FintechZoom and GE Stock: Navigating the Future of Financial and Industrial Innovation in 2024

Economic

Summary:

Discover how FintechZoom's market insights and General Electric's strategic innovations are shaping the financial and industrial landscape in 2024. Explore investment opportunities and key factors influencing GE stock performance this year.

The financial technology (fintech) sector has been one of the most dynamic and transformative industries over the past decade. Fintech innovations have revolutionized traditional financial services, from payments and banking to investment and insurance. Among the myriad platforms and companies in the fintech space, FintechZoom has emerged as a notable player, providing comprehensive market insights, news, and tools for investors. Concurrently, established industrial giants like General Electric (GE) have navigated significant changes, leveraging technological advancements to drive growth and efficiency. This article explores the intersection of fintech and industrial technology, with a focus on FintechZoom and GE stock, and examines the implications for investors in 2024.

The Evolution of FintechZoom

FintechZoom is a leading online platform that offers a wide range of financial services, including market analysis, investment news, and trading tools. Launched in the early 2010s, FintechZoom has grown to become a trusted resource for retail and institutional investors alike. The platform's success is attributed to its ability to provide real-time data, comprehensive financial news coverage, and advanced analytical tools that help investors make informed decisions.

Key Features of FintechZoom:

Market Analysis and News: FintechZoom offers up-to-the-minute news on various financial markets, including stocks, cryptocurrencies, commodities, and forex. The platform's in-depth analysis and expert commentary provide valuable insights into market trends and economic developments.

Trading Tools: FintechZoom's suite of trading tools includes real-time charts, technical indicators, and automated trading signals. These tools enable traders to execute strategies with precision and respond quickly to market changes.

Educational Resources: FintechZoom provides a wealth of educational content, including articles, webinars, and tutorials, to help investors of all levels improve their trading skills and knowledge.

Community and Forums: The platform hosts an active community of investors and traders who share ideas, strategies, and market insights. These forums foster collaboration and learning among users.

General Electric (GE): A Legacy of Innovation

General Electric (GE) is an iconic American conglomerate with a rich history spanning over a century. Founded by Thomas Edison in 1892, GE has been at the forefront of industrial innovation, developing technologies that have shaped modern society. The company's diverse portfolio includes segments such as aviation, healthcare, power, renewable energy, and digital industries.

Recent Developments in GE:

Digital Transformation: GE has been undergoing a significant digital transformation, integrating advanced technologies such as the Internet of Things (IoT), artificial intelligence (AI), and big data analytics into its operations. This transformation aims to enhance operational efficiency, reduce costs, and drive innovation across its business units.

Renewable Energy: As the world shifts towards sustainable energy solutions, GE has expanded its renewable energy portfolio, focusing on wind and hydroelectric power. The company's investments in renewable energy technologies position it as a key player in the global transition to clean energy.

Healthcare Innovations: GE Healthcare continues to innovate in medical imaging, diagnostics, and patient monitoring. The company's advanced healthcare technologies are crucial in improving patient outcomes and addressing global healthcare challenges.

Aviation Growth: GE Aviation remains a leader in the aerospace industry, supplying advanced jet engines and components to major airlines and aircraft manufacturers. The recovery of the aviation sector post-pandemic has provided a boost to this segment.

GE Stock Performance in 2024

In 2024, GE stock has shown resilience and growth potential amid a complex economic landscape. The company's focus on digital transformation, renewable energy, and healthcare innovations has driven investor interest. Key factors influencing GE's stock performance include:

Financial Health: GE's efforts to streamline operations, reduce debt, and improve profitability have strengthened its financial position. The company's strong balance sheet and cash flow generation provide a solid foundation for future growth.

Market Position: GE's leadership in key industries, such as aviation, healthcare, and renewable energy, positions it well to capitalize on emerging trends and market opportunities.

Innovation and R&D: GE's continued investment in research and development (R&D) drives innovation across its business units. Cutting-edge technologies and new product launches enhance the company's competitive edge.

