This week’s fireworks on the Giltsmarkt, while investors are worried that the tears of the Chancellor in the Lower House had porced her departure, marked the latter in what has regularly become volatility in the British prices of the government bonds.
After selling the pound on Wednesday afternoon when Sir Keir Starmer stopped giving Rachel Reeves his full support, the gilded prices recovered after the prime minister had made a fuller public expressions of support, and said that Reeves Chancellor come for a “very long time”.
The costs of ten years decreased from their highlights, but remained at 4.56 percent higher than before the episode. Investors said they were concerned that measures to strengthen public finances became politically unreachable, after the U-turn for the reform of well-being, and that the risk of the government’s stability was thrown into sharper lighting.
It will be a “Fine Balancing Act that bits the market on the one hand, but on the other hand the rebels within the Labor party,” said Craig Inches, head of rates and cash at Royal London Asset Management. A step higher in the global bond returns would again put the pressure on a guilt market that, although stable for now, remains toe. Ian Smith
Is China still confronted with deflation?
China has fought against deflatory pressure that will probably not decrease in June, because a weak domestic demand and an economic policy aimed at production have their impact on prices.
The country of Statistics of the country will publish the producer Price Index and Consumer Price Index in June on Wednesday. The PPI, who follows the prices of goods and services before they reach consumers, is negative since October 2022. The CPI has been negative since February this year.
The average prediction in a reutures survey has the PPI in June by 3.1 percent on an annual basis after a decrease of 3.3 percent in May. The CPI is expected to be flat on an annual basis after falling 0.1 percent on an annual basis in May.
An important engine of deflation is extreme price competition in domestic companies. There are prize wars in sectors ranging from electric vehicles to food delivery. High-level civil servants have become increasingly vocal against this trend, in the midst of broader rhetoric against “Invention”-a word that describes the malaise caused by continuous competition that makes someone’s efforts increasingly worthless.
In a meeting last Tuesday, President Xi Jinping and attended by Prime Minister Li Qiang, officials emphasized the need to “regulate legal low-prize-wanordial competition”.
This has caused the expectations of the modest supply of supply side, which can relieve deflatoire pressure. But until China makes sense to encourage the question or reduces oversupply, inflation probably remains stubbornly low. William Sandlund
Will Fed minutes offer instructions on the timing of the next rate reduction?
Strong economic data keeps the pressure of the American Federal Reserve to lower the interest rates during the next meeting at the end of this month and although observers still expect at least one reduction in 2025, it is unclear when the FED could actually lower the rates.
More insight into the thinking process of the FED will come on Wednesday with the release of the June meetings of the Federal Open Market Committee. The Fed left the federal funds intact during the meeting of last month, because it has since made a quarter -point reduction in December.
The American Bureau of Labor Statistics reported on Thursday that the economy of the country had added around 147,000 jobs in June, well above the consensus prediction of 107,000. Traders responded by supporting bets that the FOMC would decrease this month.
There is now a chance of less than 5 percent that the FED will lower interest rates during its meeting of July 29-30, according to data from LSEG. The equivalent of two quarter -point reductions is expected by the end of the year, with the FED coming together again in September, October and December.
Morgan Stanley economists said that recent data showed that the labor market remained too tight to expect the FED to intervene in July.
“For the FED, Labor Input gradually slows down without creating considerably larger play,” said the MS economists. “We do not think that this data will indicate a reduction in July, and we continue to think that the combination of rising rates and a low unemployment rate will keep the fuel on the sidelines.”
Brian Rose, a senior American economist at UBS, pointed to a decrease in private wage lists in June as proof that the FED would probably reduce later in the year, while it agreed that the current data was too strong for a reduction of July.
“However, the weakness in private wage lists, the participation rate, income and sentiment surveys suggest that the demand from work,” said Rose. Will Schmitt
