In May UK shop price inflation slowed to its lowest rate in two and a half years, indicating that the pace of price increases in British retail is returning to normal levels, with food inflation also continuing its downward trend for the thirteenth consecutive month. This easing of inflationary pressures, welcomed by the Bank of England, suggests potential for future interest rate cuts as services sector prices remain the focus due to their higher inflation compared to goods.
In April, Japan’s corporate services prices surged at the fastest rate since March 2015, driven by rising labor costs in services industries, marking a significant development for policymakers who are keen on initiating a wage-led demand growth cycle. The Corporate Services Price Index increased by 2.8% year-on-year, with the Bank of Japan considering further rate hikes as part of its shift away from negative interest rates.
The Bank of Israel maintained its benchmark interest rate at 4.50%, citing increasing inflation pressures and ongoing geopolitical uncertainties due to the conflict with Hamas in Gaza. The central bank highlighted that any future rate cuts would be cautious, acknowledging challenges in normalizing interest rates while aiming to stabilize the markets and support economic growth amid heightened risks.
The 6M Euribor is unchanged at 3.78% compared to previous business day. The 10Y Swap increased with 4 basis points to 2.84% 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) is set to lower interest rates from a record high of 4% at its upcoming June 6 meeting. The ECB now looks almost certain to be one of the first major central banks to cut rates, after being one of the last to raise them after the biggest inflation surge for a generation. ECB’s chief economist Philip Lane told the FT in an interview: “Barring major surprises, at this point in time there is enough in what we see to remove the top level of restriction.” This move precedes anticipated rate cuts by the FED and the Bank of England later in the summer.
On Monday, European Union governments officially approved a new regulation aimed at guaranteeing that the EU generates 40% of its solar panels, wind turbines, heat pumps, and other sustainable technology equipment. This initiative is crafted to bolster European industries in competing with counterparts in the U.S. and China. The Net Zero Industry Act (NZIA) is set to be enacted next month or in early July.
Spot gold held its ground at $2,349.89 per ounce, as of 0600 GMT, after rising about 1% in the previous session. U.S. gold futures were up 0.7% at $2,350.70.
The 6M Euribor is unchanged at 3.78% compared to previous business day. The 10Y Swap decreased with 4 basis points to 2.80% 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.
Germany’s economy grew in the first three months of this year in line with an earlier estimate, according to new data from the German statistics office Destatis released on Friday morning. On a quarterly basis, economic growth was 0.2 percent, following a 0.5 percent contraction in the fourth quarter. On an annual basis, Germany’s GDP decreased by 0.2 percent in the first quarter, which also matches the preliminary estimate.
Raphael Bostic, President of the Atlanta Fed, expects that official interest rates will remain stable at the current level for an extended period to achieve the inflation target of 2 percent, which he believes could take several years. Bostic emphasizes that the robust job growth and the savings spent during the coronavirus crisis keep demand high despite higher interest rates. He warns against shifting inflation targets under the current circumstances and confirms that the Fed is committed to the 2 percent goal.
Oil prices rose on Friday after four days of declines, with West Texas Intermediate increasing to 77.72 dollars per barrel and Brent to 82.00 dollars per barrel. However, on a weekly basis, prices fell by about 2 percent due to concerns that the Federal Reserve’s prolonged high interest rates could weaken oil demand. Analysts note a weak demand period despite the expected seasonal increase and highlight the upcoming OPEC meeting, where the response of oil-producing countries to the current price levels will be crucial.
The 6M Euribor is unchanged at 3.78% compared to previous business day. The 10Y Swap is unchanged at 2.84% 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.
In May, Dutch consumer confidence declined, according to Statistics Netherlands, with the confidence index dropping from -21 in April to -22 in May. The assessment of the economic climate became more negative, though the willingness to buy was slightly less negative. At -22, confidence was well below the twenty-year average of -10. The highest level ever recorded was 36 in January 2000, while the lowest level was -59 in September and October 2022.
