Economies

  • Powell buoyed by recent inflation data

    Federal Reserve Chair Jerome Powell stated that recent inflation data has increased confidence that price growth is moving towards the 2% target, noting progress and a focus on labour market cooling. On 11 July, government data showed a decline in the consumer price index and a year-over-year pace slowing to 3%, a positive sign for potential interest-rate cuts in 2024.

  • China growth comes in below expectations

    China's economy grew at a slower-than-expected annual rate of 4.7% in the last quarter, falling short of the 5.3% growth seen in the first quarter. The National Bureau of Statistics noted that progress this year has been challenging due to weak global economic momentum, persistent inflation, geopolitical conflicts, and insufficient domestic demand. Despite these challenges, the economy achieved a 5% growth rate in the first half of the year, matching…

  • US CPI comes in softer boosting confidence that target will be achieved

    The US Consumer Price Index (CPI) came in lower than expected, which is likely to bolster the Federal Reserve's confidence that inflation is on a sustainable path to the 2% target. This has increased the likelihood of a rate cut in September to 81.3%. June's CPI report was notably soft, with headline inflation falling 0.1% month-on-month, contrary to the predicted rise of 0.1%. Core CPI increased by only 0.1% MoM,…

  • Yields are stable ahead of Fed Chair Powell Testimony on Capitol Hill

    Treasury yields remained stable as investors awaited Federal Reserve Chair Jerome Powell's twice-yearly report on the economy to Capitol Hill. Powell is set to address the Senate Committee on Banking, Housing, and Urban Affairs at 10 a.m. Eastern on Tuesday, followed by the House Committee on Financial Services on Wednesday, where he is expected to face tough questions.

  • Jobless claims are creeping up and may influence interest rate policy.

    The latest US jobless claims data shows a slightly higher-than-expected 238,000 Americans filed for unemployment benefits in the week ending 15 June, indicating a potentially softening labour market. Although this figure is down from the previous week's total, the four-week moving average of claims remains elevated at 232,750, suggesting a labour market that's losing momentum.

  • UK inflation hits 2% target as election looms

    UK inflation for May dropped to the Bank of England's target of 2.0%, as reported by the Office for National Statistics, marking a decrease from 2.3% in April. This figure matched economists' forecasts, causing a slight rise in the sterling to $1.2732. Services inflation, a crucial indicator for the BOE, decreased to 5.7% from 5.9% in April, while core inflation, excluding certain volatile items, fell to 3.5% from 3.9%.

  • Fed likely to delay cuts further

    The US Federal Reserve is anticipated to maintain interest rates within the 5.25-5.5% range this Wednesday, suggesting that September may mark the earliest consideration for a rate cut. Market attention will be directed towards the updated dot plot, providing insights into individual members' perspectives on interest rate trajectories. In March, the Fed indicated a predominant view of three rate reductions for the year, with an additional three cuts expected in…

  • ECB set to deliver hawkish cut tomorrow.

    Tomorrow the ECB is likely to deliver a 25-bps cut – the first major advanced economy central bank to begin its cutting cycle. The cut is expected, with markets having priced in the cut from 4% to 3.75% for a few weeks now. However, forward guidance will be key here, with market participants focusing on any clues provided regarding future policy direction.

  • PCE rises largely in line with expectations

    Inflation in April rose as expected, with markets anxious about potential interest rate cuts, according to a key measure released Friday closely watched by the Federal Reserve. The core personal consumption expenditures (PCE) price index, excluding food and energy, increased 0.2% monthly and 2.8% annually, matching estimates. Including food and energy, PCE inflation was 2.7% annually and 0.3% monthly, also in line with forecasts. Fed officials prefer the PCE over…

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