GAM's Active Thinking 03 May 2024
Latest from Charles Hepworth blog:
Friday’s US non-farm jobs report reflected the smallest gain in employment we have seen in the US for a while now. Advancing only 175,000, against expectations of 238,000, is a bit of a miss in economic terms and, coupled with this, the overall unemployment rate ticked up to 3.9% when it was expected to hold steady at 3.8%.? Average hourly earnings only advanced 0.2% versus 0.3% forecast, and this will be welcome news to the Federal Reserve (Fed).?
After Spanish, French, Italian and German Gross Domestic Product (GDP) quarterly prints that all exceeded expectations this morning, it was a nailed-on certainty that the flash estimate for Eurozone growth in the first quarter was going to show that the region has cast off its recessionary chains. That is indeed what has occurred as GDP for the region expanded 0.3% over the quarter, better than the estimate of 0.1% growth.
The US Federal Reserve (Fed) concluded that the market gets what the market expects. No one really was expecting any move today (how different to views at the start of the year!) given the inflation dynamics at the moment – inflation’s last mile towards 2% has proven to be the longest one. Even if some are speculating no cuts at all this year, which would be a bold prediction, the majority are now expecting the Fed to make two 25 basis point cuts by year end.
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