Global News Update 15 July to 19 July 2024

United States:

- Political Climate: Trump’s campaign faced an attempted assassination in Pennsylvania, leading him to select JD Vance as his running mate to appeal to blue-collar voters. Biden’s re-election bid is under pressure, with Democratic megadonors threatening to halt funding and senior Democrats, including Senator Jon Tester, urging him to step down.

- Economic Data: The Fed is preparing for potential interest rate cuts in September amid improved inflation data and a cooling labour market.

- Debt Securities: Investors anticipate higher inflation and a greater supply of longer-dated government bonds due to Trump’s potential tax-cutting and pro-trade tariff agenda.

- AI: OpenAI launched GPT-4o mini, a more affordable AI model, and is in talks with Broadcom to develop new chips to reduce reliance on Nvidia. The Biden administration is considering severe trade restrictions on semiconductor technology to China.

United Kingdom:

- Political Developments: UK and EU plan a bilateral summit to reset post-Brexit relations. Chancellor Rachel Reeves is introducing legislation to prevent budget issues like the “mini” Budget by giving the fiscal watchdog more powers. Starmer proposed 40 bills for economic growth and worker rights.

- Economic Data: Average earnings excluding bonuses rose 5.7% in May, down from 6% in April, signalling a cooling labour market. Services inflation slightly decreased to 5.6% in June.

- ESG: Criticism arose over Brussels’ efforts to establish hydrogen as a clean fuel, with a report stating the bloc won’t meet its targets despite €18.8bn in funding.

- Jobs: The BOE and government face uncertainty over the jobs market due to delays in the new labour force survey rollout.

Eurozone:

- Fiscal Health: France’s national auditor raised concerns about budget deficits and public debt, indicating non-compliance with EZ fiscal rules. The ECB kept interest rates at 3.75%, with a decision on a potential cut in September being “wide open”.

- Jobs: Rapid wage rises and geopolitical uncertainties are expected to keep pushing prices up, complicating monetary policy decisions.

China:

- Economic Growth: GDP grew by 4.7% YoY in Q2, below the expected 5.1%, with retail sales slowing. Manufacturing expanded by 6.2% in the last quarter, but the real estate sector contracted for the fifth consecutive quarter.

- Debt Securities: UBS research suggests new 60% tariffs on all Chinese exports to the US could halve China’s annual growth rate if Trump returns to the White House.

Japan:

- Economic Data: Inflation rose 2.6% YoY in June, up from 2.5% in May, driven by slightly higher energy costs. Exports rose 5.4% YoY in June, led by chip-making gear and non-ferrous metals, supporting economic recovery expectations.

Canada:

- Economic Outlook: The finance minister projected a soft landing for the economy, with inflation retreating and interest rates decreasing, despite polls showing Trudeau’s unpopularity due to issues like the cost of living and housing shortages.

New Zealand:

- Inflation: Inflation fell to 3.3% in Q2 from 4% in Q1, below the consensus of 3.6%, due to ongoing stickiness in domestic prices like rents and insurance, raising concerns for the RBNZ.

Australia:

- Jobs: Employment rose by 50.2k in June, driven by full-time jobs, with the unemployment rate ticking up to 4.1% as more people sought work, showing labour market resilience to high interest rates.

Artificial Intelligence (AI):

- Corporate Moves: The co-founder of Russian tech group Yandex launched an AI venture in Europe, and the UK Competition and Markets Authority is investigating Microsoft’s hiring of staff from start-up Inflection AI, highlighting regulatory scrutiny.