Economic Factors: Macroeconomic factors, including interest rates, inflation, and global economic growth, influence GE's performance. The company's global footprint provides diversification but also exposes it to geopolitical and economic risks.

Investment Considerations

Investing in GE stock offers potential rewards but also comes with risks. Investors should consider the following factors:

Long-Term Growth: GE's strategic focus on digital transformation and renewable energy aligns with long-term growth trends. Investors with a long-term perspective may benefit from the company's innovation-driven growth.

Industry Cycles: GE operates in cyclical industries, such as aviation and energy. Understanding industry cycles and economic indicators is crucial for timing investments and managing risks.

Competitive Landscape: GE faces competition from other industrial giants and emerging tech companies. Assessing GE's competitive position and market share is important for evaluating its growth prospects.

Regulatory Environment: Regulatory changes in healthcare, energy, and aviation can impact GE's operations. Staying informed about regulatory developments and their potential effects on the company is essential.

The Role of Platforms like FastBull

In the dynamic world of fintech and industrial technology, platforms like FastBull have emerged as invaluable resources for investors. FastBull offers comprehensive tools and information that help investors navigate complex financial markets. With features such as real-time market data, advanced charting tools, and AI-driven trading signals, FastBull empowers investors to make informed decisions. The platform's user-friendly interface and educational resources cater to both novice and experienced investors, making it easier to capitalize on opportunities in the fintech and industrial sectors.

Conclusion

FintechZoom and General Electric (GE) represent two distinct yet interconnected facets of the modern financial and industrial landscape. FintechZoom's cutting-edge tools and market insights empower investors to navigate financial markets with confidence. Meanwhile, GE's legacy of innovation and strategic focus on digital transformation and renewable energy position it as a key player in the evolving industrial sector.

As we move through 2024, the convergence of fintech and industrial technology continues to create new opportunities and challenges for investors. Platforms like FastBull provide essential resources for staying informed and making strategic investment decisions. By leveraging the insights and tools available through these platforms, investors can better navigate the complexities of today's financial markets and capitalize on the growth potential of leading companies like GE.

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Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Warren Takunda

Economic

Consumer inflation in Tokyo, the leading indicator of the national average, accelerated in June in all three key measures on higher utility costs due to reduced subsidies and renewed upward pressures from rising import costs amid the protracted weakness of the yen, data from the Ministry of Internal Affairs and Communications released Friday showed.

Hot weather boosted demand for air conditioners, leading to higher durable goods prices, and hotel fees also helped pushed up inflation. The increase in processed food has peaked but the item remains the largest contributor, raising the total CPI by 0.70 percentage point, while energy prices added 0.38 point to the index.

The core CPI (excluding fresh food), closely watched by the Bank of Japan, posted a 2.1% increase on year, just above the median forecast of 2.0%, after picking up to 1.9% in May from a 25-month low of 1.6% in April, when completely free high school education took effect in the capital.

The year-over-year rise in the total CPI accelerated to 2.3%, as expected, after rising to 2.2% in May from a three-month low of 1.8% in April. The core-core CPI (excluding fresh food and energy) annual rate rose to 1.8% from a 20-month low of 1.7 % in May, coming in slightly higher than the median forecast of a 1.7% rise.

Services costs have lost upward momentum in recent months as wages for medical and welfare service workers and education support providers remain depressed despite the highest overall wage hikes in 33 years for employees at large firms this year. Services prices in Tokyo have also been pushed down by the metropolitan government’s move in April to add its own financial support to national subsidies, effectively making all public and private high schools in the prefecture tuition free.

The prices of services excluding owners’ equivalent rent rose 1.1% on year in June, contributing 0.38 point to the Tokyo CPI, up from a 0.7% rise (plus 0.26 point) in May. The annual rate of goods prices excluding fresh food accelerated to 3.7% (adding 1.54 points) after rising to 3.6% (plus 1.48 points) in May from 2.5% (plus 1.06 points) in April in light of higher utility costs.

