U.S. GDP Growth Beats Expectations, But Fails To Dent The Market's Faith In Rate Cuts

U.S. GDP Growth Beats Expectations, But Fails To Dent The Market's Faith In Rate Cuts. GDP grew an annualised 2.8% in second-quarter 2024. Core PCE deflator rose 2.9% annualised versus the 2.7% expectation.

Rates Spark: Weak PMIs Help Build The Case For Rate Cuts

Weaker eurozone PMIs have helped markets price in two more ECB rate cuts for 2024. US manufacturing PMI slipped back below 50 and new home sales weakened, but services PMI edged higher. We continue to view the environment as prone to more risk-off, higher volatility and lower market rates.

What Biden's Historic Election Decision Means For Markets

Home Market Outlook Economy Analysis What Biden's Historic Election Decision Means For Markets. President Joe Biden’s late withdrawal from the presidential race creates a number of significant unknowns. I expect this late-in-the-race turmoil to ramp up short-term market volatility. I’m watching the results of earnings season for signs that market performance may be broadening from the domination of the “Magnificent 7”

Winter (Rate Cuts) Is Coming

The 2024 deficit estimate has increased by $400 billion, a 27% rise from their estimate five months ago. The U.S. Deficit for 2024 is expected to be $2.0 trillion, 7% of our Gross Domestic Product. The CBO forecasts no recession for the next decade. The IMF has warned of runaway spending in the United States.

Rates Spark: Why September Looks Like A Good Month For An ECB Rate Cut

Rates Spark: Markets Are Still Digesting Biden's Departure

US Biden's withdrawal did not have a material impact on EUR rates. The biggest impact for Treasuries was a late-in-the-day rise in yields. Weaker growth data later this week should help the EUR curve steepening. The ECB's Survey of Monetary Analysts shows a well-anchored ECB terminal rate of 2.25%.

The Best Tech And Energy Stocks Should Remain Strong

Weekly Forecast, July 19, 2024: Why 3-Month Bill Most Likely Range Is Near Zero In 2034

Weekly Report: what happened at TBT last week (0715-0719)?

Has The Neutral Rate Of Interest Increased?

Rates Spark: Lagarde Clear About Not Committing To Cuts

When Will The Fed Cut

When will the Fed cut rates? The Fed Funds rate is currently above T-Bill market rates. The Fed will cut its rate once the T- bill rate declines and stabilizes. Todd Sullivan sees evidence of a recession hedge by institutional investors for which they have shorted T-Bills. He says the Fed has a history of missing recession signals.

Rates Spark: ECB Unlikely To Satisfy Doves

European Central Bank is not likely to cut at this meeting and will likely refrain from committing to future cuts. Markets are already pricing in two more 25bp cuts for this year. In the US, the momentum is stronger towards a rate cut. In France, the political challenges continue to evolve but markets remain unmoved.

Could The Fed Cut Interest Rates Twice In 2024?

US disinflation may lead to a third-quarter Fed rate cut. Recent data on US inflation shows that the disin inflationary process is picking up steam. I believe the Federal Reserve will cut before the end of the third quarter. I see room for more than one rate cut in 2024. S&P 500 companies are forecasted to deliver their highest year-over-year earnings growth.

3 Bad Narratives That Are Dead (But Will Persist)

3 Bad Narratives That Are Dead (But Will Persist) Cullen Roche: Raising interest rates does not cause inflation. He says the Great Financial Crisis created some of the worst narratives in finance and economics. In 2008, the Fed cut rates to 0% and many expected this to create hyperinflation risk.

What The U.S. Election Could Mean For Deficits, Debt And The Yield Curve

Government borrowing and the national debt are barely mentioned in the US election campaign. The US government is borrowing the equivalent of 6% of GDP and national debt totals $35tr. Failure to change trajectory risks further debt downgrades, market volatility and higher borrowing costs. Fiscal sustainability of the US is being questioned.

Yield Advantage: Key Takeaways From PIMCO's Secular Outlook

Central banks have achieved disinflation. Real yields are at levels not seen in 15 years. Fiscal policy in the US and abroad is on an unsustainable path. We're in a world of elevated macro and geopolitical risk. PIMCO: There's a yield to be seized and a yield advantage.

Easing Into Elections

Rates Spark: Pricing Of ECB Cuts Facing Limits

Market pricing for 2024 ECB cuts looks stretched. Markets are now pricing in 48bp of ECB cuts in 2024, just shy of two full 25bp cuts. Three UK rate cuts still on the table this year. The Fed’s Beige Book is scheduled for later today.

Economic Update - Q2 2024

Home Market Outlook Economy Analysis Economic Update - Q2 2024. The US economy is still growing but growth has slowed and signs of weakness are apparent. First quarter US real GDP figures came in at a 1.4% annual growth rate. Low savings rates and rising credit card delinquencies bear watching for a potential pullback in consumer spending. The Housing market has felt the effects of higher interest rates.