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Stocks fall on US credit rating downgrade

Please see below article received from Brewin Dolphin yesterday afternoon, which provides an update on global market performance.

Most major stock markets fell last week after rating agency Fitch downgraded the US government’s credit rating.

This marked the second time in history that a leading credit agency has downgraded US debt. Fitch cut its rating from AAA to AA+, citing concerns about the state of the country’s finances and its debt burden. The announcement weighed on stocks, with the S&P 500, Dow and Nasdaq finishing the week down 2.4%, 1.4% and 3.0%, respectively.

The UK’s FTSE 100 lost 1.8% after the Bank of England (BoE) indicated that interest rates were likely to stay higher for longer. The pan-European Stoxx 600 and Germany’s Dax fell 2.6% and 3.0%, respectively, following disappointing European corporate earnings reports.

In China, the Shanghai Composite was flat as investors weighed measures that aim to boost consumption and support the real estate market against a 33.1% year-on[1]year slump in new home sales in July.

Investors await US inflation report

US indices rose on Monday (7 August) ahead of the release of US inflation numbers later in the week. The Dow rallied 1.2% and the S&P 500 gained 0.9%. Investors will be scrutinising the report for any clues as to the Federal Reserve’s next interest rate decision in September.

UK and European indices were mixed on Monday and then fell at the start of trading on Tuesday, after data showed exports from China fell by 14.5% year-on-year in July, the biggest drop since the start of the pandemic. Closer to home, the value of UK retail sales grew by just 1.5% year-on-year in July, much lower than the 12-month average of 3.9%, according to the British Retail Consortium and KPMG. The slowdown was partly due to easing inflation (the figures are not adjusted for inflation) as well as wet weather.

BoE raises base rate to 5.25%

Last week saw the Bank of England lift the UK’s base interest rate by a quarter of a percentage point to 5.25%, a new 15-year high. In its statement, the BoE said that some key indicators, notably wage growth, “suggest that some of the risks from more persistent inflationary pressures may have begun to crystallise”.

The BoE hinted that interest rates were likely to stay high for some time, saying it would “ensure the bank rate is sufficiently restrictive for sufficiently long to return inflation to the 2% target”. The bank expects inflation to fall to 4.9% by the end of the year. Although the BoE does not forecast a recession in the coming years, gross domestic product (GDP) is expected to remain below pre-pandemic levels as a result of high interest rates.

UK house prices plummet

UK house prices fell in July at their fastest annual rate since 2009, according to Nationwide. House prices fell by 0.2% from the previous month and by 3.8% from a year ago, worse than the 3.5% annual decline seen in June. The price of a typical home is now 4.5% below the August 2022 peak.

Robert Gardner, Nationwide’s chief economist, said housing affordability remains stretched for those looking to buy a home with a mortgage. For example, a first-time buyer with a 20% deposit who earns the average wage would see monthly mortgage payments account for 43% of their take-home pay (assuming a 6% mortgage rate). This is up from 32% a year ago and well above the long[1]run average of 29%.

Separate data from the BoE showed the value of net mortgage lending fell in the second quarter compared to the first quarter, marking the first quarterly contraction since records began in 1987.

US labour market cools

Over in the US, Friday’s closely watched nonfarm payrolls report showed the labour market cooled slightly in July. The economy added 187,000 new jobs, slightly below expectations of 200,000. The figure for June was revised lower to 185,000 from 209,000, while May’s number was reduced by 25,000 to 281,000. The report from the Labor Department also showed the unemployment rate fell back down to 3.5% from 3.6% the previous month, showing continued tightness in the labour market. Average hourly earnings rose by 0.4% month-on-month, which is above what is considered consistent with the Federal Reserve hitting its inflation target.

Japan’s services sector softens

Japan’s services sector activity grew at a slower pace in July as new business growth eased and cost pressures remained high. The final au Jibun Bank purchasing managers’ index (PMI) showed the headline services index fell slightly to 53.8 in July from 54.0 in June. This was the slowest pace of growth since January. Average cost burdens faced by service providers accelerated for the first time since April amid reports of higher electricity, fuel, raw material and labour costs. Business confidence remained strong in July, but the degree of optimism slipped to a five-month low.

Meanwhile, the manufacturing PMI slipped further into contraction territory to 49.6 in July from 49.8 in June. Firms attributed the decline to weak customer demand for manufactured goods in both domestic and international markets. More positively, input price inflation eased to the softest level since February 2021, and business confidence was the second highest in 18 months.

