15th January 2025
US Inflation Eases in December; Markets React Positively
In December, the U.S. annual inflation rate came in at 2.9%, slightly above the market estimate of 2.8%, rising from 2.7% in November. The increase was driven primarily by higher energy costs, with gasoline prices climbing 4.4%. Core inflation, which excludes food and energy, edged down to 3.2%, slightly below expectations of 3.3%, and down from 3.3% the previous month. Bond markets rallied on lower-than-expected core inflation figures with 10-year treasury yields falling to 4.7% from 4.8%, whilst U.S. equity markets opened higher following a weak start to the trading week. The recent market moves reflect growing investor optimism, without dashing hopes that the Federal Reserve will be able to cut interest rates in 2025.
15th January 2025
UK Inflation Eases, However Core Pressures Persist
UK inflation eased to 2.5% in December, down slightly from 2.6% in November, as energy and transport costs continued to decline. However, core inflation held firm at 2.7%, reflecting persistent pressures in services and wage growth. The Bank of England is expected to adopt a cautious stance, with policymakers balancing moderating headline inflation against underlying risks that remain above the 2% target. Despite cooling from last year’s peaks, structural price drivers and business cost pressures pose challenges to sustained disinflation. The pound edged 0.1% lower to $1.26 following the release, as markets weighed the potential for a slower shift in monetary policy.
10th January 2025
US posts another blockbuster jobs number for December
The US economy posted another blowout jobs number in December with 256,000 jobs created. This was well above the markets estimates of 165,000 and evidences just how strong the US continues to be. The market sold off on the news primarily because a strong economy with a strong labour market does not need interest rate cuts to which the market is very keen to see keep coming down.