US: Where next for interest rates?

Investors worried about interest rates following a comment from a member of the Federal Reserve policy committee questioning whether inflation had really peaked. This means that investors continue to worry that the Federal Reserve will continue raising interest rates aggressively. On the flip side, economic data published for the month of July showed the economy was appearing to be more resilient that many expected.

Japan: Economy grows by less than expected

Investor sentiment was initially boosted by th...

US: Signs that inflation is peaking

Data showed signs that inflation, while still elevated on an annualized basis, had started to slow, supporting the view that the rise in consumer prices may have peaked. Inflation fell more than expected, down to 8.5%, down from 9.1% a month prior. This meant that investors think that the Federal Reserve could slow down the rate at which it raises interest rates and in doing so, could perhaps avoid sending the economy into a recession.

Japan: Investor sentiment boosted by US inflation and policy continui...

US: A stronger than expected jobs report

A much stronger-than-expected jobs report revived investor concerns that the Federal Reserve will need to maintain an aggressive pace of interest rate hikes to tamp down high inflation. The unemployment rate in the US dropped to 3.5% matching the February 2020 level and July saw much higher growth in jobs than many had anticipated. Despite these concerns, equity markets had some support from earning reports from companies, which showed more robust earnings than had been expected.

Japan: Investor sen...

US: Federal Reserve raises interest rates again

The US central bank, the Federal Reserve, raised interest rates by 0.75% points. At the same time, data showed that the US economy contracted 0.9% in the period between April and June. A ‘bad news is good news’ dynamic appeared to take hold: If the economy is indeed contracting, that could mean that the moving forwards the central bank could go slow down interest rate hikes. Walmart reported poor earnings due to the impact of inflation on consumers’ discretionary spending, but technology giant...

US: Slowing economic growth boosts stocks

Investors welcomed signs of a slowing economy and fading inflationary pressures. Economic data pointed towards a slowing of the economy and was further emphasised by company reports for the period between April and June. Despite indications of an easing economy, many companies reported greater resilience in profits than many had expected. However, companies where a big portion of revenue coming from advertising are showing signs of stress. Advertising is typically one of the first things companies t...

US: Inflation soars to over 9%

Investors absorbed inflation data and the earnings reports from some companies for the period between April and June. Inflation for the month of June came in at 9.1%, the highest since 1981 and send markets tumbling. However, further inflation data released later in the week showed that import and export prices had risen significantly less than had been forecasted in the month of June. This helped markets recover some of the losses later in the week.

Japan: Economic growth remains the focus

Japan mourned its...

US: Can the US achieve a ‘soft landing’?

Investors appeared mildly optimistic that the US could achieve what we call a ‘soft landing’, i.e. being able to slow the economy enough to bring inflation down, but avoiding a recession. The economy continues to slow down, and wage gains are beginning to cool down, but only very slightly. This could take the pressure off the Federal Reserve, the US central bank, raising interest rates too aggressively.

Japan: RIP Former Prime Minister Shinzo Abe

Former prime minister Shinzo Abe was shot and killed...

US: The worst first half of a year since 1970

Worries grow that the Federal Reserve’s fight against inflation would push the economy into recession. These ongoing fears has meant that the S&P 500 index, had the worst first-half of a year since 1970. Economic data published during the week was poor. Consumer confidence, manufacturing, personal consumption all indicated overall pessimism in the economy.

Japan: Services sector confidence up, but manufacturing down

The escalating risk of a global recession prompted by major central banks aggr...

US: Does a slowing economy take the pressure off the Federal Reserve?

There are signs that the economy is continuing to cool down which in turn is helping tame inflation. For example, existing home sales fell in May in the face of higher mortgage rates. National economic activity also fell, with both manufacturing and services appearing to be slowing down. As a result of this, it appears that manufacturers, whilst continuing to raise prices, the amount by which they are raising prices has come down somewhat.

Japan: Business activity rises,...