In today’s briefing:
- Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 3 May 2024
- Overview #3 -The Good, the Bad, and the Bank of Japan
- Surprise Weakness Job Growth Brings Rate Cut Closer
- Comment on Exchange Rate – EUR/JPY – March 29, 2024
- Norway Policy Rate 4.5% (consensus 4.5%) in May-24
- Eurozone Economy – Quarterly Macro Note
- HEW: Policy Plumage Evolving
Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 3 May 2024
- PMI Data: Mixed bag of Purchasing Managers Indices across Asia, with India showing record-breaking strength at 58.8.
- Trade Performance: Recent trade data indicates resilience in China’s exports despite global demand weakness.
- Japan’s Economic Struggles: Japan faces significant challenges, with exports below 2010 levels and key indicators pointing to deep economic trouble.
Overview #3 -The Good, the Bad, and the Bank of Japan
- A weekly review of recent events impacting our investment themes.
- No surprises at the Fed meeting and relief at no hint of rate hikes despite the data
- Prices Paid in the ISM predicting an uptick in CPI
Surprise Weakness Job Growth Brings Rate Cut Closer
- US Nonfarm Payrolls shows disappointing growth in jobs, much lower than the anticipated addition of 243,000 jobs.
- April’s print is also lower than the average monthly gain of 242,000 jobs over the previous 12 months.
- Unemployment rate comes in at 3.9%, marginally higher than analyst expectations of 3.8%.
Comment on Exchange Rate – EUR/JPY – March 29, 2024
- During the period under consideration, i.e. February 28th , 2024 to March 29th, 2024, the EUR/JPY exchange rate fluctuated between 160.55 and 165.17.
- The MA-10 line was moving above the MA-20 line for the first two weeks, and then it crossed below the MA-20, maintaining a steady movement until it crossed over again on March 22nd MA-20 line retained upward trend throughout the entire period.
- Based on Graph 2, the CCI (red line) was moving downwards at the beginning of the period under consideration but after March 12th the movement changed to the opposite direction.
Norway Policy Rate 4.5% (consensus 4.5%) in May-24
- The Norges Bank has maintained the policy rate at 4.5%, aligning with expectations and previous forecasts, to control inflation that is still markedly above the 2% target despite a gradual slowdown.
- Economic activity in Norway is slightly better than expected, with resilient employment but continued low growth. Rising international policy expectations and a weaker krone complicate future monetary policy decisions.
- The Committee is prepared to adjust the policy rate up or down, depending on forthcoming economic data, focusing on inflation trends and economic growth rates.
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Eurozone Economy – Quarterly Macro Note
- The Euro area economy narrowly avoided a technical recession in the second half of 2023 and started the new year with mixed macroeconomic fundamentals.
- Although decreasing inflation, solid wage growth, and a robust labor market are expected to boost consumer spending and business confidence, GDP growth rates fell sharply from 3.5% in 2022 to 0.5% in 2023, with private consumption stagnating and investment slowing due to high financing costs and uncertain economic conditions.
- Additionally, exports decreased due to lower foreign demand, although the trade balance remained positive.
HEW: Policy Plumage Evolving
- The Fed’s expectations surpassed the September call, leading to a shift from a hawkish to a neutral stance on the market. This change occurred just as a dovish Fed and payrolls emerged. There is still perceived value in using equity options to hedge against potential downside risk.
- Despite positive recent news, the Bank of England (BoE) appears eager to implement cuts. This bias is expected to persist in its decision, although there is no indication that a cut is imminent.
- Notable events include the end of the technical UK recession and rate decisions in Australia, Sweden, Malaysia, Brazil, and Peru.
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