Despite better-than-expected macroeconomic data, such as this afternoon’s U.S. retail sales, financial markets continue to speculate on a 50 basis point rate cut by the Federal Reserve on Wednesday evening.
Asian markets posted predominantly lower prices on Wednesday morning in anticipation of the Federal Reserve’s rate decision. The Nikkei index fell 0.2 percent to 36,130.39 points, while the SSE Composite Index lost 0.5 percent. Markets in Hong Kong and South Korea were closed due to a holiday.
Gold remains at its highest level ever, with technical indicators pointing to further growth. As the market increasingly anticipates a loosening of central bank policies, the outlook for gold appears favorable. Investors have already heavily anticipated lower interest rates. Since the beginning of the year, the price of gold has risen by over 25%, and since early October, it has surged by more than 42%.
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.
Falling crude prices threaten major energy companies’ ability to lift returns and require a new pitch to investors. Slowing global demand, especially from China, keeps oil prices low, pressuring European majors to prove the profitability of their low-carbon investments. US majors with shale opportunities face less immediate pressure.
UK house prices rose sharply in September due to declining mortgage rates and the stability brought by a new government. The average asking price increased to £ 370,759, driven primarily by the demand for larger properties. Market confidence led to a 14% increase in new sellers compared to last September, but uncertainty remains about potential changes in the forthcoming government budget.
US companies plan smaller pay increases in 2025, averaging 3.6%, down from 4% in 2024, due to easing worker demand and inflation. The loosening job market allows employers to retain staff with smaller raises and increase demands on employees. However, sectors like healthcare still offer significant pay rises due to high demand for nurses.
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.
Industrial production in the eurozone decreased by 0.3 percent in July compared to the previous month, according to data from Eurostat. This decline was in line with economists’ expectations. The initial decline of 0.1 percent in June was revised to a stable production level (no change).
French inflation in August fell more sharply than initially expected, dropping from 2.3 percent in July to 1.8 percent in August. Preliminary figures indicated a drop to 1.9 percent, but final data released by the French statistics bureau Insee show a larger decline.
The Russian central bank raised interest rates again last Friday. The policy rate was increased from 18.0 to 19.0 percent. In a previous decision at the end of July, the rate had already been raised by 2 percentage points.
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.
The European Central Bank (ECB) has reduced its deposit facility rate by 25 basis points to 3.50%, citing moderating inflation and labor cost pressures, while maintaining a cautious stance to ensure inflation returns to its 2% target. The ECB staff forecasts inflation to average 2.5% in 2024, gradually declining to 1.9% by 2026, with core inflation expected to ease as well. The ECB remains committed to a data-driven approach for future rate decisions and will maintain restrictive policies as long as necessary, while scaling back asset purchase programs and managing refinancing operations accordingly.
Oil prices rose nearly 2% due to disruptions from Hurricane Francine, affecting production capacity of 670,000 barrels a day in the Gulf of Mexico. However, crude remains lower this year as concerns about slowing demand, especially from China, persist. The IEA predicts a potential oil surplus in 2024, reinforcing market caution despite recent gains.
Moderna plans to launch ten new drugs over the next three years while reducing its research and development budget to $3.6-$3.8 billion by 2027, down from $4.8 billion. The company also revised its 2024 revenue forecast to $2.5-$3.5 billion, marking the second time this year it has lowered its outlook. Investors reacted negatively to the news, causing Moderna’s stock to fall by over 18%, reaching its lowest level of 2024.
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.
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.
European stock markets closed lower on Tuesday, as investors awaited the U.S. inflation data expected later this week and the ECB’s decision on Thursday. At the same time, oil prices took a hit due to bleak forecasts from OPEC. According to the oil cartel, global oil demand is expected to increase by 2.03 million barrels per day in 2024, followed by growth of 1.74 million barrels per day in 2025. These figures are lower than the estimates published last month.
Inflation in Germany dropped below 2% in August, with consumer prices rising less sharply year-on-year compared to the previous month. This was confirmed on Tuesday by the final figures from Germany’s statistical office, Destatis, in line with the earlier published preliminary estimate.
Following the actions of the Federal Reserve this summer, the European Central Bank (ECB) is expected to cut interest rates by 25 basis points this Thursday. This prediction is shared by several experts and is already priced into the market.
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.
Dutch house prices are seeing double-digit growth for the first time in a long period. In July, prices were 10.6% higher than a year earlier. Buyers paid about €44,000 more on average per home, notes Rabobank. Rising incomes and housing shortages are driving prices up faster than expected, with a 9.1% rise forecast this year and 10.7% next year. Transactions remain low due to limited supply.
