In today’s briefing:
- The US Fed May Find It Hard NOT to Cut Rates in 2024
- 5 Things We Watch: CBs, Eurflation, OPEC, Ifo, Dutch Politics
- CX Daily: Zhongzhi Vice President Xie Among Those Probed Over Group’s Collapse
- EM by EM #32: Keep Calm & Carry Lira?
- Euroflation Nugget: Deep deflation tomorrow?
- UK Trend Inflation Problem
The US Fed May Find It Hard NOT to Cut Rates in 2024
- Risk asset markets are driven by rising Global Liquidity and falling inflation. Low inflation in 2024 will be sufficient to justify a significant change in direction by the US Fed
- Cyclical analysis points to a further sizeable improvement in Global Liquidity conditions over the next 12-18 months
- Investment regime is heading towards its next phase of Calmwhich favors equities and sees steeper yield curves ahead
5 Things We Watch: CBs, Eurflation, OPEC, Ifo, Dutch Politics
- We start off this week’s 5 Things We Watch by having a look at the reactions of CBs.
- This is followed by talking about EURflation and the upcoming OPEC meeting and we then move on to talking about the Ifo numbers released last week while lastly finishing off with Dutch politics.
- The Fed is the most plausible “pauser”.
CX Daily: Zhongzhi Vice President Xie Among Those Probed Over Group’s Collapse
- Zhongzhi / Exclusive: Zhongzhi vice president Xie among those probed over group’s collapse
Meeting /: Politburo weighs new rules to tighten party control over foreign affairs
GDP /: China to hit 5% GDP growth target for 2023, PBOC chief says
EM by EM #32: Keep Calm & Carry Lira?
- Main points upfront: Erdogan’s foreign policy decisions, including tighter economic integration with the UAE and other Arab states, are causing him to distance himself from the West.
- This could lead to ongoing security concerns within the NATO alliance, and he may seek concessions in exchange for compliance.
- Mehmet Simsek’s “Mission Normalization” is progressing slowly in a challenging environment.
Euroflation Nugget: Deep deflation tomorrow?
- Hello everyone, and welcome to a shorter piece on today’s regional CPI numbers, and what to expect for tomorrow’s print.
- Main conclusions up-front: HUUGE dovish surprises in German and Spanish inflation numbers today, smack dab at our forecast from yesterday, where we wrote about the potential of Black Friday sales shining through in this week’s inflation numbers.
- Germany and Spain combined amount to around 50% of the total EZ CPI basket, so a dovish surprise tomorrow is likely.
UK Trend Inflation Problem
- The BoE’s medium-term inflation forecasts have been grinding higher amid evidence of persistence from wages. Historical errors clustered in regimes lasting several years.
- Inflation proved more predictable in 2023, with spot surprises no longer skewed so heavily. Still, the trend exceeded other expectations, and we expect a 2024-25 repeat.
- Wage settlements are too high and reinforced by myopic government policy before the election. Second-round effects still delay rate cuts to 2025, in our view.
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