Other details from the Tokyo CPI data:

The general slowdown of the core measure began in February 2023, when it eased sharply to 3.3% from a 41-year high of 4.3% in January 2023 as the effects of government subsidies for electricity and natural gas utilities kicked in.

Fresh food prices, a volatile factor, rose 7.3% on year in June, pushing up the overall index by 0.30 percentage point, following an 8.7% rise and a 0.37-point contribution the previous month. Fresh vegetable prices remain high due to poor crops caused by bad weather in April.

Food excluding perishables rose 3.0 percent on year (a 0.70-point contribution to the total CPI) in June, after rising 3.2% in April (plus 0.73 point). This category replaced energy as the largest positive contributor to the CPI increase in October 2022 (1.27 points vs. 1.20 points).

Energy prices rose 7.5% on year in June, pushing up the total index by 0.38 percentage point, after rising 5.9% (plus 0.29 point) in May and falling 2.9% in April (minus 0.15 point).

In the energy category, gasoline prices rose 3.4% on the year with a positive 0.02-point contribution to the CPI after a 4.1% rise (plus 0.02 point) the previous month.

Electricity charges rose 10.8% on the year (plus 0.29 point) after rising 13.1% (plus 0.33 point) in May and slipping 2.1% (minus 0.06 point) in April. The prices for natural gas supplied to homes rose 3.8% (plus 0.06 point) after falling 3.9% (minus 0.07 point) in May. The government provided subsidies for electricity and natural gas from January 2023 (reflected in February bills onward) until the end of May 2024. It will provide one-off subsidies for three months through October when air conditioner use pushes up electricity bills.

The prices for household durable goods rose 7.8% with a positive 0.10-point contribution to the CPI in June after rising 4.1% (plus 0.05 point) in May and falling 3.8% (minus 0.05 point) in April.

Accommodations costs rose 19.9% on the year with a positive 0.23-point contribution in June, up from increases of 14.7% (plus 0.19 point) in May and 18.8% (plus 0.23 point) in April but down from a 27.7% rise (plus 0.31 point) in March. The surge in hotel fees seen late last year is largely in reaction to a slump that began in late 2022. The government in October that year began subsidizing domestic travel under a new nationwide program, lowering the costs for tourism as part of economic stimulus measures through the first half of 2023 in many regions.

Source: MaceNews

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Warren Takunda

Economic

Next week's French and UK elections will be significant for Pound Sterling and the Euro. Markets have a good idea of what will happen, and if they are correct, we could well see the Pound-Euro exchange rate hanging around current levels when all is said and done.

However, elections are about people, and we don't always do what financial analysts expect. This means certain tail-risk outcomes exist that could really shake the market and deliver the volatility many currency buyers desire.

With the Conservatives and Labour offering up the status quo, the UK offers limited tail-risk outcomes, even in the event of a miraculous win by Rishi Sunak's Conservatives. Instead, France's legislative vote will be more interesting with some clear tail-risk outcomes that could really move the market.

Base-case: Pound-Euro Slides Below 1.18

The first round of voting happens on Sunday, and the initial results will be known at 7PM UK time. The market expects Marine Le Pen's RN Party to make a strong showing and become the biggest party in the French legislature after the second round vote a week later.

This will mean a 'cohabitation' between the French President and Prime Minister, who are from different parties, resulting in lawmaking gridlock, but it is not necessarily an adverse outcome to the Euro, which has already factored in such an outcome.

French Vote: The Tailrisk That Would Tip Pound to Euro Above 1.22_1

Above: The Economist's poll tracker

In fact, the single currency could even continue to recover over the coming days and weeks, with Pound-Euro eventually slipping below 1.18, bringing it closer to the median investment bank forecast for end-2024.

"If the French election results in a cohabitation with a hung parliament, our base case economic outlook for the eurozone remains on track. That should see French equities recover," says Dr. Nannette Hechler-Fayd’herbe, an economist at Lombard Odiear.

Fat Tail-risks: 1.22 and Above

The remaining scenarios are unfavourable to the Euro.