The American manufacturing and services sectors grew faster in May than in the previous month, according to preliminary purchasing managers’ indices from S&P Global. The index for manufacturing rose from 50.0 to 50.9, and the index for the services sector increased from 51.3 to 54.8. The composite index reached 54.4, compared to 51.3 in April. This is the highest level in over two years.
The eurozone economy showed more growth in May, but slightly less than expected, according to preliminary figures from S&P Global. The purchasing managers’ index for the services sector remained stable at 53.3, while 53.5 was expected. The index for the manufacturing sector rose from 45.7 to 47.4, above the expected 46.1. As a result, the composite index increased from 51.7 to 52.3, slightly higher than the expected 51.8.
The 6M Euribor is unchanged at 3.78% compared to previous business day. The 10Y Swap increased with 4 basis points to 2.84% 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.
Oil prices closed lower for the third consecutive day on Wednesday, following a rise in U.S. oil inventories. West Texas Intermediate settled at $77.57, down 1.4 percent. In the week ending May 17, crude oil inventories increased by 1.8 million barrels, while gasoline inventories decreased by 0.9 million barrels. Inventories of heating oil and diesel rose by 0.4 million barrels, and refinery utilization capacity increased from 90.4 to 91.7 percent.
Consumer prices in the United Kingdom rose more than expected in April, according to figures from the ONS released on Wednesday. On an annual basis, prices rose by 2.3 percent, compared to economists’ forecast of a 2.1 percent increase. The previous month saw a price level increase of 3.2 percent. Prices rose by 0.3 percent on a monthly basis, following a 0.6 percent increase a month earlier. A 0.2 percent increase was expected.
Existing home sales in the United States fell in April, according to figures from the National Association of Realtors (NAR) released on Wednesday. On a monthly basis, sales decreased by 1.9 percent to 4.14 million homes on an annualized basis. Economists had anticipated a 1.4 percent increase to 4.25 million sold homes.
The 6M Euribor decreased with 1 basis point to 3.78% compared to previous business day. The 10Y Swap increased with 3 basis points to 2.80% 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.
German home prices are expected to decline by 2% in 2024, a smaller drop than in 2023, due to anticipated lower borrowing costs. Despite this, the supply of affordable homes will continue to fall short of demand with a significant shortfall predicted over the next two to three years.
The International Monetary Fund warned the UK government against implementing pre-election tax cuts, suggesting that future tax increases might be necessary to meet debt targets. While the IMF upgraded the UK’s economic growth forecast for 2024 to 0.7%, it criticized recent tax policies and projected that the public debt will continue to rise, advising the government to consider new revenue-raising measures.
China announced significant measures to stabilize its struggling property sector, including 1 trillion yuan in extra funding and eased mortgage rules. Despite these efforts, analysts remain cautious about their effectiveness in boosting private sector demand and restoring confidence in the real estate market.
The 6M Euribor is unchanged at 3.79% compared to previous business day. The 10Y Swap decreased with 3 basis points to 2.77% 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.
Producer prices in Germany declined more sharply in April than the previous month, according to figures from Destatis, the German statistics office. On a yearly basis, prices fell by 3.3 percent, compared to a 2.9 percent decline in March. Energy prices dropped by 8.2 percent year-over-year. On a monthly basis, producer prices rose by 0.2 percent in April, while energy prices fell by 0.1 percent.
After a positive 18-month period, U.S. macroeconomic data is showing signs of weakening. This is evidenced by the decline in purchasing managers’ indexes in April, the cooling U.S. labor market, and weakened consumer confidence and housing market. This weakening has contributed to the U.S. economic indices turning significantly negative for the first time since early last year.
It appears that currency markets have entered calmer waters, allowing the US dollar to stabilize. This is evident from the period between last week’s U.S. inflation data release and the upcoming PCE inflation report at the end of next week. According to market analysts, May has so far brought a weak US dollar, strong risk sentiment, and rising expectations for easing by the Federal Reserve. The 6M Euribor decreased with 1 basis point to 3.79% compared to previous business day. The 10Y Swap increased with 1 basis point to 2.80% 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 Japanese economy contracted again in the first quarter of this year, according to data from the Japanese government. Economists had expected a contraction of 0.4 percent, but the actual contraction was 0.5 percent on a quarterly basis. This marks a continuing challenge for Japan, as its gross domestic product had already contracted by 0.9 percent in the third quarter of last year. On an annual basis, the economy contracted by 2.0 percent in the first quarter, highlighting concerns about the country’s economic growth.
