26/07/2024
Written by: Ian Morley
Summary:
The US $ Index reached new yearly highs following robust US manufacturing data and hawkish remarks from Fed Chair Powell. This led to a surge in US bond yields, with market expectations of a June rate cut reduced to 50%. Interestingly, markets are now pricing in only a 65-basis points reduction for the year, contrasting sharply with previous expectations of 150 basis points of cuts through 2024.
Elsewhere, UK Shop price data released this morning showed prices rising at their slowest pace in over 2 years, providing encouragement to both the Bank of England and consumers. The BRC survey indicated headline store inflation rose by 1.3% compared to the previous month’s 2.5% increase.
Speeches:
Market Insight:
The resilience of the US economy continues to surprise forecasters, with recent manufacturing data revealing growth for the first time in 1.5 years. This triggered significant adjustments in bond and interest rate markets. The US dollar is also gaining further momentum after Fed Chair Powell tempered expectations of imminent rate cuts. Attention now shifts to Friday’s US monthly employment report, where a 200k increase in payrolls is anticipated, with the unemployment rate expected to remain steady at 3.9%.