These are 1) RN secures an outright majority, as opposed to a simple win, which gives them a greater say in parliament, and 2) the left-wing alliance New Popular Front wins the vote as voters shift allegiances in the second round.

"We would expect French equities to continue selling off, especially in the case of a left-wing majority French government," says Hechler-Fayd’herbe. "This would create the greatest risks for other European assets such as eurozone sovereign bonds and the euro."

The New Popular Front is trailing RN in second place, but the gap is not insurmountable.

Analysis from Goldman Sachs says the latest polls suggest that participation in the election is likely to be high compared to the 2022 vote, which is expected to increase the chances of having three-party candidates making round two across many constituencies.

Goldman Sachs views this "as a favourable scenario for the extremes (left and right) into round 2."

Valentin Marinov, Head of G10 FX Strategy at Crédit Agricole, says GBP/EUR would shoot higher if the New Popular Front (NFP) wins.

"The EUR/GBP 3M-6M outlook would depend on the outcome of the French rather than the UK election. Key in that would be the FX impact of wider government credit spreads to Bund yields after the French vote. Our simulation results suggest that EUR/GBP could dip towards 0.82 or even lower in response to a Left-wing alliance victory."

EUR/GBP dipping to 0.82 "or even lower" equates to a rise in the Pound to Euro exchange rate above 1.22.

The NFP has revealed spending plans are significant and would require a sizeable increase in borrowing, something bond markets would struggle to accommodate.

The NFP is a coalition of left-wing parties that includes Jean-Luc Mélenchon’s France Unbowed, the Socialist Party, the French Communist Party and the Greens. It plans to raise the monthly minimum wage to €1,600, impose price ceilings on essential foods, electricity, gas and petrol, repeal Macron’s deeply unpopular decision to raise the retirement age to 64 and invest massively in the green transition and public services.

Prime Minister Gabriel Attal said their agenda would present France with a "fiscal drubbing".

Crédit Agricole's base-case assumption is that some negatives related to the French and UK votes are in the price of EUR/GBP so that the pair may not drop significantly below recent lows in the event of an RN victory and/or a hung parliament in France.

However, in the long term, Marinov expects that a slightly less dovish Bank of England relative to the European Central Bank could sustainably push EUR/GBP towards 0.83 or lower in 2025 (GBP/EUR above 1.2050).

It is ever thus: central bank policy will ultimately determine the longer-term moves for exchange rates.

Those with payment requirements should view any big knee-jerk politically-inspired moves as being potentially shortlived and stay nimble.

Source: Poundsterlinglive

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Alex

Economic

Stocks

As U.S. stocks lock in a solid first half, investors are speculating whether political uncertainty, potential Federal Reserve policy shifts and big tech's market dominance could make the rest of 2024 a tougher slog.

The S&P 500 is up 15% year-to-date thanks to strong corporate earnings, a resilient U.S. economy and enthusiasm over artificial intelligence that powered massive gains in stocks such as chipmaker Nvidia. The index's steady march upward produced 31 new highs in the first half, the most for first half of any year since 2021.

The first half has been "very much a Nirvana period for stocks," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder. "The economy has been stronger than many people anticipated including the Fed."

If history is any guide, the momentum in U.S. stocks is likely to continue: a positive first half has been followed by additional gains in the rest of the year 86% of the time, according to a CFRA study of markets during election years since 1944.

But the ride could get bumpy. Political uncertainty is likely to be a more powerful factor on asset prices, as investors focus on the U.S. presidential election. A recent JPMorgan survey showed investors see political risk in the U.S. and abroad as the top potential destabilizing factor for stocks.

Investors have also become increasingly concerned about the narrowness of the market's advance, which has been concentrated in a handful of tech powerhouses. Nvidia alone - whose shares are up 150% this year - has accounted for about a third of the S&P 500's total return, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Another key uncertainty is whether the economy can maintain the balance of gradually cooling inflation and resilient growth that has fueled investor confidence. A sharp deviation from that so-called Goldilocks scenario could upend the Fed's plans to cut rates later this year.

