US: Labour Market & CPI
- The US unemployment rate climbed to a 2 year high in February at 3.9%. Nevertheless hiring remained healthy and the labor market is proving once again resilient
- Non-farm payrolls in February +275k (+200k expected and +353k prior)
- Nevertheless, soft growth in wages keeps on the table an anticipated interest rate cut in June from the Fed
- CPI: headline +0.4% on the month as expected, with Core CPI higher by 0.1% both on month and year
- Gasoline up, food unchanged
- Shelter (rents and OER) has receded
- Report adds evidence that inflation is proving stubborn: “The last mile is always the hardest”
ECB Rate Decision
- The ECB sent a very clear signal last Thursday and, barring any unexpected surprises, the first rate cut will occur in June with markets now pricing a full 100bp of easing in 2024
- Quarterly outlook is very encouraging, with inflation seen at 2.3% this year and down to 2.0% in 2025
- The concept of data dependence has been once again reiterated. “We will know a little more in April, a lot more in June”
The Everything Rally
- Positive trends in the last month. Almost everything is up: Equities, mid & long maturing Core Government Bonds, BTPs, Corporate Bonds, Euro and, more surprisingly, Gold
- Macro developments according to plan: disinflation continues, economic activity holds well, prospects of easing from central banks
- Environment favorable for risk-taking: end of instability in inflation and activity coming
- In spite of tight monetary policies, US and Eurozone economies remain exceptionally liquid. Monetary aggregates (such as M2) are still growing
Novo Rallies (again...)
- Experimental Amycretin even better than Wegovy
- Novo expects to be able to go straight to phase 3
- Recent approvals in the US give Novo access to an additional 6.6m patients
- Bloomberg expects anti-obesity medicines growing from $10bn in 2024 to $80bn in 2030. Novo’s market share to stay around $37bn
- In the US, Ely Lilly is standing out as a fierce competitor
- Lilly is well rooted in the US based on all diabetes areas
- Novo has better geographical diversification
- Both Novo and Lilly are currently held back by supply restrictions
World Trade Volumes
- The latest IMF “chart of the week” shows a step decline in traffic through Suez (Red Sea hostilities) and the Panama Canal (draught)
- By contrast, transits via the Cape of Good Hope have skyrocketed
- Yet, the Drewry Shanghai-Rotterdam freight rate at 3650 is well off its recent 5000 peak
- The takeaway: once again, markets are adapting
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