Data from the US Department of Labor indicates that American import prices rose in April. On a monthly basis, prices increased 0.9 percent compared to a rise of 0.6 percent the previous month, which exceeded economists’ expectations of 0.3 percent. Fuel import prices increased by 2.4 percent following a 5.4 percent rise the previous month. Export prices increased by 0.5 percent on a monthly basis, while on an annual basis, import prices were 1.1 percent higher and export prices were 1.0 percent lower.
On Thursday, oil prices continued to rise, with a barrel of West Texas Intermediate (WTI) becoming 0.8 percent more expensive, reaching a price of $79.23. The price for a barrel of Brent increased by 0.7 percent to $83.27. These price increases followed Wednesday’s news that U.S. oil inventories had declined for the second consecutive week. Additionally, favorable inflation figures from the United States also positively impacted oil futures.
The 6M Euribor is unchanged at 3.80% compared to previous business day. The 10Y Swap increased with 4 basis points to 2.74% 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 economy in the eurozone grew faster in the first quarter of this year. This was evident from figures released by the statistics agency Eurostat on Wednesday. Growth reached 0.3 percent on a quarterly basis in the first three months of the year, in line with an earlier estimate. On an annual basis, the eurozone economy grew by 0.4 percent, also in line with previous figures. In the fourth quarter, the economy in the eurozone still contracted by 0.1 percent on a quarterly basis, but the GDP rose by 0.1 percent on an annual basis.
The Dutch economy shrank again in the first quarter. This was shown by figures from the Central Bureau of Statistics released on Wednesday. Over the quarter, the gross domestic product decreased by 0.1 percent compared with the fourth quarter, according to an initial calculation of Statistics Netherlands. In the last quarter of 2023, the Dutch economy still grew by 0.3 percent on a quarterly basis. The slight decline of GDP in the first quarter is mainly attributable to the export of goods and a greater withdrawal from inventories, according to Statistics Netherlands.
Consumer prices in the United States in April rose as expected. This was evident from figures released by the U.S. Department of Labor on Wednesday. Consumer prices increased by 3.4 percent on an annual basis in April, versus 3.5 percent a month earlier. Economists had also expected an inflation rate of 3.4 percent. Core inflation, which is adjusted for food and energy prices, was 3.6 percent on an annual basis compared with 3.8 percent a month earlier. Economists had also expected a rate of 3.6 percent.
The 6M Euribor is unchanged at 3.80% compared to previous business day. The 10Y Swap decreased with 12 basis points to 2.70% 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.
Federal Reserve Chairman Jerome Powell emphasized the need for patience in monetary policy, noting that despite unexpected high inflation rates in the first quarter, the restrictive measures need time to take effect. This cautious stance comes amid continuing signs of inflation pressures, as evidenced by higher-than-expected U.S. producer prices, contrasting with the European Central Bank’s optimism about easing inflation and potential interest rate reductions.
U.S. producer prices in April rose more sharply than expected with a month-over-month increase of 0.5% following a revised drop in March, while core prices excluding volatile elements like trade, food, and energy also saw a rise. Year-on-year prices showed a 2.2% increase from a previous 1.8%, and core prices escalated to 3.1% from 2.8% in March.
OPEC has maintained its oil demand growth forecast for 2024 at 2.2 million barrels per day, unchanged from the previous month’s report. The decline in expected demand from the Middle East will not be compensated by slight increases from the US and China. Production by non-OPEC+ countries is expected to grow by 1.2 million barrels per day this year, led by increases in the U.S., Brazil, Canada, and Norway.
The 6M Euribor increased with 1 basis point to 3.80% compared to previous business day. The 10Y Swap increased with 4 basis points to 2.82% 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.
