ASX 200, SGX Iron Ore: Bullish Breakouts on the Menu, Hawkish RBA a Risk

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Economic

Commodity

Stocks

Summary:

Tuesday looms as a make-or-break session for Australia's ASX 200 with futures sitting at a key technical level ahead of the Reserve Bank of Australia (RBA) May interest rate decision...

Tuesday looms as a make-or-break session for Australia's ASX 200 with futures sitting at a key technical level ahead of the Reserve Bank of Australia (RBA) May interest rate decision. Should it provide a hawkish update as covered in a preview note earlier this week, it may hinder upside in the near-term. One saving grace for bulls may be the continued rebound in iron ore futures in Singapore. We'll look at trade setups for both markets in this brief note.

Quick RBA overview

Tuesday's RBA decision will be largely about what it signals on the future path of inflation. Having seen a couple of meetings under the new RBA format, it's the statement and forecasts that typically move markets, not the post-meeting press conference held by Governor Michele Bullock. As such, if you're trading AUD/USD or ASX 200 through a fundamental lens, that's where your focus should be.

On the updated forecasts, it's a near-certainty the bank's near-term trimmed mean inflation forecasts will be revised higher to reflect the hotter-than-expected March quarter consumer price inflation report. The question is whether the detail in that and past inflation reports will be enough to see the forecast profile upgraded through to the middle of 2026, implying a slower return to the midpoint of the bank's 2-3% inflation target and increased risk of it having to resume its tightening cycle.

While the updated forecasts will have a higher-for-longer cash rate profile than those issued in February, given its near-term unemployment forecasts are likely to be lowered and uncomfortable detail in the latest inflation report when it comes to domestic price pressures, it may be enough to offset the higher rates profile and see its 2025 trimmed mean inflation forecasts increased by a similar margin.

Net-net, if that is the case, it points to upside risks for AUD/USD and downside risks for the ASX 200.

ASX 200 futures capped below key level

Having broken long-running uptrend support three weeks ago, Australia's ASX 200 futures have spent the period since attempting to form a bottom, continuing to find buying on dips below 7540. Since the Federal Reserve FOMC meeting last week, it's been nothing but one-way traffic for SPI futures, seeing the price bounce to the 50-day moving average, a level it's respected constantly dating back to the final quarter of 2023.

The proximity to the 50-day moving average provides a decent level to build a trade around, allowing for optionality depending on what the RBA does (and Asian markets) later in the session.

ASX 200, SGX Iron Ore: Bullish Breakouts on the Menu, Hawkish RBA a Risk_1

Should the bank deliver a hawkish hold as we expect and futures be unable to break connivingly through the 50-day moving average, it will allow for shorts to be established below the figure with a stop loss order above 7745 for protection.

Alternatively, should the RBA deliver an unlikely dovish surprise, or we see a big rally in regional equity markets, a clean break of 7745 may open the door to a push to 7800. If that eventuates, place a stop loss order under the 50-day moving average for protection. With indicators such as RSI and MACD turning higher, momentum is to the upside.

SGX iron ore may see further upside ahead

One factor that's been working in the favour of ASX 200 bulls has been iron ore futures in Singapore have been flying, rebounding sharply after dipping below $100 per tonne on several occasions in March and April. Over recent weeks, the price has broken the 50-day moving average and downtrend resistance dating back to the start of 2024, leaving the price coiling up in an ascending triangle below the 200-day moving average.

If the 200 gives way – something that looks increasingly likely given the constructive price action – it may open the door to a push towards $123.80, $126.85 or $131.60. Should we get the topside break, don't forget to place a stop loss below the 200-day and/or uptrend support for protection against reversal.

ASX 200, SGX Iron Ore: Bullish Breakouts on the Menu, Hawkish RBA a Risk_2

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Cohen

Central Bank

Economic

The Reserve Bank of Australia (RBA) will announce its decision on monetary policy early on Tuesday. Australian policymakers are widely anticipated to keep the Official Cash Rate (OCR) unchanged at 4.35%. In the March meeting, the RBA moved away from the tightening bias, scrapping references to potential rate hikes from the Board’s statement. As a result, the Australian Dollar (AUD) plummeted.