"With a wide range of potential macro outcomes in 2025, partly due to the U.S. election result, market volatility is likely to increase," wrote Jason Draho, head of asset allocation, Americas, for UBS Global Wealth Management.

Political Uncertainty

While investors have mostly been focused on factors such as earnings and monetary policy this year, politics are expected to loom larger as the matchup between President Joe Biden, a Democrat, and Republican challenger and former president Donald Trump intensifies in the coming months.

Futures tied to the Cboe Volatility Index reflect increased demand for protection against equity gyrations around the November vote, as polls continue to show the candidates neck and neck.

Signs that one of the candidates is gaining the upper hand could ripple out into asset markets. For many, it comes down to divergent tax policies: a Democratic sweep of the White House and Congress could mean the party would have a freer hand to raise taxes, generally seen as a negative for equities, according to UBS Global Wealth Management.

The first live debate of the 2024 election race late Thursday spurred a rise in U.S. stocks futures and the dollar in a move some investors interpreted as a reaction to a strong showing by Trump.

One potential wildcard, according to strategists at Janus Henderson, is a contested or prolonged election.

"Any commentary suggesting it's a real threat could create bouts of volatility in the coming months, and that volatility would likely continue until a victor is announced," they wrote. Election and Fed Risks Loom for US Stocks after Strong First Half of 2024_2

Election and Fed Risks Loom for US Stocks after Strong First Half of 2024_2

Concentration

AI-fever and strong earnings have helped drive up equities in the first half, but gains have been concentrated in tech and growth stocks, including Nvidia, Microsoft and Amazon.

The equal weight S&P 500 index - a proxy for the average stock - is up just 4% for the year, a fraction of the S&P 500's gain.

Many investors believe big tech dominance is well deserved, given strong balance sheets and leading positions at the top of their industries. But their growing heft could make markets unstable if the case for holding tech and growth stocks weakens and investors head for the exit all at once.

"It's understandable why everyone has drifted to these names, but it's a bit of a game of musical chairs. If the music stops, there's going to be a problem," said Stephen Massocca, senior vice president at Wedbush Securities.

Meanwhile, the 12-month forward price to earnings ratio of the tech-heavy Nasdaq 100 has risen to 26 from 20, two years ago, according to LSEG data.

Some investors are looking to areas of the market that have underperformed in recent months, expecting the rally in tech to spread out into other sectors. Jack Ablin, chief investment officer at Cresset Capital, has been focused on "quality dividend companies" and small caps.

"We think that perhaps the large cap has run a little too far and that we'll now see perhaps a broadening," Ablin said.

Growth

Most investors have cheered signs of cooling inflation and moderating growth this year, as it bolsters the case for the Fed to cut interest rates from a multi-decade peak. But a more pronounced economic slowdown could fuel worries that elevated interest rates are weighing more heavily on the economy.

Fed officials have trimmed their projections to just one rate cut this year from a previous forecast of three, thanks to the economy's strength and unexpectedly sticky inflation.

Market reactions to past rate cutting cycles have largely hinged on whether the cut came during a period of comparatively strong economic performance or in response to a sharp slowdown in growth.

While the S&P 500 has risen by an average of 5.6% in the 12 months after a cycle has begun, cuts that came along with a challenging economic environment coincided with far worse returns, an Allianz study examining rate cuts since the 1980s showed. For example, a rate cutting cycle that kicked off around the collapse of the dotcom bubble in 2000 saw the index down 13.5% a year later.

"Every landing is a soft landing until it is not," said Julia Hermann, global market strategist at New York Life Investments.

Source: Reuters

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Glendon

Economic

The natural gas market is experiencing a period of turbulence as a crucial level of support gave way on Monday, July 1st, 2024. This price decline has sparked concerns about a potential correction and raised questions about the future trajectory of natural gas prices.

