Recent market volatility has raised questions about the staying power of the rally for global assets that began in late-2023. A clear warning sign has yet to emerge, based on a set of ETF pairs that measure the broad trend via prices through Sep 18. But in some corners there are hints that the tide may be turning.
Macro Briefing: 19 September 2024
US government shutdown risk rises as House rejects temporary fund bill. The government needs a stopgap measure to prevent a partial shutdown when new budget year begins Oct. 1.
The Federal Reserve cut interest rates, reducing its target rate by 1/2-percentage point to a 4.75%-to-5.25% range. “We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation,” says Fed Chairman Powell.
Defying Recent Recession Warnings, Growth Likely To Prevail In Q3
The recent run of forecasts from some corners that a US recession is imminent, or possibly already underway, continue to look premature. Although it’s short-sighted to dismiss various risks that are lurking, which could imperil the expansion down the road, recent data continue to support the case that modest growth rolls on.
Macro Briefing: 18 September 2024
US retail sales rose in August, posting an unexpected increase vs. expectations for a loss. The slight 0.1% monthly advance follows July’s strong 1.0% increase. “The stronger than expected retail sales data for August suggest that, boosted by rapid wealth gains and falling energy prices, consumers continue to spend freely despite the labor market slowdown,” writes Capital Economics North America economist Olivia Cross wrote in a note to clients.
Desperately Seeking Yield: 17 September 2024
The beginning of the end for the current run of peak yields looks set to start tomorrow (Wed., Sep. 18) as the Federal Reserve is expected to roll out its first interest rate cut. On the eve of regime shift it’s timely to take stock of where we are with trailing payout rates across the major asset classes, based on a set of ETFs.
Macro Briefing: 17 September 2024
US economy is at an “important turning point,” says the top economic advisor in the White House. “Inflation is now back down close to pre-pandemic levels, and that means the focus needs to be on safeguarding the gains — the important gains — we’ve made in the labor market,” observes White House National Economic Advisor Lael Brainard.
New York Fed Manufacturing Index indicates a strong rebound in business activity for September. “Business activity grew in New York State for the first time in nearly a year, according to firms responding to the September 2024 Empire State Manufacturing Survey,” the bank reports. “New orders climbed, and shipments grew significantly.”
Bond Market Enjoys Solid Tailwind Ahead Of Fed Meeting
The Federal Reserve is expected to cut interest rates this week. The question is whether the bond market has fully priced in the start of policy easing?
Macro Briefing: 16 September 2024
A busy week of central bank decisions awaits in the days ahead, including the Federal Reserve’s expected announcement of a rate cut on Wed., Sep. 18. Central banks in Brazil, England, Norway and South Africa are also set to hold policy meetings this week. “We’re entering a cutting phase,” says John Bilton, global head of multi-asset strategy at JP Morgan Asset Management.
The US 10-year Treasury yield closed last week at 3.66%, near the lowest level since June 2023. The recent slide in the benchmark rate comes amid the consensus view that the Federal Reserve will cut interest rates on Wednesday (Sep. 18). Fed funds futures are estimating a coin toss between a 1/4-point vs. a 1/2-point reduction in the target rate.
Book Bits: 14 September 2024
● Punishing Putin: Inside the Global Economic War to Bring Down Russia
Stephanie Baker
Interview with author via Marketplace.org
Since the invasion of Ukraine, Russia has been cut off from much of the global economy, with over 20,000 sanctions and other restrictions in place, according to Stephanie Baker, an investigative reporter at Bloomberg News. Companies like McDonald’s and Starbucks have pulled out. A coalition of countries have agreed to a price cap for Russian oil in the hopes of reducing the country’s energy revenue. Never before has an economy the size of Russia’s been targeted by so many sanctions, but are those sanctions working? Baker, author of the new book “Punishing Putin: Inside the Global Economic War to Bring Down Russia,” says it depends on your definition of success.
US Q3 GDP Data Still Expected To Post Solid Growth
Today’s revised estimate of US economic activity for the upcoming third-quarter GDP report continues to point to a slower-but-still solid growth rate, based on the median nowcast for several estimates compiled by CapitalSpectator.com.