Global News Update: 16–21 December 2024
United States (USD)
• Economic Growth: November retail sales rose +0.7% MoM (core: +0.2%, cons +0.4%), reflecting steady consumer spending despite the Federal Reserve signaling only two rate cuts in 2025.
• Jobs: Economists expect the Trump administration’s tariff and tax policies to stoke inflation, causing the Fed to adopt a cautious approach to future rate cuts.
• Debt Securities: Long-term UST yields climbed midweek, with the 10-year Treasury yield closing at 4.53%, reflecting inflation concerns and slower Fed rate cuts next year.
• Inflation: November PCE data came in at 2.6% YoY (cons +2.7%), supporting the Fed’s stance on tempering easing.
• Geopolitical Risks: The U.S. government faces a potential shutdown due to congressional gridlock over a funding bill.
United Kingdom (GBP)
• Economic Growth: Manufacturing confidence fell to 5.8 in Q4 (Q3: 6.8) after Chancellor Rachel Reeves’ tax-raising Budget.
• Jobs: Wage growth rose to 5.2% in October (Sep: +4.9%, cons +5%), led by private sector increases. Job postings fell 23% YoY, as businesses face weak growth and higher costs.
• Debt Securities: The BoE held rates at 4.75% and downgraded growth forecasts, citing persistent inflationary risks.
• Inflation: November CPI rose to 2.6% YoY (Oct: +2.3%, cons +2.6%), fueled by higher motor fuel and clothing costs.
Eurozone (EUR)
• Political Turmoil: Germany heads to snap elections after Chancellor Scholz lost a confidence vote. France’s business confidence fell for the third month, while Macron seeks to pass an emergency budget bill.
• Economic Growth: Bank of Spain upgraded GDP growth to 3.1% in 2024 and 2.5% in 2025, citing strong domestic demand.
• Debt Securities: ECB cut rates by 25 bps to 3%, signaling further cuts in January and March, as inflation stabilizes at 2% and growth remains sluggish.
Japan (JPY)
• Economic Growth: November exports rose 3.8% YoY (cons +2.5%), led by machinery and metals, while imports fell 3.8%, yielding a trade deficit of ¥117.6 billion.
• Inflation: Core consumer prices rose 2.7% YoY in November (Oct: +2.3%), driven by higher energy costs, reinforcing a gradual BOJ rate hike outlook.
China (CNY)
• Economic Growth: Retail sales growth slowed to 3% YoY in November (Oct: +4.8%, cons +5%), while new home prices fell 0.2%, signaling continued property market weakness.
• Inflation: Economists warn that Trump’s tariffs could weaken export growth, requiring Beijing to strengthen economic support measures.
Australia (AUD)
• Economic Growth: Consumer confidence fell 2% MoM in December, reflecting persistent inflation and interest rate uncertainty. GDP projections were downgraded due to weaker mining exports.
• Monetary Policy: Australia’s jobless rate dropped to 3.9% in November (Oct: 4.1%), as employment rose by 35,600 jobs, reducing the probability of a February rate cut.
New Zealand (NZD)
• Economic Growth: GDP declined 1.0% in Q3 (cons -0.2%) as high interest rates dampened demand, raising expectations for deeper rate cuts.
Artificial Intelligence (AI)
• Advancements: Google launched advanced AI models capable of real-time multi-modal actions, and OpenAI introduced video-feed analysis for ChatGPT. Perplexity tripled its valuation to $9 billion after closing its fourth funding round of the year.
• Infrastructure Challenges: North America’s electricity grid faces critical reliability risks as surging AI demand outpaces capacity additions.
Environmental, Social, and Governance (ESG)
• Energy Transition: Fossil fuel companies like BP and Shell called for policy shifts to encourage lower-pollution product investments. The EU introduced stricter regulations on high-risk AI systems to enhance transparency.
Key Takeaways
• Economic Resilience: While inflation moderated in the U.S. and EU, economic data points to slower global growth, especially in China and New Zealand.
• Monetary Policy Divergence: Central banks, including the Fed, ECB, and BoE, maintained cautious stances on rate cuts, reflecting inflation persistence.
• AI and ESG: AI-driven investments and innovations continue accelerating, while ESG compliance remains a global priority amid geopolitical uncertainties.