Please check in again soon for further relevant content and market news.

Chloe

09/08/2023

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The Daily Update: Moody’s Downgrades Banks / Fed Polar Opposites / Food Price Pain

Please see the below market update from EPIC Investment Partners:

Moody’s cut the credit rating for 10 midsize and small US banks yesterday whilst warning that it may also downgrade some of the nation’s biggest lenders, believing that they are being squeezed by funding risks, possible regulatory capital weaknesses and increased risk exposure to commercial real estate loans.

The banks that had their ratings cut included Old National Bancorp, Fulton Financial Corp, M&T Bank Corp, BOK Financial Corp, Pinnacle Financial Partners Inc, and Webster Financial Corp with bigger lenders like State Street Corp, U.S. Bancorp, Truist Financial Corp, and Bank of New York Mellon Corp on review.

In the statement following the downgrades, the rating agency said: “Many banks’ second-quarter results showed growing profitability pressures that will reduce their ability to generate internal capital”. Adding, “This comes as a mild U.S. recession is on the horizon for early 2024 and asset quality looks set to decline, with particular risks in some banks’ commercial real estate (CRE) portfolios.”

Overnight we also had a couple of Fed speakers hit the wires, Bowman and Bostic, who are at opposite ends of the hawk/dove spectrum, and true to form, they did not deviate.

Bowman repeated her view that the Fed may need to raise rates further to fully restore price stability, although it will still depend on incoming data. Bostic said that rates are in a restrictive stance, employment gains are slowing, and that there is no need to hike rates further. He added that he expects the Fed to be in restrictive territory well into 2024.

On this side of the pond, we heard from the Old Lady’s Chief Economist, Huw Pill, warning that while “substantial” falls on global food markets will eventually filter their way down to shoppers, it will only slow the rate of price increases rather than result in an actual fall.

“Unfortunately, the days of seeing food prices fall — that does seem to be something that we may not be seeing for a little while yet, if in the future at all. Our expectation at the moment is that food price inflation will fall back towards about 10% by the end of this year and then further next year”, he said. Adding, “That’s still not a very comfortable level.”

Please continue to check our Blog content for advice and planning issues and the latest investment, markets and economic updates from leading investment houses.

Andrew Lloyd DipPFS

8th August 2023

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Tatton Investment Management: Monday Digest

Please see below the Tatton ‘Monday Digest’, which was received this morning (07/08/2023) and provides their views on global economic news from the past week:

Overview: Expecting the unexpected

Stock and bond markets started August with something of a wobble last week. When bond yields suddenly ticked up over the week, for reasons that were not immediately obvious, equity valuations reacted with a mild correction. Only after Friday’s US jobs data signalled a cooling of underlying inflation drivers from the tight labour markets did equity markets begin to relax again. The catalyst for bond yields rising (which means prices fell) was not immediately obvious. It may have been Fitch’s downgrade of the US long-term foreign currency credit rating to AA+ but, since US Treasuries are NOT issued in a foreign currency, this shouldn’t matter greatly. Also, the much more influential Standard & Poor’s has had its US rating at AA+ since 2011.

It is more likely that the price falls were simply due ‘more sellers than buyers’. The US Treasury surprised markets by selling substantially more new long-term bonds than expected, just as corporate borrowers have been shifting from high-cost short-term borrowing to longer-term financing (as we noted last week) and therefore – like the US government – also looked for more buyers of long-term bonds.

The bond sell-off may not have much further to go, but investors are still wary after the huge capital losses of 2022. Here in the UK, we are no stranger to bond price falls since last autumn’s mini-budget disaster. Last Thursday, the Bank of England’s Monetary Policy Committee (MPC) voted by a majority to raise rates by another 0.25% and reiterated that “further tightening in monetary policy would be required”. Although the MPC sees inflation as hard to shift, investors see the risks as no longer heavily skewed. Growth here and in Europe (extremely important for the UK) seem to be on a slower path than the US, especially recently. Although the UK government bond yield curve is inverted, UK (and Euro) bonds look cheaper than those in the US. All areas have seen some price falls but, when comparing bonds of similar maturity, UK Gilts and Euro government bonds have been relatively stable. 