Breaking Through Support: A Cause for Concern

The price of natural gas (often referred to as Henry Hub Natural Gas) had been hovering around $2.70 per million BTU (British thermal unit) for a considerable period. This level served as a significant support point, acting as a floor that prevented further price declines. However, on Monday, selling pressure intensified, pushing the price below $2.55. This breach of support indicates a shift in market sentiment, with sellers potentially taking control.

Factors Contributing to the Decline

Several factors are believed to be contributing to the recent decline in natural gas prices:

Weakening Demand from China: China, a major importer of Liquefied Natural Gas (LNG), has reportedly reduced its purchases after prices surged above $3.00 earlier in June. This suggests that Chinese demand may not be as robust as previously anticipated, putting downward pressure on global LNG prices and consequently impacting Henry Hub prices.

Shifting Weather Patterns: While some parts of Europe are experiencing hot weather that could boost demand for natural gas for power generation, overall weather forecasts are not indicating a significant heatwave that would drastically increase demand in the near future.

Strengthening US Dollar: The US dollar has gained some ground against other major currencies recently. Since natural gas is priced in US dollars, a stronger dollar can make it less attractive to foreign buyers, potentially leading to lower prices.Potential Implications and Future Outlook

The breach of the $2.70 support level could signal a deeper correction in the natural gas market. Analysts are divided on the potential extent of the decline, with some predicting a drop to as low as $2.20 and others suggesting a more moderate correction.

Here are some key considerations for the future:

Storage Levels: Natural gas storage inventories in the US will play a crucial role. If stockpiles remain high and continue to build throughout the summer injection season, it could further dampen prices.

Geopolitical Landscape: The ongoing situation in Ukraine and potential disruptions to Russian gas supplies to Europe could introduce an element of uncertainty and potentially lead to price spikes.

Global Economic Conditions: A slowdown in global economic growth could reduce demand for natural gas from various industries, putting additional downward pressure on prices.

What to Watch For

Traders and investors in the natural gas market should closely monitor the following developments:

Price Action: Whether natural gas prices can establish a new support level or continue their downward trajectory.

Inventory Data: Weekly updates on US natural gas storage levels.

Weather Forecasts: Any significant shifts in weather patterns that could impact demand.

Geopolitical News: Developments in the Russia-Ukraine conflict and their potential impact on global gas supplies.

Conclusion

The recent decline in natural gas prices marks a pivotal moment in the market. The breach of key support raises concerns about a potential correction. While the future direction remains uncertain, close attention to the factors mentioned above will be crucial for navigating this dynamic market environment.

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Devin

Economic

Bond

The recent turmoil in France's bond market could mark a new chapter for the euro zone's wealthiest economies, with emerging political and fiscal risks fuelling volatility earlier associated with its high-debt members such as Greece or Spain.

French President Emmanuel Macron's rattled markets with his shock decision on June 9 to call a snap election after his grouping got trounced by far-right parties in European parliamentary elections.

French government bond yields are around 3.25%, near their highest level of the year. That has pushed their premium over German yields - the European benchmark - to the most since at least 2017, reflecting the extra return investors want for holding that debt.

France is also now subject to European Union disciplinary measures over its budget deficit, together with Belgium, fellow member of what has been considered euro area's low risk "core", while former budget laggards Spain, Portugal and Greece are in the clear.

The terms "core" and "periphery" became commonplace during the euro zone sovereign debt crisis, which has driven a wedge between the richer north and the more indebted southern "peripheral" countries, both politically and from an investment perspective.

The "periphery" bonds were often the object of intense speculative trading at the first hint of any sort of setback.

However, the last few years have seen yield spreads for the euro zone's rich-economy core widen, while those for the "periphery" countries have mostly shrunk, as they stuck to tough debt-reduction rules imposed after the crisis.

In fact, out of that group, in the last five years, only Spain has seen its spread over Germany widen, while Greece's, Portugal's and Italy's have shrunk. The original core members, meanwhile, have all seen a widening, with France experiencing the largest increase.

"We think French government bonds will increasingly behave more like 'peripheral' rather than 'core' assets," Felix Feather, economist at UK asset manager abrdn, said.

