No Surprises in FOMC Minutes

The FOMC minutes of the January meeting were in line with other recent commentary, with the bulk of the committee noting the "risks of moving too quickly to ease the stance of policy", emphasizing the risk of more persistent inflation. The initial market reaction was muted, as recent upside surprises in macro data have already prompted markets to reduce the pricing of rate cuts.

Sunset Market Commentary

The February European headline PMI came in slightly stronger than expected, rising from 47.9 to 48.9. A deepening contraction in Germany (46.1) and sustained output fall in France (47.7) were countered by faster growth in the rest of the region. There’s a split on a sector level as well. Manufacturing unexpectedly ventured deeper in contraction territory (46.1) with Germany (42.3) in particular clipping the wings of a fragile bottoming out process.

Disappointing German Manufacturing Halted Euro's Flight

For the euro area, the manufacturing index fell from 46.6 to 46.1, against expectations for a rise to 47.0. The services sector reached the critical milestone of 50.0. Readings below this level indicate a month-on-month contraction, and the overall composite PMI for the euro area remained in contractionary territory for the seventh consecutive month. However, it has risen to 48.9, the highest level since June last year.

EUR/USD – A Bullish Breakout or Just Further Consolidation?

EURUSD broke higher earlier in the week after bouncing off the 61.8% Fibonacci retracement level the week prior.

NZ First Impressions: Retail trade, December Quarter 2023

Today’s report highlights the significant impact that price increases and higher borrowing costs are having on spending appetites. Nominal spending levels were down 0.4% over the past year. But with strong price growth, the amount of goods that households are actually taking home has dropped 4% over the past year. And it’s been falling for two years now as strong financial pressures have squeezed households’ spending power.

Preview of RBNZ February 2024 Monetary Policy Statement

Westpac economics sees the RBNZ leaving the OCR at 5.5% at the February Monetary Policy Statement and adopting a hawkish outlook for the OCR.

Why September?

Absent a new inflationary shock, central banks’ next moves are likely to be down. We expect the first cut in Australia to occur after the late-September meeting. Here we explain our reasoning behind this timing.

Cliff Notes: A Game of Patience

In Australia, the RBA February Minutes put forward a familiar account of the Board’s deliberations and assessment of risks, providing more colour on the key themes presented in various communications since the decision. The case to raise the cash rate further – centred on the observation that it would take “some time” for inflation to return to target – is becoming increasingly improbable given continued progress on inflation which is broadly consistent with the Board’s central forecast.

AI Surge Fuels Stock Market Gains

Yesterday was a great day for stock prices as it seems that AI-optimism fuelled a market boom, after Nvidia beat quarterly earnings expectations by some margin. Tech stocks were the big winner with the Nasdaq Composite up 2.96%, but broader indices such as the MSCI world and European STOXX600 also gained, with the latter hitting an ATH driven particularly by tech stocks.

Up Go Stocks, Down Go Bonds

We knew that yesterday was going to be a good day – at least for the stock markets, given that Nvidia defied the expectations that it would – maybe – fail to deliver $20bn sales in the latest quarter. But the company announced $22bn sales. And because a potential misstep from Nvidia was seen as […]