In today’s briefing:
- India Politics: Setback for Modi Heralds Era of Uncertain Coalition Politics
- Is that It? Commodity Bull Market Over?
- NDA (Not BJP) Wins 3rd Consecutive Term; Economic Reform Will Still Gain
- OPEC’s Hint at Easing Production Cuts Sends Oil Prices Tanking
- Inflation Synchronisation
- Philippines CPI Inflation 3.9% y-o-y (consensus 4.0%) in May-24
- CX Daily: Chinese Lithium Giant’s Chile Headache Telling of Growing Global Resource Protectionism
- EM Watch: The China bet and the copper story are both old hat by now
- Canada Policy Interest Rate 4.75% (consensus 4.75%) in Jun-24
India Politics: Setback for Modi Heralds Era of Uncertain Coalition Politics
- The ruling BJP suffered major losses in the recent elections. It fell short of an overall majority and will have to rely on regional partners to form the next government.
- Consolidation of the anti-BJP vote under the aegis of the INDIA coalition delivered dividends, but voters also were not enthused by Modi’s economic and social campaign rhetoric.
- Expect short-term uncertainty as the major blocs attempt to cobble together parliamentary majorities. But more political checks and balances would be good for India.
Is that It? Commodity Bull Market Over?
- Recent signs of economic weakness in the US is a believable narrative for the current weakness
- OPEC + announcement on increasing production adds to the noise
- Weakness spreads from the energy sector to other commodity sectors
NDA (Not BJP) Wins 3rd Consecutive Term; Economic Reform Will Still Gain
- The National Democratic Alliance (NDA) led by PM Narendra Modi won its 3rd consecutive parliamentary majority (293 seats) although BJP fell short of a majority (unlike in 2014 and 2019).
- Modi will take office on Friday, but will be dependent on the 16 and 12 MPs of Chandrababu Naidu’s TDP and Nitish Kumar’s JD(U) respectively, CMs of Andhra and Bihar.
- Naidu is an economic reformer, who’s likely to support labour-market reform and privatisation. BJP’s social agenda (UCC, single nationwide election) will need to be shelved, but economic reform will advance.
OPEC’s Hint at Easing Production Cuts Sends Oil Prices Tanking
- OPEC+ decided to extend production cuts to the end of 2025. It also plans to ease voluntary output cuts starting this October.
- Easing hints sent oil prices tanking, shedding 5% over two days. Weak demand and ample supply thanks to overproduction by OPEC+ members lend little price support.
- Summer driving season will ramp up gasoline demand. Weather might dampen demand, but panic buying will more than offset the demand pullback.
Inflation Synchronisation
- The resilience of US inflation relative to the UK and EA has raised talk of decoupling and is feeding monetary policy divergence this summer.
- Price changes are unusually synchronised, and the US looks more likely to be ahead of Europe than breaking away, limiting the potential for sustained differences.
- Correlations remain high across spectral frequencies. A temporary decoupling is possible but would be a generational event that we doubt the fundamentals will justify.
Philippines CPI Inflation 3.9% y-o-y (consensus 4.0%) in May-24
- Philippine CPI inflation in May 2024 reached 3.9% year-on-year, the highest since November 2023, but slightly below the 4.0% consensus and the historic average, indicating moderated inflationary pressures.
- Despite the rising headline rate, core inflation slowed to 3.1%.
- Producer Price Index (PPI) inflation contracted by -0.77% in April 2024, suggesting that reduced upstream cost pressures may temper future CPI inflation increases.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
CX Daily: Chinese Lithium Giant’s Chile Headache Telling of Growing Global Resource Protectionism
- Lithium / In Depth: Chinese lithium giant’s Chile headache telling of growing global resource protectionism
- Ukraine /Beijing rebuts claim it is pressuring countries to skip Ukraine peace summit
- Pension /In Depth: China’s pension finance push falls on deaf ears
EM Watch: The China bet and the copper story are both old hat by now
- Welcome to our weekly EM editorial where we travel across the liquid EM markets in the context of recent developments in USD markets.
- ISM Services jumped back to 53.8—time to put that recession chatter to bed for a few months again?
- Bloomberg’s latest alarmist piece on “business employment dynamics” showing a net job loss in Q3 of last year is probably the worst analysis I have read in a while.
Canada Policy Interest Rate 4.75% (consensus 4.75%) in Jun-24
- The Bank of Canada reduced its policy interest rate by 25 basis points to 4.75%, aligning with the economic consensus, driven by increased confidence in achieving the 2% inflation target.
- Economic growth resumed in Canada with a 1.7% GDP increase in Q1 2024, while CPI inflation eased to 2.7%, supported by declining core inflation measures and narrower price increase breadth across CPI components.
- The Bank will closely monitor core inflation, demand-supply balance, and wage dynamics, with the potential for further rate cuts if inflation continues to ease and confidence in reaching the 2% target solidifies, balanced against the risk of prematurely loosening monetary policy.
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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