Daily Brief Macro: Business Cycle Watch: Why Sweden’s Resurging Momentum is a Must Watch and more

• In this brief update on the business cycle, we will present a comprehensive overview of the current economic situation in Sweden.
• The Riksbank initiated its first rate cut in May, and we anticipate additional cuts throughout the autumn.
• This makes Sweden an ideal “live-studio” for observing the effects of early rate cuts on the economic cycle.

• Insurers / In Depth: Electric cars are draining the batteries of China’s insurers
• Plenum /Plenum Explained: China to combat cross-border corruption, improve constitutional review
• Personnel /: Communist Party creates financial graft-busting committee

• Credit spreads have traded in a tight range despite various market events
• High yield spreads have tightened throughout the month
• Macro factors like growth, inflation, and Fed policies are more important for credit markets than the political environment

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• Headline CPI rose 1.33%MoM in Jun’24, because of a 3.17%MoM spike in food CPI. Consequently, headline CPI rose 5.08%YoY, driven by food inflation of 9.36%YoY.
• Although core inflation was at 3.1%YoY in May-Jun’24, India targets headline inflation, not core. Vegetable inflation (+29.3%YoY) remained the main culprit pushing up headline inflation. Fiscal solutions will take time.  
• Headline CPI inflation is likely to stay close to 5%YoY in Jul-Sep’24 (vs earlier expectations of it abating below 4%YoY). The first rate cut is therefore unlikely before Dec’24. 

• The lack of specific stimulus from China’s 3rd plenary meeting and minor rate cuts led to a 2.5% decline in iron ore prices, highlighting market disappointment.
• Despite a 13.7% MoM increase in iron ore imports, market concerns arise from stockpile accumulation rather than domestic consumption, suggesting potential future import slowdown.
• SGX Iron Ore options showed a bearish trend with a weekly volume put/call ratio of 2.1 and notable put option increases for September and October expiries, indicating market pessimism.

• Business executives blame regulations for hindering innovation and making products more expensive
• Supreme Court overturned Chevron deference, giving businesses more power to challenge regulations
• The end of Chevron rule may lead to confusion and legal challenges for businesses in regulated industries

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• The PMIs proved surprisingly resilient in the flash releases for July, especially in the US where its already high level pushed up further rather than converge down to its peers.
• Residual seasonality should be depressing the activity data, as appears to have occurred in the EA. Other US data softened, including the ISM, leaving the PMI as an outlier.
• Central banks seem set to conclude that policy is still tight amid broader softening signals. Indeed, we still expect the Fed to start a short rate-cutting cycle in September.

• Southern Copper (SCCO US) posted a 6% EBITDA beat and a 17% EPS beat buoyed by higher pricing of copper and by-products
• Sales/EBITDA/Profit increased by 35.5%/61%/72% YoY. It also guided a positive outlook for copper, highlighting a tightening of the physical market boding well for future quarters. 
• The board paid a 1.20 USD/share quarterly dividend in 50:50 scrip/cash. It will probably continue this practice, considering the elevated capex/ debt repayment of 500 mn USD in April 2025.