Market Overview Last One Year: June 2023 to June 2024
The global economic landscape in the last year has been shaped by significant developments across various regions, impacting economic growth, employment, debt securities, artificial intelligence, environmental policies, inflation, and recession fears.
United States
Economic Growth: The US economy experienced fluctuations, slowing growth in the first half of 2024. In June 2023, growth was more robust, driven by consumer spending and a recovery post-pandemic. By June 2024, growth decelerated due to higher borrowing costs and persistent inflation, reflected in a marked-down personal spending rate of 1.5% in Q1 2024.
Jobs: The labour market remained resilient, with consistent wage growth and employment rates, despite signs of cooling by mid-2024. Initial jobless claims were 242,000 as of mid-June 2024, indicating a slight softening compared to previous months.
Debt Securities: Treasury yields fluctuated, impacted by Federal Reserve policy shifts and inflation expectations. By June 2024, expectations for rate cuts were rising, influenced by decelerating inflation at 2.6% YoY as of May 2024.
Inflation and Recession: Inflation moderated from higher levels in 2023, with the core PCE index showing a 0.1% increase in May 2024, *suggesting a more stable inflation environment*. Recession fears subsided somewhat, but concerns persisted due to policy uncertainties and global economic conditions.
United Kingdom
Economic Growth: The UK experienced slow growth, with GDP remaining unchanged in April 2024, reflecting challenges in sustaining economic momentum. Political uncertainties surrounding the upcoming election also impacted economic sentiment.
Jobs: Wage growth remained steady, and unemployment rates were stable, but there were concerns about the labour market softening, as seen in rising jobless claims.
Debt Securities: The political landscape, particularly the potential change in government, influenced debt markets. Concerns about fiscal policy and public sector funding were prominent.
Inflation and Recession: Inflationary pressures eased somewhat, with inflation rates moderating compared to previous highs, contributing to a cautious monetary policy approach by the Bank of England.
Eurozone
Economic Growth: The Eurozone saw modest growth, with industrial production and ESG investments providing some support. However, economic confidence was challenged by political developments in France and broader geopolitical uncertainties.
Inflation and Recession: Core inflation remained stubborn, affecting ECB policy decisions. Inflation was at 2.6% YoY as of June 2024, with the ECB signaling caution in reducing interest rates.
Debt Securities: Fiscal challenges in member states like France led to rising sovereign bond premiums, highlighting concerns about public debt sustainability.
Japan
Economic Growth: Japan's growth remained fragile, with retail sales providing a positive signal in May 2024. The yen weakened significantly against the dollar, prompting potential intervention by authorities to stabilize the currency.
Inflation: Inflationary pressures were noticeable, with discussions around potential interest rate hikes as upside risks to inflation became more evident.
Debt Securities: The government maintained a cautious approach to debt, with the BOJ closely monitoring economic indicators for policy adjustments.
Australia
Economic Growth and Inflation: Australia's economy faced inflationary pressures, with a 4% YoY inflation rate in May 2024, prompting speculation about future rate hikes by the Reserve Bank of Australia.
Jobs: The labour market showed resilience, with employment rates stable and wage growth continuing.
China
Economic Growth and Trade: China faced trade tensions, particularly with the US, affecting its economic outlook. The government emphasized the openness of its market in response to Western criticism of its industrial strategy.
Debt Securities: The Chinese government bond yield fell to historic lows, reflecting concerns about domestic economic conditions and expectations for further stimulus.
AI Developments: China continued to push forward with AI advancements, investing heavily in technology as part of its broader industrial strategy.
Artificial Intelligence (AI)
Corporate Developments: AI saw significant investment and corporate developments, with companies like Nvidia experiencing large fluctuations in market value. Investments in AI were driven by its potential applications across various sectors, including defence and medical care.
Environmental, Social, and Governance (ESG)
Energy Consumption: Discussions around the energy consumption of AI systems highlighted concerns about sustainability, with calls for balanced perspectives on the technology's long-term benefits versus its current energy demands.
From June 2023 to June 2024, global economies navigated a complex landscape characterized by evolving monetary policies, inflationary pressures, geopolitical tensions, and significant technological advancements, particularly in AI. While growth prospects varied by region, the overarching themes of cautious optimism and strategic adjustments remained prevalent.