Investment Institute
Weekly Market Update

Take Two: US inflation eases; Japan falls into recession

  • 19 February 2024 (3 min read)

What do you need to know?

US annual inflation eased to 3.1% in January from 3.4% in December - higher than the 2.9% analysts were expecting, but still the lowest rate since June last year. Higher housing and food prices offset a decline in petrol prices, while core inflation, which excludes more volatile food and energy prices, remained unchanged at 3.9%. The data reinforced market expectations that the Federal Reserve (Fed) will hold interest rates in March and begin easing later than anticipated. Elsewhere, UK inflation remained unchanged at 4% in January from December, lower than market expectations of an increase to 4.2%, supporting expectations of Bank of England rate cuts in the coming months.


Around the world

Japan unexpectedly fell into recession in the last three months of 2023 with GDP contracting 0.4% on an annualised basis, below market forecasts of 1.4% growth. This followed a fall of 3.3% in the third quarter (Q3) - two consecutive quarters of contraction signify a recession. High inflation weakened private consumption, while capital expenditure also fell. Elsewhere, the UK economy also slipped into recession at the end of 2023. GDP contracted 0.3% in Q4 compared with the previous three months, following a 0.1% fall in Q3, with a slowdown across services, production and construction. Economists had expected a 0.1% decline in Q4.

Figure in focus: 2.6%

Eurozone industrial production significantly outpaced market expectations in December, increasing 2.6% month-on-month following a 0.4% rise in November, beating forecasts of a 0.2% decline. Year-on-year, output grew 1.2% in December from a 5.4% contraction in November. The increase was partly due to a 23.5% jump in production in Ireland, where monthly industrial data has tended to be volatile recently due to fluctuations in contract manufacturing and outsourcing. Meanwhile Eurozone Q4 GDP growth was confirmed at 0% in a second estimate, meaning the bloc narrowly avoided a recession in the last three months of 2023.


Words of wisdom

Climate transition bonds: Unlike green bonds, where the proceeds are used for environmentally friendly projects, transition bonds are designed to raise financing to support the progress to a low-carbon economy - for example via projects that will reduce emissions. Already used by some corporates, last week Japan became the first country to issue sovereign climate transition bonds, offering ¥800bn ($5.3bn) in 10-year bonds as part of its plan to reach net zero by 2050. The proceeds will be used for a range of initiatives including subsidies for low-carbon transport, renewable energy as well as research and development.

What’s coming up?

Canada issues inflation figures for January on Tuesday, while the Fed publishes the minutes from its latest monetary policy meeting on Wednesday. Thursday will see the Eurozone report final inflation data for January, when flash February Purchasing Managers’ Indices are also published for the bloc as well as Japan, the UK and US. Germany issues its final Q4 GDP growth data on Friday as well as its Ifo Business Climate index for February, a closely watched indicator of the country’s economic health.

Changing of the Guards
Macroeconomics

Changing of the Guards

Investment Institute
Take Two: US inflation eases; France to begin new parliamentary session
Macroeconomics Weekly Market Update

Take Two: US inflation eases; France to begin new parliamentary session

  • by AXA Investment Managers
  • 12 July 2024 (3 min read)
Investment Institute
Take Two: US GDP revised up; Canada inflation unexpectedly rises
Macroeconomics Weekly Market Update

Take Two: US GDP revised up; Canada inflation unexpectedly rises

  • by AXA Investment Managers
  • 01 July 2024 (3 min read)
Investment Institute
One Week at a Time
Macroeconomics Viewpoint Chief Economist

One Week at a Time

Investment Institute
June Monthly Investment Strategy - The times they are a-changin’
Macroeconomics Monthly Market Update

June Monthly Investment Strategy - The times they are a-changin’

  • by David Page, Hugo Le Damany, and others
  • 26 June 2024 (10 min read)
Investment Institute

    Disclaimer

    This website is published by AXA Investment Managers Australia Ltd (ABN 47 107 346 841 AFSL 273320) (“AXA IM Australia”) and is intended only for professional investors, sophisticated investors and wholesale clients as defined in the Corporations Act 2001 (Cth).

    This publication is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Market commentary on the website has been prepared for general informational purposes by the authors, who are part of AXA Investment Managers. This market commentary reflects the views of the authors, and statements in it may differ from the views of others in AXA Investment Managers.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    All investment involves risk , including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested.