In today’s briefing:
- The Week At A Glance: ISMs, NFP, FOMC & QRA to put even more pressure on USD rates?
- Energy Cable: The recipe for another summer of exploding energy prices (in Europe)
- Great Game – Could Biden Have Even More to Fear from Trump’s Trial?
- EA Core Inflation Softens By Slightly Less
- Indonesia: Prabowo Risk Beginning to Hurt IDR, Requiring Tighter Money
- Macro Daily – MX Inflation 1h-Apr
- Colombia Policy Interest Rate 11.75% (consensus 11.75%) in Apr-24
- CX Daily: How Do the West’s Concerns About China’s Overcapacity Stack Up?
The Week At A Glance: ISMs, NFP, FOMC & QRA to put even more pressure on USD rates?
- The QRA announcement will be released in a few hours (on Monday) while the issuance details will be released on Wednesday.
- We generally don’t see any reasons to fear the Q2 issuance as a strong tax-season has been confirmed with the TGA standing at 941bn dollars, which is almost 200bn above the target range.
The TGA also printed above the target range going into Q2, making it unlikely that the US Treasury turns the heat on in the issuance pace. We see a small downgrade of the Q2 number (202bn) as the most likely.
Energy Cable: The recipe for another summer of exploding energy prices (in Europe)
- Energy markets in Europe still fragile. A hot summer and manufacturing rebound could set prices going.
- Manufacturing cycle is improving everywhere but in Germany. Cost-push inflation showing up in drilling now
- This week we want to talk about the ingredients needed for another summer of exploding electricity and gas prices.
Great Game – Could Biden Have Even More to Fear from Trump’s Trial?
- Welcome to this week’s Great Game where we will catch up on events in the Middle East and also cover the Trump trial that’s currently taking all the attention in the US Election race.
- Situation:Israel responded very lightly to the massive Iranian attack on April 13th and we haven’t heard any more from that conflict over the past week.
- As we predicted, Israel’s response was “next to nothing” and clearly acknowledged the de-escalatory nature of Iran’s strike. I know some took offense to that analysis, but it is genuinely our assessment and I think events since has reinforced that view.
EA Core Inflation Softens By Slightly Less
- EA inflation unsurprisingly remained at 2.4% y-o-y in April, with a 5bps slowing taking it within 1bps of our forecast. Energy and industrial goods continue to weigh temporarily.
- Services inflation ended a five-month streak at 4%, slowing to 3.7%. That was a tenth higher than we expected again, with the core rate 3bps more resilient at 2.67%.
- The ECB will be reassured by services inflation slowing, easing a June cut, but ongoing upside surprises urge caution, with September’s cut conditional on progress at the Fed.
Indonesia: Prabowo Risk Beginning to Hurt IDR, Requiring Tighter Money
- Although the fiscal deficit declined to 1.6% of GDP in 2023, markets are pricing in risks arising from President-elect Prabowo’s possible resort to fiscal profligacy in pursuit of 8% growth.
- More tangibly, with exports declining 7.5%YoY and imports up 1.1%YoY in Q1CY24, the trade surplus shrank to US$7.3bn (from Q1CY23’s US$12.11bn), likely widening the CAD (from Q4CY23’s 0.4% of GDP).
- With IDR depreciating 9.3%YoY, BI hiked its policy rate by 25bp last week to pre-empt imported inflation. Another rate hike is likely before Oct’24, so we would Underweight Indonesia.
Macro Daily – MX Inflation 1h-Apr
- Inflation in the first half of April was 4.59% annualized, slightly above our estimate.
- The first fortnight of April typically presents a negative variation due to seasonal electricity subsidies.
- However, this time it was offset by an increase in multiple agricultural products.
Colombia Policy Interest Rate 11.75% (consensus 11.75%) in Apr-24
- The Banco de la República Colombia’s unsurprising decision to reduce the policy interest rate by 50 basis points to 11.75% aims to bolster economic growth against a backdrop of declining inflation, with the central bank maintaining a careful balance to avoid overheating the economy.
- Updated economic projections suggest a recovery, albeit juxtaposed with a concerning uptick in unemployment rates, presenting a challenge for ongoing monetary policy adjustments.
- External economic pressures, particularly from US policy shifts and global financial market trends, remain pivotal in shaping the future trajectory of Colombia’s monetary policy, emphasizing the importance of adaptive strategies to navigate international uncertainties.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
CX Daily: How Do the West’s Concerns About China’s Overcapacity Stack Up?
- Overcapacity /Cover Story: How do the West’s concerns about China’s overcapacity stack up?
- Tesla /: Four things to know about Tesla’s advanced self-driving tech in China
- Stocks /: Overseas investment through China’s Stock Connect nearly doubles 2023’s total
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