The previously-mentioned US non-farm payroll data of new jobs created over the month (being slightly weaker and below 200,000 new employees) helped alleviate some of the pressure on US yields. Nevertheless, we suspect the incentive to issue around the 10 year maturity because of the currently lower yield cost compared to short term debt could still have some further follow-through – pushing this maturity band’s yield up further. It’s not the end of the world, but equities could lose momentum. So, while we welcomed July’s upbeat investor sentiment, August so far has again demonstrated the fragility of optimism-driven valuations. We expect market fortunes to remain finely balanced and therefore sensitive to anything with the potential to sway investors one way or the other.

European energy update: safer but not safe

Europe has come an incredible way from a year ago. Last August, European natural gas prices peaked at around €340 per megawatt hour, but currently prices are under €30. Far from shortages, current industry talk is of weak demand and storage capacity being close to full. Prices for futures contracts point to a sharp oversupply, leading benchmark contract prices to fall 24% in July, according to Bloomberg.

However, due to recent problems with production in Norway, and lower-than-expected cargoes of liquified natural gas (LNG), there has been a sharp drop in Europe’s projected supply recently. That pushed back analyst predictions of the date when storage will hit 100% of capacity. Bloomberg went from mid-September to the end of October. A year ago, this would have been the kind of news that sent commodity markets rocketing and policymakers spinning, but this time the news was shrugged off by traders, with storage levels currently at 86%.

Traders are now much more focused on weak demand prospects than supply side concerns. Despite Eurozone growth pulling out of a dip in the last quarter, manufacturing output has proven weak on the continent, lowering energy demand. The near future also looks difficult, with business sentiment surveys weakening further and unexpectedly. Last week, Bloomberg lowered its forecast for European gas demand for the 2023-24 winter; they expect it to be 27 billion cubic metres below the 2016-2020 average, if the weather is within the normal range.

Should the weather stay within a normal range, Europe will start its gas drawdown from a strong position and have comfortably enough energy supplies to provide for a sluggish economy. Given there are no great harsh winter fears (indeed policymakers’ attention is currently on the punishingly hot summer in southern Europe) it therefore makes sense that futures pricing for gas has come down, which should help European consumers down the line. On the negative side, however, the continent is still vulnerable to events entirely beyond its control, and despite the pressing need for energy security and the close-to-full gas supplies, Europe’s gas storage capacity has not significantly improved over the last two years. If the supply-demand balance did unexpectedly shift, the storage situation could mean prices change rapidly.

Please continue to check our Blog content for advice and planning issues and the latest investment, markets and economic updates from leading investment houses.

Carl Mitchell – Dip PFS

Independent Financial Adviser

07/08/2023

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Evelyn Partners Update – August Bank of England MPC decision

Please see below, an article from Evelyn Partners discussing the recent Monetary Policy Committee interest rate decision and the implications for markets and the economy. Received yesterday evening – 03/08/2023

What happened?

The Bank of England delivered on the expectations of economists and markets with an increase of 25bps to the base rate at their meeting today. This represents the Bank’s 14th consecutive increase and takes the base rate to 5.25%, its highest in 15 years.  The committee was split 3 ways on the vote, with 1-6-2 members voting for 0-25-50bps increases respectively. 

What does it mean?

Today’s decision by the Bank of England was always likely to be close, if markets are our guide. Prior to the meeting, Overnight Index Swap markets had priced around a 1/3 chance that the Bank would go further and increase by 50bps.  In the end the MPC’s hawks, who would have preferred such a move, were outvoted by the majority, including governor Andrew Bailey.

A key reason the bank will have decided against the larger increase will have been June’s inflation numbers, which finally revealed a downside surprise in headline inflation and, perhaps more importantly, the core (excluding volatile food and energy) print.  The core figure came in at 6.9%, which will still high, was lower than July’s figure of 7.1%.  The expectation is for inflation to continue to fall as lower energy prices continue to feed through to the bottom lines of balance sheets, both for businesses and individuals.  This was reflected in the MPC’s own inflation forecasts, which fell from 5.1% to 4.9% in the fourth quarter of this year, although this was allied with an increase in its inflation expectations over the medium term.

The monetary policy report also included growth forecasts, which continued to make for pretty bleak reading, revealing a cut to forecasts to 0.5% per year for 2023 and 2024.  On the upside, the Bank agrees with the consensus of economists in no longer forecasting a recession in the UK, but it does highlight the risk of one in 2024 and early 2025. 

