Fed will not have full confidence in a decline in inflation, which has been stagnant since November. Even some top analysts such as Larry Summers seem to be on the same line that we have been defending for some time. According to Summers, there is a good likelihood that there won’t be any rate reduction this year and that the Fed is “way off” in their predictions of neutral rates. In any case, tomorrow there will be more data in this regard, because the US inflation rate will be published.

πŸ‡¨πŸ‡³ China: China’s inflation rate released over the weekend, monstered higher than expected inflation levels, inflation in February rose to 1% the 0.7 expected. The annual came in at 0.7% versus the expected 0.3%. However, the PPI rate still came out negative at -2.7%. At the very least, these results alleviate the fears of deflation that we have had since 2023.

🏒 The housing minister of China stated during a news conference that real estate enterprises that are “seriously insolvent and have lost their operating capabilities” need to file for bankruptcy and restructure. His comments coincide with the fact that China’s real estate industry is still experiencing a liquidity crisis, as large real estate companies are missing or postponing loan payments as a result of Beijing’s crackdown on their high-leverage debt.

πŸ‡―πŸ‡΅ Japan: Strong capex helped Japan’s economy escape recession, and Q4 GDP was revised up to a modest growth. Despite being revised upward to prevent a technical recession, Japan’s GDP for the fourth quarter fell short of market estimates. The preliminary -0.1% GDP for Japan’s fourth quarter of 2023 was revised up to 0.1% quarter-on-quarter seasonally adjusted. Although the nation escaped a technical recession, today’s report was below the 0.3% market consensus.

🌍 Geopolitics: over the weekend, Pope Francis called for negotiations to end the war with Russia. However, Ukraine rejected what could be considered as an offer of mediation by the Pope. Foreign Minister Dmytro Kuleba even made references to the role of Pope Pius XII for his neutrality towards the Nazis during World War II. Paradoxical, considering that part of the Ukrainian army carries symbols of the same ideology.

🀝 Following talks with his Ukrainian counterpart Volodymyr Zelenskyy in Istanbul on Friday, President Recep Tayyip Erdoğan declared that Turkey is prepared to organise a conference between Russia and Ukraine to end the war. It should be recalled that it was Turkey that negotiated the Black Sea agreement which succeeded in lifting the Russian blockade on Ukrainian grain exports.

πŸ•ŠοΈ For his part, Zelenski calls a peace meeting in Switzerland, but excludes Russia from that meeting. In fact he said, “We don’t see how you can invite people who block, destroy, and kill everything.”

❗ Once again let us recall, that the peace proposal offered by Russia to Ukraine in April 2022 included the withdrawal from the Ukrainian territories. This proposal was accepted by Ukraine, but later rejected under pressure from the British Prime Minister.

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