**PRO** Macro Investors
**PRO** Macro Investors
September 13, 2024 BONUS >> What the latest economic indicators reveal
BECOME MY FRIEND
💎 Get your Mentorship FREE here
🎙 PODCAST
📢 Bonus to must read FOR INVESTORS
⚡ Japan's Q2 GDP (0.7%)
Japan's economy grew by 0.7% in the second quarter, just missing the forecast of 0.8%. Still, it’s a significant improvement from last quarter’s contraction of -0.6%.
The Japanese market tends to respond positively to such growth - even if it’s modest.
For example, when Japan’s GDP rose by 0.5% in early 2021, we saw the Nikkei 225 climb by 7.2% in the following quarter.
It might not be a huge leap forward, but this signals stability, which could be positive for investors eyeing the Japanese market.
🧠 German CPI (MoM, -0.1%)
Germany’s inflation rate dipped to -0.1%, perfectly matching expectations, but down from the previous 0.3%.
This slight decrease in inflation may seem small, but historically, disinflationary trends in Germany have often had positive effects on European bonds and equities.
Take late 2020, for instance: during a similar period of declining inflation, the German 10-year Bund yield dropped by over 30 basis points, and the Euro Stoxx 50 surged by 5.5%.
We might see a similar dynamic unfold here, making European bonds an attractive option in the near term.
💎 UK GDP (MoM, 0.0%)
The UK economy remained flat in July with 0.0% growth, missing the expected 0.2%.
Unfortunately, this echoes the sluggishness we saw post-Brexit. In July 2019, when UK GDP stagnated, the FTSE 100 dropped by 2.7% in the following two months, and the GBP/USD exchange rate fell by 1.4%.
We could see pressure on UK equities and the pound, especially as investors continue to digest the ongoing challenges post-Brexit.
💥 US Core CPI (MoM, 0.3%)
Inflation in the US continues to hold strong, with core inflation ticking up by 0.3% in August.
This doesn’t stray too far from what the market expected, but it’s a reminder that the inflationary environment persists.
In similar situations, such as during the inflation spikes of 2018, the S&P 500 saw a correction of 6.2% over the following six months as the Fed was forced to take a more aggressive stance.
Could we be heading down the same road? Keep an eye on this as it may prompt further rate hikes by the Fed, with equities feeling the squeeze.
💡 US Crude Oil Inventories (0.833M)
Crude oil inventories came in higher than expected, rising by 0.833M, which usually signals a potential dip in oil prices.
Back in Q1 2023, when we saw a similar build-up in inventories, WTI crude prices fell by 5% over the subsequent week.
Energy stocks could feel some pressure in the short term, but this could open opportunities for sectors like transportation that benefit from lower oil prices.
🔥 US Initial Jobless Claims (230K)
The job market remains solid, with initial jobless claims slightly above expectations at 230K, but still indicating strength.
This echoes similar numbers from 2021 when jobless claims were around 230K, leading to a 2.4% rise in the US Dollar Index (DXY) over the next quarter.
If the labor market remains resilient, we might see the dollar continue to strengthen as the Fed stays on track with its current monetary policy.
Best regards,
Alessandro
Founder of Macro Mornings
Disclosure
This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.