In today’s briefing:
- Hong Kong: A Tale of Two Markets and When to Re-Enter
- Chinese Momentum: Driving Markets or a Crowded Consensus?
- Rate-Cutting Agenda Stays, Growth Buoyed by Massive Fiscal Stimulus
- Fed Snap (March 20 Meeting): Current & Future Takeaways
- United States Economy – Quarterly Macro Note
- CX Daily: Local Governments Struggle To Tackle Mountain Of Hidden Debt
- Norges Bank Policy Rate 4.5% (consensus 4.5%) in Mar-24
- BoE Hawks Read the Writing on the Wall
- Swiss National Bank Policy Rate 1.5% (consensus 1.75%) in Mar-24
- Greek Economy – February 21, 2024
Hong Kong: A Tale of Two Markets and When to Re-Enter
- The bad news is that Hong Kong will not have a V-Shaped recovery which will keep market sentiment subdued
- The good news is that Hong Kong will not have a V-Shaped recovery which will contribute to a reduction in overall market volatility
- After an epic bear market, Hong Kong will enter a secular bull market this year
Chinese Momentum: Driving Markets or a Crowded Consensus?
- China’s government is targeting an economic expansion of approximately 5% again this year.
- A challenging objective considering the myriad of challenges facing the world’s second-largest economy.
- These challenges include weak consumer spending, a real estate sector in turmoil, efforts by the US to limit its technological advancements, unprecedented youth unemployment rates, and significant debt levels among local governments.
Rate-Cutting Agenda Stays, Growth Buoyed by Massive Fiscal Stimulus
- The exceptional Covid-induced monetary and fiscal stimulus is being wound down, but not fast enough. Fiscal deficits averaged 10% of GDP for 4 years, far larger and longer than 2009-11.
- QT was abandoned in Jul’23, and M2 has contracted at a modest pace. Upside growth surprises are thus likely to continue, and will require Q2CY24 M2 to decline more sharply.
- Once core CPE inflation abates below 2.5%YoY (likely Jun’24) the first 25bp rate cut will occur at the Jul’24 FOMC, then similar cuts in Sep’24 and Dec’24. Benign for markets.
Fed Snap (March 20 Meeting): Current & Future Takeaways
- Financial markets reacted partly to Chair Powell’s presser and the updated projections
- The new median dot, while still anticipating three rate cuts in 2024, shows a somewhat shallower Fed easing path in 2025 and 2026
- The current market implied odds, though fluid and unsettled, repriced aggressively following the March meeting
United States Economy – Quarterly Macro Note
- In 2023, the United States economy registered robust growth, with a Gross Domestic Product increase of 3.3% in the fourth quarter, resulting in an overall annual growth rate of 3.1%.
- This expansion was mainly driven by a 2.8% increase in consumer spending, despite the prevailing challenges caused by elevated interest rates, persistent inflation, and looming recession fears.
- The positive momentum entering the current year is bolstered by carry-over effects from the preceding year, suggesting a continuation of economic expansion.
CX Daily: Local Governments Struggle To Tackle Mountain Of Hidden Debt
- Debt / In Depth: Local governments struggle to tackle mountain of hidden debt
- Guizhou / China graft busters launch probes into regional officials linked to debt dispute
- Loans /China’s new loans to nonbanking institutions hit nine-year high
Norges Bank Policy Rate 4.5% (consensus 4.5%) in Mar-24
- The Norges Bank decided to keep the policy rate at 4.5% to balance inflation control and economic growth amid slowing but above-target inflation and modest economic activity.
- Inflation is now expected to decelerate somewhat faster than anticipated, economic growth is more subdued in the first half of 2024 before improving, while unemployment rises slightly less than previously expected.
- The Committee is ready to adjust the policy rate in response to evolving economic and inflationary trends. It aims to steer inflation towards the 2% target by the end of 2027 while navigating prevailing uncertainties.
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BoE Hawks Read the Writing on the Wall
- The BoE held the Bank rate at 5.25%, with only one dissent for a cut as the two hawks stopped pushing for a hike that was not going to happen, given broad resistance.
- An extended period of restrictive policy is still envisaged, with persistent inflationary pressures rather than the spot CPI rate guiding when rate cuts begin.
- Wage and service inflation is not seen returning to target sufficiently rapidly yet, and we expect that problem to persist, leaving our call for the first cut back in Feb-25.
Swiss National Bank Policy Rate 1.5% (consensus 1.75%) in Mar-24
- The SNB’s unexpected rate cut to 1.5% reflects a strategic shift, influenced by sustained below-target inflation and the effectiveness of previous monetary tightening, underscoring the bank’s commitment to price stability and economic support.
- Future policy decisions will hinge on inflation dynamics, global economic conditions, and domestic economic health. The SNB is poised to adjust its stance in response to evolving economic indicators and inflation forecasts.
- The SNB’s approach balances supporting economic growth and ensuring price stability, indicating a readiness to adapt policy measures in the face of heightened economic uncertainties and shifting global dynamics.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
Greek Economy – February 21, 2024
- The 2024 projections for Greece show a slight rise in its GDP growth, as Real GDP would reach €199.205 billion, reflecting a 2.15% increase compared to the previous year’s projection of €195.019 billion.
- In overall looking at the past and current year, the OECD, IMF, and EU have forecasted average growth rates of 2.29% for 2023 and 2.15% for 2024.
- The projections for Public Debt indicating a decline from €367,842 mn 2023 to €363,454 mn in 2024.
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