Macro This week, risk assets came under pressure as Wednesday’s CPI report exceeded expectations, marking 3rd increase in a row. Since the FED is facing three reports now, it will be easier to argue for the rate cuts before the fall if significant CPI improvements are in the upcoming April and May reports. The increases, however, came from the ‘stubborn’ components such as shelter and auto insurance, while the median…

Macro The US labour market remains very strong, with this week’s payroll report reflecting 303,000 jobs added in March (vs 214k estimated), with the unemployment rate and average hourly earnings (MoM) as expected at 3.8% and 0.3%, respectively. Such a report suggested that the economy is still booming and that in this economic environment, the neutral rate of interest is much higher than it used to be in the recent…

Macro The FED evaluates the optimal inflation rate and the policy path to achieve it. It is trying to prioritize the labour market over the noisy inflation data, as it didn’t change its December projections and committed to 3 rate cuts over the remaining 6 meetings this year. This is despite its now forecast of more inflation this year and next year and more growth this year and next year.…

Macro Last week, we discussed hot payroll numbers with cool wages and a strong but perhaps moderating economy. This week, we have received another hotter-than-expected inflation print, but investors still expect three rate cuts this year, with the first one starting in either June or July. As the outlook on the US economy is relatively stable from last week, it’s worth discussing two important but contrasting emerging markets: India and…

Macro On Friday, we had the latest US job numbers with a downward revision for February to 275k (ahead of the 200k estimate). However, the unemployment rate jumped to 3.9% (expected 3.7%), a new two-year high. Average hourly earnings increased by just 0.1% MoM or 4.3% YoY. These numbers indicate that the US labour market remains resilient, but it started to moderate and did not fundamentally change the picture of…

Macro The US economy is not slowing down, and most point to the increases in budget deficit and fiscal stimulus from debt overlay, which kept going for the last four years. Some go as far as to say that since the pandemic, the government is spending so much money that it’s hard to have a recession. The US debt to GDP ratio is approaching 125%, and at the current pace,…