A focus on Fed's next interest rate decision, the words most 'powerful' passport, recession for Sweden, and food price accusations from the CMA.
With all eyes on the Federal Reserve’s next interest rate decision on 13 December, yesterday saw markets react to further dovish comments from two federal reserve officials, Christopher Waller, and Michelle Bowman. The former – who is widely regarded as one of the most hawkish policy makers – said that the central bank is on track to bring inflation back down to their 2% target and that they may not need any further monetary tightening. While Waller and Bowan still signalled that subsequent policy decisions should be data dependent and are of course subject to a number of contingent possibilities, their comments suggest that their
conditions for a further rate hike have been raised. Such sentiments gave markets greater credence to the notion that the Federal Reserve have achieved their terminal rate. Earlier this month the Federal Reserve met market expectations in maintaining their benchmark policy target rate of 5.25-5.5% – its highest level in 22 years. With the DXY dollar index depreciating close to its lowest level in three months, focus now turns to Chairman Powell’s speech on Friday where markets will be keen to gauge further insight into projected monetary course.
According to Henley & Partners’ ‘Henley Passport Index’ Singapore is the most ‘powerful’ passport in the world, given that its citizens are able to travel to 192 destinations out of 227 without a visa. This is followed by Germany Italy and Spain, all of which can travel to 192 destinations. Previously Japan held the most ‘powerful’ passport for five years running, though it has now been demoted to third place. The index refers to the “ranking of all the world’s passports according to the number of destinations their holders can access without a prior visa”. Meanwhile, the most recent report stated that “The UK appears to have finally turned the corner after a six-year decline, jumping up two places on the latest ranking to 4th place — a position it last held in 2017.” At the bottom of the rankings comes Afghanistan, which is able to travel to 27 destinations, making it’s passport slightly less powerful than Iraq and Syria (with 29 and 30, respectively). As such, Henley & Partners state that “the global mobility gap between those at the top and bottom of the index is now wider than it has ever been, with top-ranked Singapore able to access 165 more destinations visa-free than Afghanistan.”
Data from Stockholm this morning indicates that Sweden is in a recession for the first time since 2020. This comes as growth contracted 30bps over the three months to September after shirking 80bps in the previous quarter. This quarter’s unexpected drop comes as household consumption dropped 0.6% and government spending remaining more or less unchanged. As we looked at last week, the Riksbank unexpectedly held their benchmark policy rate at 4% missing projections of 25bps rate hike. This marked the first pause in their monetary tightening cycle for well over 18 months, as policy makers weighed up the impact of further monetary tightening on an already shrinking economy.
The CMA has this morning accused some branded food companies of pushing up prices more than costs, exacerbating cost pressures on households. This morning’s statement argued that “Over the last two years, around three-quarters of branded suppliers in products such as infant formula, baked beans, mayonnaise, and pet food have increased their unit profitability and, in doing so, have contributed to higher food price inflation.”
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Macro Monday, report from the BCC on the impact on British businesses from Red Sea disruption, Ukraine president announces number of deaths since the Russian full-scale invasion, and data releases today.
Friday feeling, what's happened in the last two years of the Russia-Ukraine conflict, and more hawkish views from the Fed.
Thought for Thursday, House of Commons ceasefire vote decision, minutes released from Federal Reserve monetary policy meeting, geo-political update in Russia and Gaza, and looking at today's data.
Word of the week Wednesday, data indicates public sector net borrowing in surplus, this afternoons House of Commons vote for a ceasefire in Gaza, and release of FOMC policy me.eting minutes
Travel Tuesday, changes for China's property market, attacks on Red Sea Vessels cause further shipping disruption, EU defensive naval operation launched, and US propose a UN Security Council Resolution in the Middle East.
Macro Monday, update on Israel-Gaza conflict, town in Ukraine in full control of Russian forces, and pressure for creation of more public-private partnerships in the UK from insurers.
Friday Feeling, Labour take comfort in by-election results, potential for income tax cut plans to be dropped, president of European Commission speaks on European Union defence production.
Thought for Thursday, data released this morning shows UK in technical recession, Sunak's pledge for economic growth takes a blow, increasing number of MPs not looking for re-election for the Conservative party, and Labour party lead drops seven percentage points.