Damon

As central banks have started their rate cutting cycles, the inflation outlook will be a crucial element in determining their pace. Currently, inflation is lower in the euro area than in the US for both core and headline inflation. However, base effects are more favourable in the US in the next months. Furthermore, in contrast to US CPI, the euro area’s HICP does not include owner-equivalent rent. What is clear, is that the sources of inflationary pressure are different in the US versus in the euro area. The US faces higher rental inflation, while facing lower energy and goods inflation than the euro area. Forward-looking indicators point to favourable inflation dynamics in both economic blocs, however.

Investors in large consumer-goods companies are having to up their stock-picking game...

Despite the significant financial market turbulence and pronounced currency fluctuations that several East and Southeast Asian economies have faced this year...

The latest CPI report suggests a moderation in inflationary pressures. Energy prices, due to the lagged effect between gasoline and crude oil prices, did not make significant contributions to the decrease in CPI inflation this time. On the other hand, housing inflation only slightly slowed its pace of increase. Both factors remain the primary drivers of "persistent" inflation.

Current market pricing oscillates between expecting 1-2 interest rate cuts this year, and the data's performance could influence the balance of power within the Fed. The latest inflation report may serve as a crucial reference for whether the Fed can initiate its first rate cut in the summer.

Governments may take measures to appreciate their currency prior to elections, with a high probability of depreciation occurring after a new government takes office. Recent elections in some emerging markets and developing economies (EMDEs) have once again demonstrated that mainstream currency depreciation is more likely to occur after elections.

Homeowners with low-rate mortgages are expected to maintain their current status quo, refraining from putting their homes back on the market for resale. Additionally, the market is poised to experience increased demand from millennials and first-time buyers in the future.

Non-farm payrolls came in sharply lower than expected, boosting expectations of interest rate cuts. The market regained its expectations of two rate cuts this year, bringing forward the Fed's first rate cut from November to September. If the subsequent inflation data also declines, it will completely fuel the expectation of rate cuts.

The latest inflation report has reduced the market's expectations of interest rate cuts by the Federal Reserve. How long will the Fed maintain the current interest rates?