Oil prices recovered on Monday after hitting their lowest point in over a year last week. West Texas Intermediate rose by about 1% to above $68 per barrel, while Brent exceeded $71 per barrel. The recent drop was caused by economic weakness in the US and China, raising demand concerns amid ample supply. This week, OPEC, the Energy Information Administration, and the International Energy Agency will provide market insights through their monthly reports. Market sentiment remains pessimistic, with money managers the least optimistic about oil in over 13 years.
Statistics Netherlands (CBS) confirmed today that inflation in August was 3.6% compared to the same month last year. The decrease is mainly due to lower motor fuel prices, which were 5.6% lower than in August 2023. In contrast, fuel prices were 1.5% higher in July compared to the previous year. Clothing prices also contributed to the lower inflation rate, according to CBS.
The 6M Euribor decreased with 1 basis point to 3.35% compared to previous business day. The 10Y Swap decreased with 1 basis point to 2.42% 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.
The Eurozone economy grew slightly less than initially expected in the second quarter of 2023, according to Eurostat data released on last Friday. The gross domestic product (GDP) increased by 0.2% in Q2, down from the preliminary estimate of 0.3%. On an annual basis, the economy grew by 0.6%, in line with earlier forecasts. In the first quarter, the Eurozone economy had grown by 0.3% quarterly and 0.5% annually.
U.S. job growth in August was slightly lower than expected, with 142,000 new jobs added compared to the forecasted 161,000. Unemployment remained at 4.2%, in line with expectations. Hourly wages increased by USD 0.14 (0.4%) to USD 35.21, with an annual wage growth of 3.8%, higher than the previous month’s 3.6% and economists’ expectations of 3.7%. Additionally, job growth for June and July were revised downwards, with June’s numbers adjusted from 179,000 to 118,000 and July’s from 114,000 to 89,000.
In July, Germany experienced a sharper increase in imports compared to exports. According to data from the German statistics agency Destatis released on last Friday, imports rose by 5.4% month-on-month, while exports increased by 1.7%. On a year-on-year basis, both exports and imports declined, with exports falling by 1.2% and imports decreasing by just 0.1%. The trade surplus for July was EUR 16.8 billion, falling short of economists’ expectations of EUR 20.6 billion.
The 6M Euribor decreased with 2 basis points to 3.36% compared to previous business day. The 10Y Swap decreased with 2 basis points to 2.43% 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.
Retail sales in the eurozone rose by 0.1 percent month-on-month in July, less than the expected 0.3 percent, following a 0.4 percent decline in June. On an annual basis, sales fell by 0.1 percent in July. These figures were released by the European statistical agency Eurostat.
The U.S. services sector continued to grow in August, with the Purchasing Managers’ Index rising from 55.0 in July to 55.7, the highest level in nearly two and a half years. The composite index improved slightly from 54.3 to 54.6, despite a decline in the manufacturing index from 49.6 to 47.9. Analysts suggest that this growth indicates robust economic development in the third quarter and supports expectations of a ‘soft landing’ for the economy.
The upward potential for the euro is limited in the short term, as September is usually a weak month for the euro/dollar pair and the trade-weighted euro index. Analysts suspect the cause may be related to the corporate tax deadline in the US and expect the euro/dollar to remain within the range of 1.05 to 1.11, unless there is a sharp rise in US unemployment figures. The British pound could come under pressure if the Bank of England signals cooling wage growth and declining inflation, which could influence market expectations.
The 6M Euribor increased with 3 basis points to 3.38% compared to previous business day. The 10Y Swap decreased with 4 basis points to 2.47% 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.
US job openings fell to their lowest level in 3.5 years in July, indicating a cooling labor market, but this is unlikely to lead to a large interest rate cut by the Federal Reserve. Meanwhile, a surge in imports widened the trade deficit to its highest level since June 2022, reflecting strong domestic demand despite potential impacts on GDP growth.
UK services activity reached a four-month high in August, with easing price pressures suggesting a more stable inflation outlook and economic environment following the July elections. The central bank’s recent rate cut and expectations for another cut by year-end have bolstered demand, though concerns remain about policy uncertainty ahead of the autumn budget.
Germany’s services sector growth slowed for the third month in August, signaling a loss of momentum in the economy as employment declined and the outlook remained subdued. The composite PMI, combining services and manufacturing, fell further below the growth threshold, reflecting continued economic weakness.
The 6M Euribor increased with 3 basis points to 3.38% compared to previous business day. The 10Y Swap decreased with 4 basis points to 2.47% 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.