But much water has passed under the bridge since then. On the one hand, the Monthly Consumer Price Index (CPI) rose 3.5% YoY in March, while on the other hand, the latest wage growth figure indicated persistent upward pressures. Wages increased 4.2% YoY in the last quarter of 2023.

Reserve Bank of Australia expected to remain on hold, but what else?

The RBA is not expected to change the OCR, but market players are concerned policymakers may reinstate the hawkish stance. The uptick in inflation, coupled with a persistently tight job market, spooks away any chance of a rate cut in the near term. In fact, speculative interest is more keen to bet on upcoming rate hikes before year-end than on a reduction of the interest rate benchmark. The idea seems quite logical as the RBA stalled rate hikes well below its main counterparts.

Ahead of the announcement, speculation mounts that Governor Michele Bullock and co. will opt out to reopen the door for additional tightening, with market participants increasingly beating on a rate hike in November 2024.

Governor Bullock noted in the press conference following the March decision that she wouldn’t rule anything in or out, adding that she needs to be confident that inflation is sustainably moving towards the central bank target range of 2%-3%. Indeed, she sounded confident back then, but the optimism diluted as macroeconomic data did not support the loosening case.

The CPI rose 1.0% in the first quarter of the year, according to the Australian Bureau of Statistics (ABS). The same report showed that, over the twelve months to the March 2024 quarter, the CPI rose 3.6%, actually lower than the 4.1% annual rise in the previous quarter. It was the fifth consecutive quarter of lower annual inflation, although the trimmed mean annual inflation held at 4%, still above the RBA’s goal.

Furthermore, analysts at TD Securities noted that the latest employment data from Australia will not prompt the RBA to lower the policy rate anytime soon. "Australian headline employment fell 6.6k in March, softer than the +10k consensus and TD's +18k f/c. Given the significant increase in jobs posted in February, a much larger giveback could have happened, so the 6.6k drop is not too bad. Driving the negative print was the 34.5k drop in part-time, but full-time rose 27.9k (this is strong) while there were upward revisions to headline and full-time for February.”

Investors have spent most of this year betting on the dates major central banks will trim interest rates, pricing in sooner or later movements. However, that’s not the case in Australia, beyond the 30% odds a rate hike could come in November. Nothing, however, is priced in the country, and Tuesday’s announcement could put speculative interest in a certain path, spurring some aggressive price action around the AUD.

The RBA will include fresh economic forecasts. In February, the central bank was expecting trimmed mean inflation would decline to 3.1% by the end of 2024 and to 2.8% a year later. Inflation was then seen returning to the 2%-3% target by mid-2024. On growth, policymakers forecasted Gross Domestic Product (GDP) growth will slow to 1.3% in the second quarter of the year and slowly pick up afterwards to reach 2.4% by mid-2026.

However, with hotter-than-anticipated inflation in the first quarter of the year, the RBA will likely review its inflation forecasts. Growth figures, on the contrary, will likely suffer minor revisions. Market players will pay more attention to the long-term projections and whether the June 2026 line is moved further away.

How will the RBA interest rate decision impact AUD/USD?

The AUD/USD pair trades above the 0.6600 mark ahead of the announcement, as the US Dollar suffers from a not-that-hawkish Federal Reserve (Fed). The US central bank has made it clear that interest rates will remain high for longer, although policymakers maintain the door open for rate cuts later this year.

Financial markets are optimistic despite global signs of stubbornly high inflation, while stock markets’ strength further underpins AUD/USD.

Valeria Bednarik, FXStreet Chief Analyst, says: “The AUD/USD pair will likely extend its rally, should the RBA deliver a hawkish message. Flipping back to potential rate hikes could be a nice catalyst for those looking to add longs. The pair has met sellers in the 0.6640 price zone in March and in the 0.6660 area in April, meaning large stops should accumulate above the latter. If those get triggered, a rally towards 0.6700 seems likely. The next resistance level is 0.6730, while the final target comes at 0.6770.”

Bednarik adds: “Speculative interest may be quite disappointed if the statement remains the same. AUD/USD could drop towards the 0.6560 price zone, while a break below the latter exposes the 0.6500 mark.”

