πŸ“° Macro-News round-up
#MarketNews

πŸ‡―πŸ‡΅ Japan: Last night, the PPI index came in at 0.9% annualized, up from 0.8% in the prior period. No major impact for the market. Still, increases in the PPI could mean higher inflation going forward, so we will keep a close eye on them. The yen remains in a very weak position against the dollar.

πŸ‡ͺπŸ‡Ί Europe: Spain published its inflation rate, which stood at 3.3% annualized, compared to 3.2% in the previous period. Germany reported an annualized inflation rate of 2.2%. In addition, its ZEW economic confidence indicator showed an improvement in economic sentiment, coming in at 47.1 versus 42.9 previously and improving expectations.

πŸ‡¬πŸ‡§ UK: Employment data shows positivity. Although employment changes remain negative, indicating job destruction, they have turned out to be better than expected, falling -177k versus expectations of -215k. On the other hand, the unemployment rate remains at 4.3%, in line with expectations and slightly higher than the previous period of 4.2%.

πŸ’Ό Today, Phil Evans, senior official at Bank of England, gave a few hints about the central bank’s position: β€œServices inflation appears to have peaked. The labor market is easing. Wage growth data indicate a small decline in Q1, but rates remain above the 2% inflation target.”

πŸ’° The data release also left the UK median income index growing by 5.7%, the same amount as in the previous period. A drop to 5.3% had been expected. This data would be negative as wage pressure is the BoE’s main fear that could keep inflationary pressure for longer.

πŸ—£οΈ The BoE believes it is making good progress in bringing CPI back to target, but there is still work to be done on inflation persistence. However, it sends a message of hope, as they admit that rate cuts could be considered for the summer if the data improves.

πŸ‡ΊπŸ‡Έ US: In any case, the highlight of the day will undoubtedly be the US inflation data and Jerome Powell’s subsequent speech. Both the dollar and bond yields remain relatively calm compared to the previous week, where they had some upward movements. However, it is precisely these assets that are likely to be most sensitive to today’s data, along with equities, SP500 remains cheerfully close to 5250 points, 150 points away from all-time highs.

🌍 Geopolitics: 

πŸ‡¬πŸ‡§ Britain’s opposition Labour Party affirmed an “ironclad” commitment to Ukraine during a visit to Kyiv by its foreign and defence chiefs. Labour polls ahead of the Conservatives in an expected national election, but Healey said there would be no change in UK support for Ukraine under a new government. Conservative PM Sunak has increased UK aid and pledged to raise defense spending to 2.5% of GDP by 2030, which Labour matches. Lammy also visited Washington recently as the US holds midterm elections pitting Biden against Trump.

πŸ€” Once again, it seems that Europe’s politicians have no plan B in the event of a possible victory by Trump, who has assured that, if he wins the election, he will put an end to the war in Ukraine, leaving Europe’s warmongers alone to finance this war. Trump is number one in the polls, so something will have to happen for him not to win the election, or he will ruin the already closed budgets for the Ukrainian war.

πŸ‡ΊπŸ‡¦ On the other hand, US Secretary of State Antony Blinken arrived in Kyiv. Talks on a US-Ukraine security agreement are in final stages ahead of the July NATO summit, while Ukraine also seeks long-term commitments from allies. Economic and political reforms will pave the way for Ukraine’s EU and NATO aspirations, though individual security agreements are a nearer-term focus.

πŸ—³οΈ Let us remind that Zelensky will cease to be, according to the Ukrainian law, the president this May. But the Ukrainian government cancelled the elections. So we cannot know whether the Ukrainian people approve of Zelensky’s performance or not. Corruption has been a longstanding issue in Ukraine, with Transparency International ranking the country at 122 out of 180 countries in its Corruption Perceptions Index before Russia’s full-scale invasion on February 24 last year. CBS made a documentary in which it claimed that only 30% of the aid to Ukraine reached the front lines of the war.

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