Previous guidance in the minutes released today was maintained: “if there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required,”. There was an Important addition about rates being “sufficiently restrictive for sufficiently long” for inflation to get back to the Bank’s 2% target.  That implies that interest rate cuts are perhaps further away than some had imagined. 

The Bank provided no clues to the market today on its plans for reducing the size of its balance sheet, saying it will lay out these plans at its next meeting in September. 

Bottom Line

Reaction to today’s 25bps increase by markets was dovish, as expectations of where rates will peak moved slightly lower, from 5.85% before the meeting to 5.75% afterwards, at the end of this year or beginning of next.  This will be welcomed by mortgage holders, in the hope that increasing rate expectations may have peaked, along with the cost of mortgage deals in the market. The yield on the 10 year government gilt remained broadly unchanged on the announcement and looks attractive in our view, at 4.4%, as the Bank gets closer to the top.

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Alex Kitteringham

4th August 2023

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Brooks Macdonald – Daily Investment Bulletin

Please see the below article from Brooks Macdonald providing their commentary on global markets. Received this morning – 03/08/2023.

What has happened

Equities fell sharply yesterday as concerns around the US debt downgrade focused investor attention on the funding needs of the US government. The US equity market fell by over 1%, recording its worst daily return since April of this year.

US debt financing

Concerns over the quantity of US Treasury issuance over the coming months filtered through risk assets yesterday with the near-term borrowing needs being formalised yesterday. Adding concern was the comment from the Treasury that this increase in borrowing was likely to continue, saying that ‘further gradual increases will likely be necessary in future quarters.’ Treasury issuance raises yields as the price adjusts for additional supply. At the same time, this issuance draws liquidity from other areas of the market (such as equities and corporate bonds), decreasing the prices of risk assets. All of this puts the US budget deficit back into the spotlight with the Fitch downgrade effectively just highlighting the funding concerns, recent political impasses and ongoing fiscal spending.

UK

Today the market’s focus will switch to the Bank of England which is unveiling its latest policy change at midday. The consensus expects a 25bp interest rate hike, with economists reducing the chance of a 50bp move given the downside miss to UK CPI last month. The market is only now apportioning around a quarter chance of a 50bp move after it being the most likely outcome a few weeks ago. The political pressure continues in the interim with Prime Minister Sunak saying that inflation was not falling as fast as he would like and stressing the policy importance of a further reduction in price pressure.

What does Brooks Macdonald think

The shift in market expectations towards a 25bp hike at today’s meeting does not mean that the UK will have necessarily reached its peak interest rate after the move. The market is expecting the Bank of England to need to raise interest rates further over the coming months to guide inflation lower. A strong UK labour market is a particular concern to the Bank of England, therefore one should expect the central bank to continue with their hawkish rhetoric alongside the smaller hike.

Bloomberg as at 03/08/2023. TR denotes Net Total Return

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Alex Clare

03/08/2023

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Brewin Dolphin – Markets in a Minute

Please see below, Brewin Dolphin’s ‘Markets in a Minute’ update, providing a brief analysis of the key news from markets around the world, which was received late yesterday (01/08/2023) afternoon:

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Carl Mitchell – Dip PFS

Independent Financial Adviser

02/08/2023

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Markets in positive mood following better US inflation data

Please see below article received from Brooks Macdonald yesterday afternoon, which provides a detailed market commentary as we head into August.

  • Better inflation data buoys hopes that the US economy might be able to pull-off a soft landing
  • Bank of Japan intervenes to dampen government bond yield moves
  • Company Q2 earnings reports reach the half-way point, so far so good
  • Another interest rate hike expected from the Bank of England later this week

Better inflation data buoys hopes that the US economy might be able to pull-off a soft landing

Markets finished last week in positive mood, as softer US inflation data increasingly suggested the economy might be able to pull-off a so-called ‘soft’ landing (where economic growth slows but avoids recession). Buoying sentiment, both US personal consumption prices and employment costs saw annual gains come in a shade weaker than expected. Looking forward, this week is a relatively busy one for data. It starts with Eurozone consumer inflation later this morning, followed by the US Federal Reserve’s (Fed) latest Senior Loan Officer Opinion Survey on bank lending out later today. Central bank decisions are due from the Reserve Bank of Australia on Tuesday and the Bank of England (BoE) on Thursday. Elsewhere, after last week’s better US Gross Domestic Product (GDP) Q2 print, this week we get some US purchasing manager survey data on manufacturing and services on Tuesday and Thursday respectively. Wrapping up the week, the US monthly non-farm jobs report is out on Friday, where the consensus is looking for 200,000 jobs added in July.

