This week kicked-off with the Caixin China composite and services figures, the former easing to 51.2 in July, while the services picked up to 52.1. Later today we have the eurozone PPI and US ISM services index print. Eurozone retail sales, German factory orders and US trade figures follow on Tuesday. China trade data and US consumer credit figures will garner attention on Wednesday, as will US initial jobless claims on Thursday. China’s PPI and CPI figures hit the screens on Friday morning, markets will also have some CPI figures from Germany and Italy to digest. Asset classes will also keep a keen eye on Fed speak this week. Today we’ll hear from the central bank’s Goolsbee and Daly at separate events. Barkin speaks on Thursday.
A rollercoaster week for asset classes saw yields across the UST curve rally, and equity markets slump. This followed markedly more dovish comments from Fed Chair Powell coupled with a disappointing US employment report. The yield on the 10-year UST enjoyed a 40bps fall to close at 3.79%, the lowest close year-to-date. Meanwhile the S&P Index fell for its third straight week, down 2.06%. The dollar (DXY Index) fell 1.06% as expectations for Fed rate cuts ramped up. Oil also suffered, with Brent closing 5.32% lower, at $76.81pb driven by concerns over the world’s two largest economies.
On Wednesday the Fed held pat on rates, however, there was a notable shift in sentiment, with Powell hinting that payroll data might be overstating job growth. Powell signalled a rate cut as soon as September, with further cuts possible depending on economic developments. The nonfarm payroll figures, released on Friday further solidified Powell’s comments, with the headline number falling well short of forecasts (114k versus expectations of 175k). Crucially, the unemployment rate has risen to 4.3% from its low of 3.4% in January last year. Models like the McKelvey Rule and Sahm Rule, which use changes in unemployment to predict recessions, are flashing warning signs.
Elsewhere, the Euro Area saw its GDP rise by 0.3%qoq Q2 2024, beating expectations. However, the picture remains mixed, with France and Spain outperforming while Germany unexpectedly contracted. The region’s inflation figures surprised to the upside, the headline figure was flat on the month in July, versus expectations for a 0.1% fall, up 2.6%yoy. The core remained sticky, with the prelim. reading suggesting a marginal rise to 2.9%yoy. The Bank of England, meanwhile, cut its policy rate by 25bps to 5.00% in a tight 5-4 vote, while cautioning against overly aggressive easing.
In Asia, the Bank of Japan made headlines by hiking its policy rate to 0.25% from a range of 0-0.1%, a level unseen in 15 years. The central bank also announced plans to slow its bond-buying programme. This marks a significant shift away from ultra-loose monetary policies, with Governor Ueda indicating potential further hikes. The move contrasts with global trends and aims to address inflation concerns and yen weakness while gradually normalising policy to minimise market disruptions.
Meanwhile, China’s economy is facing challenges as manufacturing enters a low season due to heatwaves and rainfall, with softening demand and production reflected in the manufacturing PMI. The official manufacturing PMI eased to 49.4, while the Caixin figure dropped into contraction, at 49.8. The government is focusing on boosting consumption and expanding domestic demand, as evidenced by the release of the “Opinions on Promoting High-Quality Development of Service Consumption” by the State Council on Saturday. This policy targets sectors like dining, accommodation, culture, entertainment, and tourism to stimulate consumption and cultivate new growth points.
Epic Investment Partner’s Key risks & Disclaimers:
EPIC Global Equity Fund (the “Fund”) is a sub-fund of EPIC Funds p.l.c. (the “Company”), which is an open-ended umbrella fund authorised in Ireland as a UCITS fund and regulated by the Central Bank of Ireland. This marketing material has been approved in the UK by EPIC Markets (UK) LLP, trading as EPIC Investment Partners, which is a limited liability partnership incorporated and registered in England and Wales under partnership OC306260 with its registered office at Audrey House, 16-20 Ely Place, London EC1N 6SN. EPIC Markets (UK) LLP is regulated by the Financial Conduct Authority. Distribution of this material and the offer of the Fund are specifically restricted in certain jurisdictions. In particular, but without limitation, neither this material nor shares in the Fund are available to US persons.
This document is for general information purposes only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. It is not a personal recommendation and it should not be regarded as a solicitation or an offer to buy or sell any shares in the Fund. This document represents the views of EPIC Investment Partners at the time of writing. It should not be construed as investment advice. Any person interested in investing in the Fund should conduct their own investigation and analysis of the Fund and should consult their own professional tax, accounting or other advisers as to the risks involved in making such an investment. Full details of the Fund’s investment objectives, investment policy and risks are set out in the Fund’s Prospectus and Supplement which, together with the Key Information Document (“KID”), are available on request and free of charge from Maples Fund Services (Ireland) Limited, 32 Molesworth Street, Dublin 2, Ireland and, in the UK, from EPIC Markets (UK) LLP, Audrey House, 16-20 Ely Place, London EC1N 6SN. Any offering of the Fund is only made on the terms of the current Prospectus, Supplement and KID. A subscription in the Fund can only be made after the provision of the KIID and should be made solely upon the information contained in the Prospectus, Supplement and KID.
An investment in the Fund is not suitable for an investor who cannot sustain a loss on their investment. There is no guarantee of the Fund’s future performance and past performance is not a reliable indicator of future performance. The value of your investment and the income derived from it can go down as well as up, and you may not get back the money you invested. The risks associated with making an investment in the Fund are described in the Prospectus and Supplement but investors should note, in particular, the following: 1) Foreign currency denominated investments are subject to fluctuations in exchange rates that could have a positive or an adverse effect on an investor’s returns. There is also a risk that currency hedging transactions for one share class may in extreme cases adversely affect the net asset value of the other share classes within the same sub-fund since there is no legal segregation between share classes; 2) The Fund is subject to the risk of the insolvency of its counterparties; and 3) Emerging market securities are subject to greater social, political, regulatory, and currency risks than developed market securities. This may impact the liquidity and value of such securities and, consequently, the value of the Fund.
MeDirect Disclaimers:
This information has been accurately reproduced, as received from EPIC Investment Partners. No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.
The financial instruments discussed in the document is intended for retail clients however, it may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.
If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Information Document (KID), which may be obtained from MeDirect Bank (Malta) plc.