"While this distinction does not have quite the bite it once did during the euro crisis, when the ongoing membership of the euro zone seemed like an open question for many peripheral countries, it does mean that French bonds are likely to trade with greater volatility, pro-cyclicality, and persistently wider spreads to Germany," Feather said.

French Bond Market Gets Taste of Euro Zone 'Periphery' Turmoil_1

The spread between German and French 10-year yields spiked to as much as 82 basis points the week after Macron's announcement, prompting a warning from the French finance minister about the potential for a deeper crisis.

It is currently around 77 basis points, compared with fellow core members Belgium at 64 basis points, Austria, with 56 basis points, and the Netherlands at 33 basis points.

What has helped Spain, Portugal and Greece, largely contain their spreads, is investors' preference for higher-yielding assets, particularly as long-dated bonds yield less than shorter-dated ones right now, known as "yield curve inversion".

"With inverted yield curves, finding assets that beat cash is difficult. That's why many people were holding on to their periphery bonds," said Andres Sanchez Balcazar, head of global bonds at Pictet Asset Management.

Analysts said this stability was also due to credible debt reduction strategies implemented by some of peripheral countries and the pivotal role of the European Central Bank, which commits to prevent a potentially destabilising blow-out in spreads.

Political Focus

Marine Le Pen's far-right National Rally (NR) leads in the polls ahead of the first round of voting on Sunday, and investors worry about the risk of a new government taking the country down an unsustainable debt path.

Various RN party members have sought to allay such fears by saying they would stick to Europe's fiscal rules, which dictate a country's budget deficit cannot exceed 3% of total national output. France is currently at 5.5%.

For Barclays, that means an RN majority might help bring France's debt spreads down.

Citi strategists, on the other hand, think this gap could blow out to as much as 100 basis points, closer to Italy's spread over Germany at around 156 basis points, if either a far-right or far-left government make big promises on spending. French Bond Market Gets Taste of Euro Zone 'Periphery' Turmoil_3

French Bond Market Gets Taste of Euro Zone 'Periphery' Turmoil_3

Konstantin Veit, portfolio manager at major bond investor PIMCO, said he was fairly neutral in terms of positioning between the euro zone's core and periphery, given how much Spanish and Portuguese spreads have narrowed.

"It's true that over time if the current fiscal trajectory persists, you might expect Spain to trade closer to France and also see Spain trading through France," he said.

Analysts and fund managers say politics remain in the spotlight for any issuer, not just France.

Portugal's centre-right minority government could struggle to approve the 2025 budget. In Spain, its centrist parties contained a far-right surge in the European elections, but the centre-left government is expected to favour increased social spending.

"We think that they both (Spanish and Portuguese spreads) have 15-20 bps of tightening left," Pictet's Sanchez Balcazar said, assuming that an NR-led government sticks to European budget rules, with no further spillover effects from France.

While France is in hot water now over its finances, it is unlikely to be in the same category as Italy, the third-largest economy in the euro zone with the worst debt problems.

"At the end of the day, I think that France's liquidity and the global safe-asset nature will keep its spread versus Germany a little bit tighter than that of Spain and Portugal," said Reinout De-Bock, head of the European rate strategy at UBS. French Bond Market Gets Taste of Euro Zone 'Periphery' Turmoil_4

French Bond Market Gets Taste of Euro Zone 'Periphery' Turmoil_4

Source: Reuters

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ING

Forex

USD: Everyone expects a soft inflation number today

There is a very strong consensus around a 0.1% month-on-month core PCE deflator for May today. Remember this is the Federal Reserve's preferred measure of inflation and following a 0.2% MoM prior reading should give the Fed confidence to start cutting rates later this year. The market does not fully price in the first Fed rate cut until November and thus there should be room for US short-dated rates to drop as focus shifts more squarely to a September rate cut. US two-year Treasury yields have been consolidating just above 4.70% for the last couple of weeks and a 0.1% MoM core PCE today should be a catalyst for them to break lower and drag the dollar with it.

