Economy
The December ISM Services PMI beat estimates, increasing to 54.1 from 52.1 in November. All subcomponents increased except for employment, which nonetheless remains in expansion. The prices paid component was especially strong, increasing to 64.4 from…
Our Global Asset Allocation strategists published their monthly tactical asset allocation report, where they illustrate booming expectations in the US will be self-limiting. For the first time since 2022, US GDP growth is expected to start the year above…
Job openings once again beat expectations in November, increasing to 8.1m from 7.8m in October. However, hires and quits decreased and layoffs increased. The gap between quits and layoffs, a leading indicator of labor market demand, ticked down. The jobs gap,…
December euro area inflation met expectations, with headline HICP printing at 2.4% y/y from 2.2% in November, and core steady at 2.7%, above the ECB’s target. Services inflation remains elevated at 4.0% y/y, up from 3.9% a month prior. While services…
Our US Bond Strategy team published their outlook for the Fed in 2025. They expect more cuts than the 50 bps signaled by the Fed at its December meeting. Core PCE inflation is tracking well below the Fed’s 2.5% forecast, while unemployment could exceed…
Economic data released over the holiday period extended recent trends, reflecting a softening global economy with resilient US growth, and an ailing manufacturing sector. The December global manufacturing PMI declined to 49.6 after reaching the 50 level…
Paradoxically, raging optimism on the US economy is making a reacceleration in growth less likely in 2025. The reaction of the bond market has made the Fed rethink its cutting campaign. Markets are also constraining Trump’s agenda. US manufacturing will not recover with a surging dollar. Fears of inflation and debt sustainability have made moderate House Republicans push back against the President Elect’s wishes. Given the sky-high optimism embedded in asset prices, we believe a defensive portfolio stance is warranted on a 12-month horizon. Overweight gold to hedge the risk of a fiscal crisis.
The Fed’s preferred measure of inflation, core PCE, came in below expectations at 0.1% m/m in November, remaining steady at 2.8% y/y. The monthly advance was the lowest since May. The inflation deceleration was broad-based. Core services inflation increased…
China’s November monetary and credit data were disappointing. New yuan loans increased by 580 bln, nearly half the expected amount. Total social financing rose by 2.3 tln instead of the expected 2.7 tln. Finally, M2 growth slowed to 7.1% y/y from 7.5% in…