Source：FXStreet

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Thomas

Stocks

US Equity Markets: Fed Chatter in Focus

On Monday (May 6), FOMC member reactions to the recent US Jobs Report and ISM Services PMI influenced market risk sentiment.

Fed Vice Chair John Williams talked about interest rate cuts but favored current levels over the near term. FOMC member Thomas Barkin had a similar view, saying that the monetary policy stance would cool the economy to bring inflation to the 2% target. Hopes of rate cuts later in the year drove buyer demand for riskier assets.

On Monday (May 6), the Nasdaq Composite Index and the S&P 500 ended the session up by 1.19% and 1.03%, respectively. The Dow gained 0.46%.

Fed forward guidance on inflation, the economy, and the Fed rate path will likely set the tone for the Tuesday (May 7) Asian session.

Asian Economic Calendar: Aussie Retail Sales, Japan Services, and the RBA

On Tuesday (May 7), economic indicators from Australia and Japan may influence buyer appetite for ASX 200 and Nikkei 225-listed stocks.

Finalized Australian retail sales figures for March will draw investor attention. Upward revisions could fuel speculation about a more hawkish RBA rate path. According to the preliminary report, retail sales declined by 0.2% in March after rising by 0.2% in February.

The numbers precede the all-important RBA interest rate decision and press conference. Economists expect the RBA to leave interest rates at 5.35%. However, a more hawkish RBA press conference could raise bets on a near-term RBA rate hike and impact rate-sensitive ASX 200-listed stocks.

From Japan, finalized Services PMI numbers could draw the attention of the Bank of Japan. According to the preliminary survey, the Jibun Bank Services PMI increased from 54.1 to 54.6 in April. An upward revision could enable the Bank of Japan to begin discussing an interest rate hike. A stronger Japanese Yen would pressure Nikkei-listed export stocks.

Beyond the economic calendar, investors should also consider corporate earnings. Nintendo (7974), Commonwealth Bank of Australia (CBA), and ANZ Group Holdings Ltd. (ANZ) are among the big names to release earnings results.

Commodities: Crude Oil, Gold, and Iron Ore

On Monday (May 6), gold spot (XAU/USD) gained 0.97% to close the session at $2,323.97. WTI crude oil advanced by 0.47%, ending the session at $78.48.On the Singapore Futures Exchange, iron ore prices were down 0.08% on Tuesday (May 7). Iron ore spot rallied 2.29% on Monday (May 6).

The USD/JPY and the Nikkei

The USD/JPY rose by 0.61% on Monday (May 6), closing the session at 153.866. The Nikkei was closed on Friday (May 3) and Monday (May 6). Investors may respond to the weaker Yen, with the Nikkei Index likely to play catch up after positive sessions for the US and Asian equity markets.

The Futures Markets

On Tuesday (May 7), the ASX 200 and the Nikkei 225 were up by 38 and 710 points, respectively.

ASX 200 Hang Seng Index, Nikkei 225, ASX 200: HSI Eyes an 11-Day Streak on Tech Stocks_1

The ASX 200 advanced by 0.70% on Monday (May 6). Gains were broad-based, with bank stocks leading the way. The S&P/ASX All Tech Index rose by 0.10%.Westpac Banking Corp. (WBC) rallied 2.65% as investors responded to the earnings release, with ANZ Group Holdings Ltd. (ANZ) rising by 1.02%. Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) advanced by 1.18% and 0.76%, respectively.BHP Group Ltd (BHP) and Rio Tinto Group Ltd. (RIO) saw gains of 0.80% and 0.34%, respectively. Fortescue Metals Group Ltd. (FMG) rallied 2.57%.However, gold-related and oil stocks had mixed sessions.Gold-related stocks Northern Star Resources Ltd. (NST) advanced by 1.47%, while Evolution Mining Ltd (EVN) ended the session flat.Woodside Energy Group Ltd (WDS) increased by 0.18%, while Santos Ltd (STO) closed the day flat.

Hang Seng Index Hang Seng Index, Nikkei 225, ASX 200: HSI Eyes an 11-Day Streak on Tech Stocks_2

The Hang Seng Index ended the Monday (May 6) session up 0.55%. Tech stocks contributed to the gains, with Hang Seng Tech Index (HSTECH) advancing by 0.92%. However, real estate stocks limited the upside. The Hang Seng Mainland Properties Index (HSMPI) ended a nine-day winning streak, falling by 1.78%.Alibaba (9988) and Tencent (0700) ended the session up 0.19% and 1.54%, respectively.Bank stocks had a mixed session. HSBC (0005) declined by 0.36%. China Construction Bank (0939) gained 0.39%, while Industrial Commercial Bank (1398) ended the day flat.

