In our #CrossAssetWeekly we explain this week why we believe the #ECB can and should front load some of its interest rate cuts and lower its policy rate in October and December - a view that we are holding for many months now and not only because several speakers from the Eurotower indicated lately that they are increasingly converging towards it. Basically we argue that (1) inflation expecations are well anchored again such that the ECB doesn't have to fight for its credibility anymore and can take comfort in its own forecasts that show inflation declining towards its inflation target in a policy relevant time. (2) Currently, only services prices are elevated. These, however, will also moderate as their main driver - the labour market - is already cooling and so will wages with a certain delay. While the unemployment rate is still at a record low, vacancies are coming down and companies increasingly report that it is the lack of demand not the lack of labour that is constraining their growth. (3) Risks are moving away from too elevated inflation to too low growth. We never bought the case that the economy can fully recover on the back of higher private consumption only. True, real household income increases on the back of lower inflation and higher wages. But households will not spend it fully if the general economic environment is as bad as it is. What the euro area economy needs is more #investment spending. But that is unlikely with interest rates being that high. Higher investment spending would accelerate productivity growth or increase the housing stock both of which could lower inflation. (4) The risk of a policy mistake by lowering policy rates too early are very small as monetary policy will remain restrictive and therefore will contribute to lower inflation even after a few rate cuts. In case, inflation unexpectedly picked up the ECB would not even have to increase rates again. It could simply leave them constant for longer. (5) Instead the ECB risks making a policy #mistake by not lowering policy rates fast enough. Real rates would increase if inflation expectations are falling faster than nominal rates. Basically that implies that policy rates should be lower if inflation is at 2.5% and not at 7.5% anymore. In our Weekly we also comment on the latest policy stimulus in #China. While that can be a turning point for financial markets it is not yet for the economy. It will not stop the correction in the housing market and is therefore also not turning the economic cycle. For this to happen more stimulus is still needed. Finally, we argue that the #US corporate sector is still sufficiently healthy such that we do not expect large scale layoffs soon. Read more in the full publication: https://lnkd.in/dpBf3fJn
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The Federal Reserve held its target overnight rate at 5.50% and reaffirmed their commitment to quantitative tightening by allowing Treasury and MBS securities to roll off their balance sheet subject to monthly caps. Excerpts from the Fed statement are as follows: - The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. - The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. -The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. Legal: https://lnkd.in/eG7Mxjp https://lnkd.in/gDwit3Q
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Markets are beginning to wake from their long slumber. With month-end flows, the Treasury’s Quarterly Rebalancing announcement, the Employment Cost Index, and a Federal Reserve decision in the docket for the day ahead, equity futures are setting up for a softer open, Treasury yields are down, and the dollar is up - classic signs of risk aversion. More from Karl Schamotta: https://lnkd.in/ekambD4H
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This is staggering ... 👇🏻 • • • Over 400 LinkedIn posts were made in the last 24 HOURS with #inflation ... 😑 My advice ... Find a PRODUCT you BELIEVE in, a LEADER you TRUST, and LEARN how to CREATE ONLINE INCOME for yourself. 💰 It’s REAL ... ✌🏻 #onlinebusinesscoach #growthmindset #multiplestreamsofincome #leveragedincome
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Corpay chief market strategist Karl Schamotta joined BNN Bloomberg this morning to discuss the economic outlook. He says signs of economic resilience could lead to higher yields and more cautious messaging from central banks. He also suggests improved sentiment in Canada might lead to outperformance for the Canadian dollar in the short-term - but says debt risks should drive the loonie lower by the end of 2024. https://lnkd.in/gUWZGRkk
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HR Strategic Partner at Corpay partnering 🤝with leadership 🏅to ensure their talent strategy aligns with their business needs.🏢
Corpay chief market strategist Karl Schamotta joined BNN Bloomberg this morning to discuss the economic outlook. He says signs of economic resilience could lead to higher yields and more cautious messaging from central banks. He also suggests improved sentiment in Canada might lead to outperformance for the Canadian dollar in the short-term - but says debt risks should drive the loonie lower by the end of 2024. https://lnkd.in/d_CXj9RP
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Senior Foreign Exchange Dealer at Corpay Cross-Border Solutions, a FLEETCOR company (formerly Cambridge Global Payments)
Corpay chief market strategist Karl Schamotta joined BNN Bloomberg this morning to discuss the economic outlook. He says signs of economic resilience could lead to higher yields and more cautious messaging from central banks. He also suggests improved sentiment in Canada might lead to outperformance for the Canadian dollar in the short-term - but says debt risks should drive the loonie lower by the end of 2024. https://lnkd.in/ggj-mUmj
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Cross Border | International Payment Solutions | Currency Risk Management for Corporations
Corpay chief market strategist Karl Schamotta joined BNN Bloomberg this morning to discuss the economic outlook. He says signs of economic resilience could lead to higher yields and more cautious messaging from central banks. He also suggests improved sentiment in Canada might lead to outperformance for the Canadian dollar in the short-term - but says debt risks should drive the loonie lower by the end of 2024. https://lnkd.in/gKcGreUr
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Markets end the day higher after Fed Chair Powell's testimony before Congress - CNN https://lnkd.in/gAS5Sahm HOWEVER, yourself or your business may be having a hard time, generating inspiring, high quality branded social media posts and SEO. optimised blog content. Our done for you service can help you with: 1. Scaling your brand awareness 2. Expanding your reach 3. Driving more traffic 4. Increasing your lead generation and sales 5. Interacting with potential customers, suppliers and partners 6. Upselling & x-selling 7. And much more! YOU or your business can get up to: 1. 180 Branded Social Media Posts 2. X4 SEO Optimised Blog Articles = 4000 words 3. Scheduling & Posting across Facebook, Instagram, LinkedIn, Twitter, Google My Business, Pinterest, Tik Tok Every month, from only $99! Learn More: https://1.xpandops.com/rsl #markets #careers #entrepreneurship #futurism #future #quotes #technology #digitalmarketing #humanresources #management #innovation...
Live updates: Markets end the day higher after Fed Chair Powell's testimony before Congress
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Get a quick dose of our FX Market Report with our #Hubbytes Here is an extract of this week's report: “The Nigerian Naira weakened by 14% to 1339 against USD last week according to data from FMDQ securities. Concerns over inflation and dwindling foreign exchange reserves have put pressure on the Naira last week. There were no data releases of note, however.” Stay ahead of the curve with our Weekly FX Report, delivered straight into your inbox every week. Sign up for our Weekly FX Report here: https://lnkd.in/dbnZ7z2J #FXMarket #FXInsights #Hubbytes
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Head of Fixed Income at J. Safra Sarasin
1moAgreed Karsten Junius. Interesting read across for the UK...Bailey has taken a baby step towards easing but arguably the BoE should also be moving toward front end loading for similar reasons.