As 2024 unfolds, global markets are experiencing the implications of Donald Trump's second term in office. Investors, analysts, and policymakers are navigating a complex landscape influenced by economic indicators and geopolitical developments. In the United States, the unemployment rate fell to 4% from 4.1%, according to the latest Non-Farm Payroll (NFP) numbers. Meanwhile, average wage data rose unexpectedly by 0.5% on the month, reaching 4.1%, surpassing market expectations of a decline to 3.8%.
In the third quarter of 2024, GDP showed minimal growth, leaving investors hopeful for a fourth-quarter rebound. The economic optimism is tempered by subdued inflation figures in Switzerland, where inflation stood at just 0.6% year-on-year in December. The Swiss franc, a traditional safe haven, has gained modestly against its major counterparts amid uncertainty spurred by Trump's policies.
The Bank of England recently lowered its benchmark lending rate by 25 basis points during its February meeting. However, it signaled caution regarding future rate cuts. Investors are keenly awaiting Thursday's first estimate of Q4 growth, which will be released alongside monthly data on services, industrial, and manufacturing output. Stronger-than-expected data could boost the pound's recovery from its January low of $1.2097.
Economic growth has shown signs of slowing, and inflation appears to be peaking. These factors, coupled with President Trump's conciliatory approach toward tariffs, have contributed to a decline in long-term borrowing costs. The yearly Consumer Price Index (CPI) rate is anticipated to have risen from 0.1% to 0.4%. Meanwhile, producer prices are expected to show a decreased decline, suggesting a slight improvement in domestic demand.
The Cleveland Federal Reserve's Inflation Nowcasting model predicts that headline CPI will have moderated to 2.85% in January, with the core rate slightly decreasing to 3.13%. In contrast, New Zealand's CPI headline rate edged up to 2.9% year-on-year in December.
In the United States, factory gate prices have been trending upwards recently. A decline in Producer Price Index (PPI) data will be crucial for a sustained decrease in the dollar's value. The Swiss National Bank is not scheduled to meet until March 20, when another 25-basis-point cut seems probable. Policymakers' stance on further easing or maintaining neutrality will largely depend on upcoming CPI reports.