The Nikkei 225

Source: FX Empire

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Samantha Luan

Economic

Stocks

Asian stocks rose in early trading, following Wall Street’s gains on optimism the Federal Reserve will start cutting interest rates this year. The yen dropped.

Japan’s benchmark Nikkei 225 climbed as much as 1.6% as the market reopened on Tuesday after a holiday. Australian shares rose 0.7%. The upward momentum came after the S&P 500 rose 1% and topped its average price over the past 50 days — a level seen by many chartists as key in maintaining the positive sentiment.

The yen fell after Japan’s top currency official Masato Kanda said that while authorities would take action in the event of volatility, there was no need for the government to intervene if the market is functioning properly.

Oil rose 0.5% in early Asia trading, while US stock futures were steady after Israel rejected a statement from Hamas that it had accepted a cease-fire proposal to end the fighting in Gaza.

The US equity benchmark rose above 5,180 on Monday. Nvidia Corp. and Tesla Inc. paced gains in megacaps. Micron Technology Inc. jumped on an analyst upgrade. Apple Inc. fell, with Warren Buffett revealing he’d cut his stake even after heaping praise on the iPhone maker. Treasury 10-year yields slid two basis points to 4.49%.

“Bulls will be looking to maintain their momentum after snatching last week from the jaws of bears,” according to Chris Larkin at E*Trade from Morgan Stanley. “This week is light on high-profile economic data, but heavy on Fed members hitting the speaking circuit. Traders will be dissecting any comments they make about potential rate cuts.”

Asian Stocks Climb After US Gain On Rates Optimism_1

In Asia, there’s renewed optimism for the bruised Chinese economy, with Beijing’s latest supportive policy stance helping to boost shares and the onshore yuan on their return from holiday on Monday. Battered assets are getting a second look as a combination of earnings recovery, policy support and cheap valuations lure investors.

Australia’s central bank is expected to keep its key interest rate on hold Tuesday, while reinstating a hawkish bias to acknowledge sticky consumer prices.

Asian Stocks Climb After US Gain On Rates Optimism_2

In the US on Monday, investors waded through remarks from some of the many Fed officials due to speak this week.

Fed Bank of Richmond President Thomas Barkin said he expects high rates to slow the economy further and cool inflation to the 2% target. His New York counterpart John Williams said eventually there will be rate cuts — but the decision on when will depend on the totality of the data.

More than 80% of the S&P 500 companies have now reported first-quarter earnings, and profit growth has easily surpassed “mediocre expectations,” according to Gina Martin Adams at Bloomberg Intelligence. The index is now on pace for a 6.5% earnings growth, almost double pre-season estimates of 3.75%, she noted.

The backdrop for stocks remains supportive, driven by healthy and broadening profit growth, inflation that will likely resume falling, a Fed that is more likely to cut than hike rates, and surging investment in artificial intelligence, according to David Lefkowitz at UBS Global Wealth Management.

A soft landing or a so-called no landing, where growth is resilient even as rates stay high, both remain possible for the US economy, the team led by Michael Wilson wrote in a note. This uncertain backdrop warrants an investment approach that can work as market pricing and leadership between groups of stocks gets whipsawed by the potential outcomes.

Source：Bloomberg

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Samantha Luan

Political

Economic

OPEC and its allies could play a major role in the outcome of the U.S. presidential election this November, as observers watch closely for signs that the world’s two largest oil exporting nations, Saudi Arabia and Russia, will raise prices by cutting production.

Keeping in place voluntary cuts of 2.2 million barrels per day on top of the cartel’s total combined production cuts of 5.86 million bpd could push up gas prices in the U.S., which are closely tied to presidential approval ratings and have been a thorn in the side of President Joe Biden during his first term.

