The infoshot to help kick-start your week
Last Week
- French bond futures saw a modest rise early Friday following the unveiling of the 2025 budget plan on Thursday. The new budget, a key component of Prime Minister Michel Barnier’s strategy to restore political and fiscal stability, includes measures worth €60.6 billion aimed at addressing France’s public finance challenges and boosting investor confidence. However, the budget’s passage faces potential hurdles from a fragmented parliament, where no party holds a majority. This political uncertainty, combined with a widening budget deficit driven by falling tax revenues, has weighed on market sentiment towards French bonds. Parliament is set to review the proposals this week, where lawmakers may propose amendments. The final version of the budget must be approved before the end of the year.
- The debate over the Federal Reserve’s rate-cutting trajectory continued on Thursday, with three Fed policymakers indicating that a higher-than-expected September inflation report would not deter the central bank from easing rates further. Another policymaker suggested he may prefer a pause in rate cuts at the next meeting. Market expectations reflect an approximately 80% likelihood that the Fed will reduce rates by 0.25% at its November meeting, down from near certainty before last week’s strong U.S. employment data. U.S. Treasuries remained steady in Asian trading on Friday, as did the Bloomberg U.S. dollar index.
- The European Central Bank (ECB) is expected to accelerate interest rate cuts in the coming months to support economic growth, according to a Bloomberg survey. Analysts predict that by the end of 2025, borrowing costs will be lowered to levels that no longer constrain demand. With inflation slightly below the 2% target, the ECB is anticipated to reduce its deposit rate by 0.25% at next week’s meeting, with further cuts projected at each meeting through March. Additional rate reductions are expected in June and December, bringing the benchmark rate down to 2%. These expectations align with financial market recalibrations, driven by signs of a weakening economy and faster-than-expected disinflation in the euro zone.
Market Pulse
Coming Up
- UK CPI Data, Wednesday 16th October 2024 at 7:00am
- EU ECB Interest Rate Decision, Thursday 17th October 2024 at 1:15pm
- China GDP Data, Friday 18th October 2024 at 3:00am
Notice:
For professional advisers only, Copia does not provide financial advice, and the contents of this document should not be taken as such. The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated, but is not an indicator of potential maximum loss for other periods or in the future.Open document settingsOpen publish panel