Bank of Japan intervenes to dampen government bond yield moves

After the Bank of Japan (BoJ) surprised markets last Friday by effectively loosening its grip on its yield-curve-control monetary policy, this morning we have been reminded that there still limits to how far the BoJ wants to travel for now. Earlier today the BoJ announced an unscheduled Japanese Government Bond (JGB) purchase operation, spending 300bn yen (around $2.1bn) to buy 5-to-10-year bonds at market yields. This looks consistent with BoJ Governor Kazuo Ueda’s comments last week that the BoJ was ‘not ready’ to allow yields to move freely. It is also interesting that in last week’s latest BoJ forecasts, while it raised its median estimate for fiscal 2023 core consumer inflation (Consumer Price Index (CPI) all items less fresh food and energy) to 3.2% from 2.5% previously, there was no change to fiscal 2024 at 1.7% or fiscal 2025 at 1.8%, which both sit below the BoJ’s 2% inflation target.

Company Q2 earnings reports reach the half-way point, so far so good

We are now half-way through the US company results season, with 51% of US large-market-capitalised companies having reported Q2 results. According to the latest Factset ‘earnings insight’ report, 80% have reported Earnings Per Share (EPS) above consensus, which is above the 10-year average of 73%. Revenues are also so far proving resilient, with 64% of companies reporting revenues above consensus, just about better than the 10-year average of 63%. Meanwhile the longer-term earnings outlook appears to continue to push-back against wider recession fears, with calendar year-on-year earnings growth expected to rise from a flat +0.4% this year, to +12.6% in 2024. Markets are discounting machines, calibrating expected future outcomes into asset prices today. With a strong year-on-year pickup in earnings growth expected next year, that is helping to give oxygen to markets currently.

Another interest rate hike expected from the Bank of England later this week

After hikes from both the Fed and the European Central Bank last week, the BoE is expected to follow suit on Thursday. It is still a bit of a close call however between a 25 basis points (bp) or 50bp hike, The BoE will be weighing up strong wage data on the one hand, but against this, there was the better-than-expected consumer inflation data. On balance, markets expect the BoE to hike by 25bps (which would take interest rates up from 5.00% currently, to 5.25%, which would be the BoE’s 14th consecutive hike in this cycle) but reiterate data-dependency for its forward guidance.

Please check in again with us soon for further relevant content and market news.

Chloe

01/08/2023

Team No Comments

Tatton Investment Management: Monday Digest

Please see below, Tatton’s ‘Monday Digest’ providing their analysis on market movements and economic events during the last week. Received today – 31/07/2023.

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Adam Waugh

31/07/2023

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EPIC Investment Partners: Daily Update

Please see below, the ‘Daily Update’ from EPIC Investment Partners for a brief analysis of the key news from markets and economies across the world. Received today – 28/07/2023

Earlier this week, we heard that eurozone banks reported a sharp fall in corporate loan demand, which has fallen to its lowest level on record (since the survey started in 2003). The ECB’s quarterly survey of banks also showed a striking fall in household loan demand and tightening financial conditions, which highlight the impact increasing borrowing costs have had on the eurozone economy. Despite this, the ECB continued on its tightening path, with inflation being the main priority.

As was well priced in, the ECB increased rates by 25bps, to 3.75% on the deposit rate, and left the door open for further hikes. In a statement, the central bank noted that although inflation has been declining, it will likely remain “too high for too long”. Headline eurozone inflation fell to 5.5% in June, from 6.1% previously, however, remains way above the 2% target. There was no forward guidance given, the ECB will maintain its data dependence approach in “determining the appropriate level and duration of restriction”. The statement also highlighted the effects of past tightening as increasingly dampening demand across the region.

In a surprise move, the ECB “set the remuneration of minimum reserves at 0%,” to ensure “the full pass-through of interest rate decisions to money markets”. Adding that “it will improve the efficiency of monetary policy by reducing the overall amount of interest that needs to be paid on reserves in order to implement the appropriate stance.”

