Market Information Thursday 12 September 2024

US inflation dropped to 2.5% in August, suggesting that the Federal Reserve may start cutting interest rates by a quarter-point at next week’s meeting. This decline in inflation aligns with the Fed’s target. Although traders have moderated expectations from a half-point cut, a quarter-point cut is now anticipated, reflecting the Fed’s cautious approach given the stable but gradually improving economic conditions.

The UK economy stagnated for a second consecutive month in July, largely due to drops in construction and manufacturing, posing a significant challenge to the newly elected Labour government. The economic stagnation occurs as Chancellor of the Exchequer Rachel Reeves prepares for Labour’s first Budget next month, acknowledging the challenges ahead and the need for gradual change. Despite the recent positive economic growth in the first half of the year, most economists—including those of the Bank of England—anticipate a slowdown in the second half, with some now seeing increased downside risks.

China’s export boom has triggered a wave of tariffs from developing economies, complicating Beijing’s efforts to expand its markets outside the West. Countries like Brazil and Turkey are leveraging tariffs to compel Chinese investment in local production, especially in the electric vehicle sector, while defending their own manufacturing bases. Despite the sharp criticism of US and EU protectionism, China has taken a more diplomatic stance with developing countries, emphasizing mutual economic and trade benefits.

The 6M Euribor decreased with 4 basis points to 3.31% compared to previous business day. The 10Y Swap decreased with 2 basis points to 2.40% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.