In today’s briefing:
- China’s Declining Population Growth, Labor Participation, and Aging Population
- Precious Perspectives Part 1: China’s Silver Scarcity Pushes Silver Higher
- Precious Perspectives Part 2: Recessionary Fears Fuel Upside Potential in Gold Silver Ratio
- ECB Steps Onto Obscured Path
- ECB Refi Rate 4.25% (consensus 4.25%) in Jun-24
- Switzerland Unemployment Rate 2.4% in May-24
China’s Declining Population Growth, Labor Participation, and Aging Population
- China’s total population declinied by 850K or 0.06% and 356K or 0.02% respectively in 2022 and 2023. Total population growth is projected to be negative in years to come.
- The negative population growth raises questions about China’s long-term economic growth prospects.
- This article addresses the impact of China’s demographic trends on medium- to long-term economic growth and draws comparisons from other Asian economies such as Japan and South Korea
Precious Perspectives Part 1: China’s Silver Scarcity Pushes Silver Higher
- SHFE silver premium over COMEX silver has escalated to 7%, exacerbated by falling SHFE silver inventories, indicating a deepening shortage in China.
- Surging demand from China’s rapidly growing solar industry and renewable data centers is deepening the global silver deficit, now projected to continue at record levels for a fourth year.
- The strong bullish outlook for silver suggests that the bullishness in silver prices is likely to continue in the near-term.
Precious Perspectives Part 2: Recessionary Fears Fuel Upside Potential in Gold Silver Ratio
- Continued strong gold demand from central banks, especially the People’s Bank of China, drives gold prices up despite high interest rates, challenging conventional expectations.
- Weakening economic indicators in the US, like falling job openings and PMI, increase likelihood of rate cuts, potentially elevating the Gold-Silver Ratio (GSR) even in a lower interest rate environment.
- Anticipating a recession in late 2024, the paper describes a strategic long stance on GSR, leveraging price divergence in gold and silver amid economic slowdown.
ECB Steps Onto Obscured Path
- The ECB cut its policy rates by 25bps in June as stability in its inflation forecast provided sufficient confidence of success for all except one policymaker.
- Recent resilience has left enough doubt for the ECB to resist signalling this step as being the first on an easing path. It needs data to clear the uncertainty obscuring the path.
- Cuts outside recessions are often reversed, and the ECB is prone to mistakes. However, we expect another ECB rate cut in September, contingent on the Fed cutting then too.
ECB Refi Rate 4.25% (consensus 4.25%) in Jun-24
- The ECB has cut key interest rates by 25 basis points, reflecting an improved inflation outlook and the effective transmission of previous rate hikes, maintaining restrictive financing conditions.
- Future interest rate decisions will be data-driven and flexible, based on ongoing assessments of inflation, economic data, and the strength of monetary policy transmission, without pre-committing to a specific rate path.
- Economic and financial risks, including geopolitical tensions and global trade dynamics, will influence the ECB’s policy adjustments to ensure the stability and effectiveness of monetary policy transmission.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
Switzerland Unemployment Rate 2.4% in May-24
- Switzerland’s unemployment rate rose to 2.4% in May 2024, indicating potential labour market weakness.
- Mixed economic indicators such as negative consumer confidence and contracting manufacturing activity were observed.
- Despite these challenges, modest GDP growth and robust retail sales were reported, suggesting underlying economic challenges.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
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