Week 31

Macro This week’s macro focus was on U.S. unemployment, non-farm payrolls, and the impact of the Bank of Japan’s decision to hike rates to 0.25%, covered in the rates segment. Let’s start with the key numbers for the U.S. labour market: To put those numbers in context, according to the FED’s Statement of Economic Projections, the neutral employment rate is 4.1%. Given the Fed’s tight policy stance, unemployment is expected…

Week 30

Macro On Thursday, the Bureau of Economic Analysis confirmed that the U.S. economy grew 2.8% in Q2. This strong growth surpassed expectations of 2% and Q1 growth of 1.4%. At first glance, it confirms sustainably strong demand and consumer resilience. However, after analyzing underlying drivers, this result looks less impressive. Q2 growth mainly came from 3, not very desirable areas: Growth looks even less impressive when looking at “Real final…

Week 29

Macro FED’s preferred inflation gauge – Core PCE is expected to end the year at 2.6%. J. Powell said 3 inflation prints from the second quarter added confidence that the inflation rate is moving toward the FED’s target. As inflation came down better than FOMC expected, it is no longer a major concern, allowing the FED to have a more balanced focus on their dual-mandate view. Powell explicitly stated that…

Week 28

Macro PPI came slightly hotter than expected. However, the Consumer Price Index (CPI) for June 2024 reported an annual inflation rate of 3.0%, indicating continued moderation from the previous months​. While food prices increased by 2.2%, energy prices saw mixed trends, with a decline in gasoline prices by 2.5% but an increase in electricity and natural gas prices by 4.4% and 3.7%, respectively. Consumer spending has been robust, driven by…

Week 27

Macro Friday’s payrolls show gains of 206k (vs. 188k estimate), a touch stronger than 190k expected. Cyclical employment has only risen by 55k, as 70k of the increase comes from government jobs and 82k from healthcare and private assistance. However, May and April’s data were revised significantly by a combined 111k jobs. The job growth was initially exaggerated as the business failures and closures were not fully captured in the…

Week 26

Macro Core PCE (Personal Consumption Expenditure, which strips out volatile food and energy items) rose by just 0.08% in May, the least since late 2020. Wages rose by 0.7% and real disposable income by 0.5%, while savings rates rose by 3.9%. The economy is normalizing with a balanced job market, persistent growth and moderating inflation. This result may provide affirmation that inflation is moving in the right direction and that the…