Summary of Global News from 21-26 October 2024
United States
- Economy & Jobs: Economic data continued to show resilience, with consumer spending and labour indicators pointing towards sustained strength. Trump has surpassed Harris in trust polls for economic leadership ahead of the election, boosting his position with a stance to increase tariffs on imports, which could impact inflation. Consumer sentiment hit a six-month high in October, with inflation expectations holding at 2.7% over the next year.
- Debt Securities: Treasury yields fluctuated, with the 10-year yield up by 3 basis points to 4.24% as investors reassessed the Federal Reserve’s path for rate cuts, now seen as gradual amid steady economic growth. The dollar rose, supported by strong economic data and political developments.
- AI: New rules from the Biden administration restrict the Pentagon and intelligence agencies' use of AI in ways that could misalign with democratic values, setting an example for international AI governance. TSMC alerted the US about chips potentially manufactured for Huawei, highlighting ongoing compliance with export controls.
United Kingdom
- Economic Confidence: UK consumer confidence dropped to -21 in October due to anticipation of potential tax rises in the upcoming Budget. Public sector borrowing rose to £16.6 billion in September, while capital gains tax receipts surged 16.3% in Q3, driven by investors taking gains ahead of tax changes. Business confidence also fell as companies await clarity on fiscal policy.
- Debt Securities & Policy: The Bank of England hinted at slower rate cuts, with inflation now seen as easing. Chancellor Reeves is expected to announce higher taxes on capital gains and hold a tighter line on overseas aid spending, as she faces a £40bn funding gap for the upcoming Budget.
- AI: The UK government is consulting on an “opt-out” scheme for content scraping by AI companies, potentially impacting publishers and creatives while fostering AI development.
Eurozone
- Growth & Debt: The IMF forecast Europe’s GDP growth to decline to just 1.45% annually until 2029, hindered by an ageing workforce and low productivity. Germany projected a €58.2 billion reduction in tax revenues over the next five years, intensifying the budgetary challenges facing Chancellor Scholz.
- Inflation & ECB Policy: With the Eurozone PMI shrinking to 49.7, the European Central Bank cut interest rates to 3.25%, with officials signalling further reductions by year-end as inflation continues to cool. ECB’s Lagarde confirmed that inflationary pressures are fading, with risks now balanced between inflation and underperformance.
Japan
- Currency & Economic Policy: The yen fell to its weakest against the dollar in nearly three months, sparking discussions between Japan’s Finance Minister and the US Treasury. Despite some improvement in wage indicators, the Bank of Japan signalled it would likely maintain its current rate path.
- Inflation: Tokyo’s consumer prices rose 1.8% in October, largely due to energy costs, with the Bank of Japan closely watching inflation dynamics ahead of a potential policy shift.
China
- Fiscal Measures & Currency: Chinese firms moved capital back into domestic markets amid lower returns on dollar-denominated assets, showing confidence in the yuan's stability. Beijing proposed issuing 2 trillion yuan in bonds to stabilise markets and address local government debt. FX settlements related to securities saw record levels, showing strong foreign currency inflows.
- Trade & Growth: Export growth slowed, especially to key markets like Japan and the EU, amid economic headwinds. Additionally, China began enforcing a tax on overseas gains for ultra-wealthy individuals, part of a broader economic recalibration.
Australia & New Zealand
- Jobs & Economic Indicators: Australia’s job market saw strong data, with employment rising by 64,100 in September and unemployment steady at 4.1%. New Zealand’s inflation fell sharply from 3.3% to 2.2% in Q3, leading to stronger bets on more aggressive rate cuts by the Reserve Bank.
- Trade Dispute: New Zealand escalated a dairy trade dispute with Canada under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, seeking fairer access to Canada’s market.
Commodities & Currencies
- Oil & Gold: Oil prices rose by 2.1% to $71.67 per barrel on Middle Eastern tensions, while gold edged up to $2,742.86 per ounce, supported by steady demand for safe assets.
- Cryptocurrencies: Bitcoin and Ether faced declines amid regulatory investigations, with Bitcoin falling 2% to $66,773 and Ether down 2.5% to $2,473.72.
This summary presents the latest market updates and economic developments across major economies, showing mixed performance with significant attention to inflation, fiscal policy adjustments, and AI regulations.