But unlike his early years in the White House, Biden now has far fewer resources at his disposal to help alleviate gas prices — including a depleted U.S. emergency oil stockpile and a more emboldened OPEC+, which has showed it is willing to buck U.S. requests in favor of their own bottom lines.

OPEC+ “is going to do what they believe is in their best interests,” Gerald Feierstein, a senior fellow at the Middle East Institute and former U.S. ambassador to Yemen, told the Washington Examiner in an interview.

“And they’re going to pursue that regardless of who’s in the White House and what U.S. preferences might be,” he added.

Gas prices and political vulnerability

Gas prices and presidential approval ratings are closely linked and have been a major feature during Biden’s first term — including in the months ahead of the 2022 midterm elections.

A combination of post-COVID industrial activity and Russia’s invasion of Ukraine sent Brent crude futures north of $130 per barrel in early 2022, causing U.S. gas prices to a record-high national average of $5.02 per gallon to mark the start of summer driving season. Biden’s approval ratings took a direct hit, bottoming out at just 38% in the weeks that followed.

The administration’s scramble to take action to lower gas prices, including a 180-million-barrel sale of emergency oil from the U.S. Strategic Petroleum Reserve, helped cushion initial oil market shocks and reduce U.S. gas prices ahead of the November midterm elections.

So far in 2024, oil markets have been tighter than expected as a result of extended OPEC+ supply cuts, which many now predict will last beyond the group’s next meeting in Vienna in June, higher demand forecasted for the second half of 2024, and conflicts in the Middle East that threaten to escalate and shut in some supplies.

More recently, drone attacks aimed at Russian oil refineries took supplies offline and further cut into the country’s oil output.

These factors have prompted many analysts to revise their oil price projections upward for the second half of the year, including Morgan Stanley, which now expects Brent crude to average around $94 per barrel by the third quarter of 2024 — a $10 increase from earlier estimates.

Others, including analysts at the energy research firm FGE, said they expect oil prices in the range of $90-$95 per barrel by the third quarter of 2024.

“Demand is going to creep higher, seasonally, in the second half of the year, and it’s going to outstrip supply growth from non-OPEC+ sources,” James Davis, who heads up crude production forecasting at FGE, told the Washington Examiner in an interview. “So the balance is going to get tighter. That’s the expectation.”

U.S. gas prices currently stand at just $3.66 per gallon, according to AAA, well below where they were at the same point in 2022. But spring prices are not necessarily a reliable indicator for gas costs later in the year. Prices typically rise around Memorial Day, kicking off the start of the summer driving season, and are subject to natural disasters like hurricanes that risk taking current facilities offline.

Gas prices are of great importance to Biden. But they are largely inconsequential for OPEC members, whose primary goal is keeping oil prices high enough to balance their budgets, but not high enough to drive away customers or push them to turn to renewable energy sources instead.

While OPEC+ production is significantly below yearly averages, according to data from the Energy Information Administration, customers seem willing to buy the oil at the higher price points — so there’s not really an incentive for OPEC+ to change its behavior, at least for now.

“The production cuts have been successful [for OPEC], so I really don’t see why OPEC would choose to reverse course anytime soon,” GasBuddy’s chief petroleum analyst, Patrick De Haan, told the Washington Examiner in an interview.

OPEC relationships

OPEC+ decisions are not above political influence. This was on display most prominently in 2022, when Saudi Arabia led OPEC+ in ordering the October production cuts of 2 million barrels per day — defying a request Biden had made during his politically charged trip to the kingdom months earlier.

The Saudi spurn sparked scathing criticism from White House officials and many Democrats in Congress, who vowed retaliation and a reassessment of the U.S.-Saudi relationship, though to date they do not appear to have acted on that warning.

If nothing else, the 2022 cuts underscored a more bullish Saudi Arabia that is willing to prioritize its own bottom line above all, Feierstein, the former U.S. ambassador to Yemen, told the Washington Examiner.

“They don’t love Biden. I think that they remember Biden’s comments from the 2020 campaign, which were pretty harsh about Saudi Arabia. They probably wouldn’t mind seeing Donald Trump back in office,” Feierstein added, though he described any political components as secondary to Saudi Arabia’s self-interests.

“Beyond that, do they feel compelled to do favors for the Biden administration? Probably not,” Feierstein said.