The challenge, however, is politics. Last night's presidential debate on CNN saw 67% polling awarding the victory to Donald Trump. Is it too early for these kind of swings to start impacting the dollar? We see a potential Trump administration as more positive for the dollar both via looser fiscal policy and also via a more aggressive trade/tariff environment. Equally, the weekend sees the first round of voting in French elections which could hit the euro - more on that below.

DXY is now edging above 106 helped in part by the unchecked rise in USD/JPY. Here, the market seems reasonably calm. This makes it more difficult for Japanese authorities to intervene. DXY will face downside risks from the US inflation data, but we suspect it will find buyers in the 105.50/60 region as investors will prefer to hold dollars over the weekend.

EUR: Bracing for the French first round

It looks like investors are already bracing for the outcome of Sunday's first round of French parliamentary elections. The 10-year OAT-Bund sovereign yield spread is trading at a wide 82bp and EUR/USD is drifting back under 1.07. His article serves as a reminder that if a candidate does not secure 50% of the vote in the first round, only the top two candidates go forward to the second round vote on 7 July. Given the polls point toward Marine Le Pen's faction at 35% of the vote, the Leftist coalition at 28% of the vote, and the centre at 20%, President Macron's party looks set for a wipeout in parliament.

The question for the market is whether a Le Pen government looks at the French bond market and starts dropping some of its plans for seemingly unfunded tax cuts - or pushes ahead. Our eurozone team suspects it will be too early for a new government to substantially water down its pre-election pledges and that it may well be a rocky few months into September - when France needs to deliver to Brussels its plans on how it will fix its 5%+ budget deficit. This period suggests a further risk premium can be built into French bonds (OAT-Bund spreads to 120bp?) and into the euro, too.

Ahead of the weekend election, today sees the European Central Bank release its consumer inflation expectations for May. Three-year expectations currently sit at 2.4% and a drop under there - marking the lowest levels since before Russia invaded Ukraine - would add to expectations that the ECB could cut again in September. Currently, the market attaches a 64% probability to such an outcome. Perhaps the ECB will take encouragement from the Riksbank which yesterday added the possibility of an extra cut in the second half.

Today's EUR/USD game plan could see a brief spike to 1.0745/60 on the lunchtime US inflation data, but we would not be surprised to see it end the day back under 1.07 as investors brace for weekend elections.

Elsewhere, the Swiss National Bank releases its first quarter 24 FX intervention data today. We suspect it will show the first FX buying in two years. However, we doubt EUR/CHF holds gains to the 0.9620, possibly 0.9650 area, and see it back at 0.9500 during a hot summer of French politics.

GBP: Modest upward revisions to first quarter GDP

GBP/USD is edging higher today - helped in part by an upward revision to the first quarter GDP data. Encouragingly, consumption seemed to be the biggest driver here. However, we still forecast the Bank of England will begin cutting rates in August and will start to signal that in speeches once the 4 July general election has passed.

Somewhat amazingly, UK rates are still priced very similarly to the US. We have a much greater conviction that UK rates will come lower and that sterling will be dragged lower too. GBP/CHF has had a decent bounce off of 1.1200, but we look for the move to stall ahead of 1.1400 and a return to 1.12 this summer.

EMFX: Losing its shine

Some of the EM high-yielding currencies are still struggling in spite of a relatively benign environment for the carry trade. The Brazilian real has had a poor June as investors see little appetite from the Lula administration to rein in government spending. The Mexican peso has started to weaken again - perhaps because yesterday Banxico implied it wanted to push ahead with easing policy even as the peso wobbles from the threat of constitutional reforms. And in South Africa, delays in forming the new cabinet have investors fretting that the unlikely bedfellows of the ANC and the Democratic Alliance may struggle to work together after all.

Lower US rates may help the EMFX environment today, but we suspect that investors will be pursuing high-yield FX with less enthusiasm this summer. Please look at our latest FX talking for all our latest forecasts.

Risk Warnings and Disclaimers

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