In today’s briefing:
- Iran’s attack – Large in Size, Harmless in Effect. What’s next?
- Inflation Preoccupation
- Comment on Exchange Rate – USD/JPY – March 29, 2024
- UK Paying More for Fewer Workers
- Positioning Watch – Volatility Is Back, but Markets Still Lean into USD Duration.. God Knows Why..
- Regional Economics: Bumpy Disinflation Makes Rate Cuts in 2024 a Big If
- South Korea Politics: Policy Constraints Loom After Legislative Polls
- Canada CPI Inflation 2.9% y-o-y (consensus 2.9%) in Mar-24
Iran’s attack – Large in Size, Harmless in Effect. What’s next?
- Welcome to the weekly Great Game, which is obviously dedicated to the situation in the Middle East.
- We covered Saturday’s attack on Israel in our Debrief, so in this post, I’ll try and look a bit ahead and give our take on what may lie ahead – both in the Israel/Iran conflict, but perhaps even more importantly in the Red Sea deadlock.
- Understanding Iran’s strikeSituation:On Saturday evening, Iran attacked Israel in response to the April 1st bombing of the Iranian embassy in Damascus.
Inflation Preoccupation
- The gap between the CPI and PCE price index adds another layer of complexity to the continuing data scrutiny
- The extent and duration of the CPI-PCE convergence tend to vary across time periods and different economic environments
- Also, the details from the latest CPI print, while tentatively less favorable, bear watching
Comment on Exchange Rate – USD/JPY – March 29, 2024
- During the period under consideration, i.e. February 28th 2024 to March 29th, 2024, the USD/JPY pair fluctuated between 146 and 152 Yen per 1 Dollar.
- The MA-10 line at the beginning of the period considered was moving above the MA-20 line.
- From March 7th until March 22nd the MA-10 line trend changed and was moving below the MA-20.
UK Paying More for Fewer Workers
- UK unemployment jumped surprisingly far in February 2024 to hit 4.2% as employment fell. More long-term jobless suggests this is neither a new shock nor too disinflationary.
- Average earnings growth surged by 0.7% m-o-m, meaning the wage bill still rose despite fewer jobs. Regular pay growth is in rude health at 6% y-o-y or 2.1% in real terms.
- Wage settlements are stuck at 5%, with a skew higher into April. Embedded inflation expectations are too high and demand tight policy despite some cyclical softening.
Positioning Watch – Volatility Is Back, but Markets Still Lean into USD Duration.. God Knows Why..
- Hi everyone, and welcome back to our weekly positioning / sentiment overview, which will be delivered to you right as firefighters have hopefully put out the fire at the old exchange building in Copenhagen..
- Markets have started the week off where they left last week, with the USD wrecking ball continuing to prevail, posing headwinds for equity and fixed income markets as Fed pricing has more or less turned upside down lately.
- We generally positioned for this repricing of USD fixed income, but were caught wrongfooted in a few trades along the way admittedly.
Regional Economics: Bumpy Disinflation Makes Rate Cuts in 2024 a Big If
- The latest US inflation print is emblematic that economies worldwide will face difficulties in achieving the “last mile” of disinflation.
- Volatile food and energy prices, as well as geopolitical disturbances to supply chains, will continue to cause problems for Asian central banks.
- Despite continued tightness in monetary policy, we still expect Asian economies to grow respectably in 2024.
South Korea Politics: Policy Constraints Loom After Legislative Polls
- President Yoon Suk Yeol suffered a major political setback in the recent parliamentary polls, with the main opposition party winning a clear majority in the National Assembly.
- Simmering public discontent from rising costs of living and doctors’ strikes to protest against Yoon’s plan to increase medical school intake drove voters to the opposition.
- Yoon’s parliamentary defeat and the contrasting domestic policy agenda of the Democratic Party means greater political paralysis ahead.
Canada CPI Inflation 2.9% y-o-y (consensus 2.9%) in Mar-24
- Canada’s annual CPI inflation rate in March 2024 increased to 2.9%, matching market expectations and marking the highest growth since December 2023.
- Despite this, disinflation has resulted in the current rate being 0.42 percentage points below the one-year average.
- The core measures continued to slow down, more than what was anticipated.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