In the near term, going to OPEC for more production makes no sense from a supply perspective — and fears of supply shortages are not enough of an incentive for the cartel of oil-producing nations to revisit their current output levels.

Short of a major supply disruption, it’s unlikely Biden would request OPEC+ to produce more oil. But should he do so, Davis said, the request would be largely futile, since the customers for that oil do not yet exist.

Consider, for example, Biden asking OPEC+ to sell more oil, “and OPEC+ asking Biden in return who they might sell it to,” Davis gamed out. “Biden would then have no sensible answer other than, ‘Me, to my SPR’ — and there’s no incentive for them to do that.”

Source：WashingtonExaminer

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Alex

Economic

Stocks

Chinese shares and the onshore yuan climbed on their return from a holiday, with sentiment boosted by Beijing’s supportive policy stance.

The CSI 300 Index rose 1.5% to the highest since October, with consumer and health-care sectors leading the gains. The onshore yuan advanced as much as 0.6%. The assets were playing catch up to gains seen in offshore peers while mainland markets were shut Wednesday through Friday.

Battered Chinese assets are getting a second look as a combination of earnings recovery, policy support and cheap valuations lure investors. The latest catalyst came from the Politburo meeting just before the trading break, when China’s top leaders vowed to explore new measures to tackle a protracted housing crisis and hinted at possible rate cuts ahead.

“We think the rally can sustain for a bit” as valuations are still low and positioning from hedge funds and long-only funds remain near five-year lows despite the recent buying, Sunil Koul, APAC equity strategist at Goldman Sachs, said in a Bloomberg TV interview. “This time it seems we have genuine investor demand, both from long-only and hedge funds.”

Chinese Stocks Climb Post Holidays On Policy Support Optimism_1

Chinese stocks listed offshore rallied when mainland markets were closed. The Nasdaq Golden Dragon China Index jumped 8.5% during that period, while a Hang Seng gauge of Chinese stocks rallied 4.4% over the two-day stretch through Friday.

Foreign funds have been returning to Chinese and Hong Kong stocks, though whether this is a tactical rebound or a more sustainable re-rating remains under debate. Bank of America Securities said the worst in terms of fund outflows has passed, while UBS Group AG strategists said earnings for mainland-listed stocks likely bottomed in the first quarter.

Overseas investors continued to boost holdings of mainland shares on Monday after buying for three straight months through April, the longest buying streak in a year.

For the rebound to extend, investors were looking for firm evidence of consumption recovery in the holiday data. Travelers made 28.2% more trips but spending only rose 13.5% from the 2019 break, the Ministry of Culture and Tourism said in a statement Monday.

The rally in Hong Kong stocks cooled, with the Hang Seng China Enterprises Index ending 0.4% higher. That came after last week’s rally following the Politburo statement, which said authorities will look for ways to deal with unsold properties.

“I worry about the market potentially over-reacting to property policy comments from Politburo, because there wasn’t immediate stimulus and details are yet to be sorted out, which leaves room for disappointment,” said Xin-Yao Ng, director of investment at abrdn

China’s major stock indexes are poised to gain this month, helped by looser monetary policies overseas, foreign inflows and upbeat economic data, Shanghai Securities News reported, citing analysts. Listed companies are increasing dividend payouts to lure investors, with the amount handed out in fiscal 2023 accounting for 42% of the companies’ total net profit attributable to shareholders for the year.

The onshore yuan jumped as much as 0.6% on Monday to 7.2009, after the central bank set the daily reference rate for the currency stronger than the previous session. The offshore yuan slipped after last week’s rally.

Source：Bloomberg

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Alex

Economic

Political

With Americans less optimistic about the state of the U.S. economy than they have been in recent months and concern about inflation persisting, their confidence in President Joe Biden to recommend or do the right thing for the economy is among the lowest Gallup has measured for any president since 2001. But Biden is not alone in facing a skeptical public, as Federal Reserve Chair Jerome Powell, the Republican and Democratic leaders in Congress, and presumptive presidential nominee Republican Donald Trump garner confidence ratings below 50%.

Forty-six percent of U.S. adults say they have "a great deal" or "a fair amount" of confidence in Trump to do or recommend the right thing for the economy, while fewer say the same of Biden (38%), Powell (39%), and Democratic (38%) and Republican (36%) leaders in Congress.

