Spreadex Market Update
Dovish Federal Reserve whilst BoE and ECB Remain Resolute
The Big News
Resolute ECB and BOE Amid Rate Cut Speculations
The European Central Bank (ECB) and the Bank of England (BOE) are steadfast in their monetary policy approaches despite market expectations for early rate cuts. The ECB preserves its 4% interest rate, subtly suggesting a reduction in bond purchases from the latter half of 2024. Simultaneously, the BOE, holding at a 5.25% rate, signals reluctance to embrace immediate rate cuts, a stance that casts uncertainty over the UK's economic outlook.
U.S. Consumer Spending: A Beacon of Economic Strength
Contrary to the anticipated decline, U.S. retail sales in November witnessed an unexpected surge, climbing by 0.3% with core sales also rising. This positive trend, coupled with a decrease in initial jobless claims, has prompted the Atlanta Fed to revise its Q4 GDP forecast upwards. This robust consumer spending is a key driver in allaying fears of an imminent recession, offering a glimmer of hope in a landscape of economic uncertainty.
Oil Markets Rally on Optimistic Global Demand Outlook
Global oil markets are experiencing a resurgence, with prices per barrel reaching $71.65. This uplift is primarily driven by the IEA's upbeat global demand forecast and a concurrently weakening U.S. dollar. However, the market faces potential resistance points, and the trajectory of oil prices remains a focal point of global economic discourse.
China's Economic Strategy
A Delicate Balancing Act In a notable shift, China plans to reduce its budget deficit to 3% of GDP in 2024, down from the current 3.8%. This adjustment is part of a broader strategy to stimulate economic recovery, including the issuance of special sovereign bonds. These fiscal manoeuvres underline China's commitment to navigating its economic challenges with flexibility and foresight.
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