Later, ECB President Lagarde repeated: “We want to break the back of inflation”. She also reiterated the data dependence approach, adding that the ECB is unlikely to give forward guidance. She said the ECB has an “open mind” going into the September meeting, adding “We might hike, we might hold.” She came across slightly dovish as she discussed the bloc’s economic outlook and the changing drivers of inflation; namely wage growth and profit margins.

As with the Fed, the ECB’s next meeting is in September, which will allow it a natural pause and lots of data to plan its next steps. Unlike the US, however, inflation in the eurozone is falling much slower, with some calling for a 2% target to be hit at the earliest in 2025. Moreover, the economy is not holding up as well; business activity (measured by the S&P Global PMIs) shrank more than expected, with only services in expansion in July. Prelim. S&P Global PMI readings in key economies (e.g., France) are well in contraction, and the manufacturing gauge in Germany fell to 38.8, with the composite reading dropping into contraction.

The eurozone’s official Q2’23 growth and inflation figures are due on Monday, expected at 0.1%qoq and 5.2%yoy (prelim. for July), respectively. Earlier this week, the IMF said it expected the eurozone could grow by 0.9% this year. However, this factors in a recession in Germany, where the GDP is expected to contract by 0.3%. The Fund noted that Italy will grow at a faster rate than the bloc’s two largest economies, Germany and France.

Lastly, it would be remiss of us to not highlight the new Governor of the BoJ, Kazuo Ueda’s surprise tweak to yield curve control (YCC) flexibility. The central bank will allow 10-year benchmark yields to have a 50bp tolerance, as reference points rather than “rigid limits”. Thus, the central bank will buy the 10-year at 1% each day instead of 0.5%. The BoJ upgraded its forecasts for inflation for this year, to 2.5% (from 1.8%), then falling to 1.9% (from 2%). Having held short-term interest rates at -0.1%, Japan is the only country left with negative interest rates.

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Alex Kitteringham

28th July 2023

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Evelyn Partners Update – July Fed rate decision

Please see below an article received from Evelyn Partners earlier this morning (27/07/2023), which details their thoughts on yesterday’s interest rate decision that was announced by the Fed:

What happened?

After pausing in June, the FOMC raised its upper bound interest rate by 25bps to 5.50%, which is broadly in line with what the market had expected, and is at its highest level for 22 years.

In the following press conference, Fed Chair Powell did leave open the possibility of further hikes to return inflation to its 2% goal. This means the next FOMC on 20 September is a “live” meeting. As of today, the Fed Futures market is not expecting a full 25bps rate hike in September.

What does it mean?

Unless there is a material rebound in inflation, the Fed is set to pause on interest rates from here, with the next move likely to be down sometime in 2024. Importantly, favourable macro data over the last few months should leave the hawks at the FOMC in the minority, reducing the risk that the Fed goes on to overtighten on interest rates.

First, the June CPI inflation report showed that underlying price pressures continue to subside. All three of the main core inflation categories that the Fed is focusing on, such as housing, core services ex shelter and core goods, are all trending down on an annual basis. Consumer surveys of inflation expectations are also coming down, which will be encouraging for the Fed in its efforts to prevent inflation becoming entrenched in the economy.

Second, the jobs market is cooling. At the headline level, June non-farm payrolls came in at 209k, its lowest increase since the recovery from the pandemic. Importantly, firms are cutting back on job vacancies and this is reducing the number of workers willing to quit jobs to seek higher paying opportunities. In effect, the Fed appears to have reduced the risk of a price-wage spiral that would make its job to bring down inflation more difficult. The next key data point to determine the whether wage rates have indeed peaked is the second quarter Employment Cost Index (a comprehensive measure of wages and benefits) due on the 28 July.

Third, the FOMC will be cognizant of the impact of monetary tightening on the financial system. Back in March, the failure of Silicon Valley Bank (SVB), the 16th largest bank in the US, raised concerns of systemic problems appearing, like those suffered during the Global Financial Crisis (GFC) in 2008. However, those fears proved to be unfounded as SVB was more of a manageable idiosyncratic risk. Nevertheless, further monetary tightening could potentially lead to rising debt default rates in the private sector that leads to material financial and banking sector stress.

Bottom Line

With the Fed set to pause on interest rates, it provides an opportunity for equities to continue to broaden out from the Artificial Intelligence-led rally.

Please continue to check our Blog content for advice and planning issues and the latest investment, markets and economic updates from leading investment houses.

Carl Mitchell – Dip PFS

Independent Financial Adviser

27/07/2023