6 goods & services with a lower price today than a year ago...
Source: HolgerZ, make it
Why a "hawkish hold" by the Fed remains a high probability outcome.
The bar for the Fed to start cutting interest rates is high. It is also worthwhile to remember that Powell job remains a difficult one in light of what has been taking place since the start of the hiking rates cycle and more recently. Indeed, 1) the unemployment rate is exactly where it was when the Fed started hiking last March...(hot job market = wage pressure =higher inflation) - see UPPER CHART BELOW 2) Financial conditions are now far easier than where they were last September... 3) The S&P 500 is back where it was just as the Fed started hiking - see LOWER CHART 4) Meanwhile, commodity prices are starting to ramp up, which could add upward pressure on headline inflation. Bottom line: while markets expect rate cuts to soon follow due to cooling inflation, there is a very decent probability that the Fed might be forced holding tight. Source: Bloomberg, www.zerohedge.com
Commodities on the run
Bloomberg Commodity Spot Index is currently having its best monthly performance since March. Source: Bloomberg, Liz Ann Sonders
Latest outlook from IMF shows expectation for global growth this year up to +3% year/year
2024 growth also at +3% … expectation is for U.S. to grow 1.8% this year, 0.2%-point increase from April; China expected to grow 5.2%, unchanged from April. Source: Bloomberg, Liz Ann Sonders
Master Options Flow Model
Heavy call options buying activity is a testimony of the ongoing fomo / "chasing the rally" mood which has been going on for some time now Source: Macro charts
ECB deleveraging continues.
Ahead of this weeks meeting, CenBank shrank its balance sheet by €18.6bn to €7,186.9bn as matured bonds were not replaced by new ones. ECB's total assets are now equal to 53% of Eurozone GDP vs Fed's 31%, SNB's 121%, BoJ's 129%. Source: Bloomberg, HolgerZ
Watches trading at Premium above retail
While luxury watches secondary market prices are declining, most Rolex, Patek, and AP trade above retail prices. Source: Bloomberg
S&P 500 hits fresh 52-week high while the Dow heads for 13th straight daily gain as markets hope that the US interest rate hikes cycle is over.
The Fed just said they are taking a "meeting by meeting" approach to future interest rate policy. As expected, the Fed raised interest rates to the highest level in 22yrs as expected and left the door open to additional increases as officials fine-tune their effort to further quell inflation. The quarter percentage-point hike, a unanimous decision, lifted the target range for the Fed’s benchmark federal funds rate to 5.25% to 5.5%, the highest level since 2001. It marked the 11th increase since March 2022, when the rate was near zero. Source: Bloomberg, HolgerZ