To a large degree, this reflects partisanship; Democrats are confident in Biden, Powell and Democratic congressional leaders, while Republicans are confident in Trump and Republican congressional leaders. Partisans have little to no confidence in the opposing party's leaders. While political independents are not overly confident in any of the leaders, they have the most confidence in Trump.

These findings are from Gallup's Economy and Personal Finance poll, conducted April 1-22. During the poll's field period, the Bureau of Labor Statistics released the latest Consumer Price Index data showing that inflation remains stubbornly elevated, though nowhere near the 40-year highs seen in 2022. After the poll was completed, Powell announced that interest rates would remain steady due to the current inflation rate.

Confidence in Biden's Management of Economy Low Compared With Predecessors

Gallup has tracked confidence in presidents' ability to do the right thing for the economy annually since George W. Bush took office in 2001. Bush, Barack Obama and Biden (to a lesser extent) enjoyed majority-level economic confidence ratings at the start of their presidencies, while the public's confidence in Trump never rose above his initial 48% reading. Trump's current rating is essentially tied with that of his last year in office.

Obama's confidence ratings were at least 50% each year except for one (42% in 2014). Biden has fared much worse as confidence in his economic management dropped precipitously in 2022 from 57% to 40% amid sharply higher inflation, and it has been below 40% since then. Only Bush earned lower confidence from Americans than Biden has since last year -- by the end of his second term, amid the Great Recession, when just 34% of Americans expressed confidence in his economic abilities.

Confidence in Biden Economic Stewardship Historically Low_1

Confidence in Powell Remains Low Historically

Powell's latest economic confidence reading of 39% is statistically similar to last year's 36%. Alan Greenspan, who served five terms in the position, inspired majority-level confidence for each of Gallup's five readings between 2001 and 2005. In contrast, the two chairs of the Federal Reserve who followed Greenspan -- Ben Bernanke and Janet Yellen -- failed to register confidence ratings above 50%.

Confidence in Biden Economic Stewardship Historically Low_2

One reason Fed chairs typically engender less confidence than presidents is that the public is not overly familiar with them, and thus more likely to not offer an opinion on their leadership. This year, 16% do not offer an opinion on Powell. Historically, the average percentage not expressing a view on the Fed chair's leadership has been 17%.

Below-Average Confidence in Democratic, Republican Congressional Leaders

The current economic confidence readings for both parties' congressional leaders are statistically similar to last year's readings but well below the historical average for each. Democratic leadership's latest 38% confidence rating is near the all-time low of 34% recorded in 2023 and below the average of 46% since 2001. Republican leadership's latest 36% rating is well above the 24% low for that group, in 2014, but significantly below the historical average of 43%.

Confidence ratings were last at the majority level in 2009 for Democratic congressional leaders and in 2003 for Republican congressional leaders.

Confidence in Biden Economic Stewardship Historically Low_3

Confidence in Economic Leaders Driven by Partisanship

Americans' confidence in these key leaders is driven by partisans' differing views. Broad majorities of Republicans express confidence in the economic competence of Trump (86%), their party's presumptive presidential nominee, and 82% of Democrats do the same of Biden.

Democrats are more likely than Republicans to say they are confident in their own party's congressional leaders (80% vs. 67%, respectively). Democrats (56%) are also more confident than Republicans (30%) in Powell's handling of the economy. Few in either party are confident in the opposing party's presidential candidate or congressional leaders.

Roughly one-third of independents say they are confident in Biden, Powell and both parties' congressional leaders. Trump earns higher confidence from independents (45%).

Confidence in Biden Economic Stewardship Historically Low_4

Bottom Line

Americans' assessments of the national economy are bleak, and they lack confidence in U.S. leaders' ability to manage it properly. Democrats trust Biden and Powell on the economy, while Republicans trust Trump -- but relatively few independents trust any of the current leaders who have a hand in managing the economy. The net result is that, unlike as recently as 2021, none of the key national figures who can influence the economy earns the trust of a majority of Americans.

Biden's subpar rating could have significant electoral implications as not only does he have the lowest economic rating of any president seeking reelection since Gallup began tracking this in 2001, but independents trust his opponent more than him.