Take Two: Fed indicates high rates for some time yet; Eurozone inflation accelerates
- 08 January 2024 (3 min read)
What do you need to know?
The Federal Reserve may ease monetary policy this year but warned interest rates could remain high “for some time” until inflation falls further. Minutes from its December meeting showed policymakers agreed the path of monetary policy “will depend on how the economy evolves”, with future rate hikes not ruled out. While market reaction to the minutes was muted, 2023 delivered better-than-expected returns; the MSCI World NR Index rose 24%, while the S&P 500 was up 26% including dividends, and the tech-heavy Nasdaq achieved 45%.1
Around the world
Eurozone annual inflation rose 2.9% in December, up from 2.4% in November; however, core inflation – excluding energy, food, alcohol and tobacco – fell to 3.4% from 3.6%, according to an official flash estimate. In addition, Eurozone manufacturing activity contracted in December for the 18th consecutive month. The final manufacturing Purchasing Managers’ Index (PMI) confirmed a slight rise to 44.4 in December from 44.2 in November – below 50 signifies a contraction. The bloc’s composite PMI remained unchanged in December at 47.6, signalling a moderate but consistent decline in Eurozone business activity.
- SW4gVVMgZG9sbGFyIHRlcm1zLiBTb3VyY2U6IEZhY3RTZXQsIGRhdGEgYXMgb2YgMjkgRGVjZW1iZXIgMjAyMy4=
Figure in focus: Two billion
Globally, 2024 will be a politically-charged 12 months, with more than two billion people set to head to the polls – most by virtue of India’s elections during April and May. However, emerging markets overall will collectively hold 19 elections this year, with some of the most important contests taking place in Taiwan, South Africa and Mexico. The UK is also very likely to see a general election later in 2024 but the most consequential for the wider world is likely to be the US Presidential race on 5 November.
Words of wisdom
Floating turbine – An offshore wind turbine mounted on a floating structure enabling the turbine to generate electricity in depths of water that fixed turbines are not able to reach. Industry officials believe floating turbines could account for over half the UK’s target for offshore wind power generation by 2050 – notably, the amount of UK electricity generated by fossil fuels fell by 22% year on year in 2023, according to climate policy specialist Carbon Brief. Floating turbines may be a potential key technology in the green transition to help replace fossil fuels with renewable energy.
What’s coming up?
On Monday, a spate of Eurozone surveys will be published covering December, including the bloc’s Economic and Industrial Sentiment and Consumer Confidence indices. On Tuesday, the Eurozone also publishes its unemployment rate for November. On Thursday, the US releases its inflation figures for December, with China following up with its own numbers on Friday. In addition, the UK reports November GDP growth on Friday.
Disclaimer
The information on this website is intended for investors domiciled in Switzerland.
AXA Investment Managers Switzerland Ltd (AXA IM) is not liable for unauthorised use of the website.
This website is for advertising and informational purpose only. The published information and expression of opinions are provided for personal use only. The information, data, figures, opinions, statements, analyses, forecasts, simulations, concepts and other data provided by AXA IM in this document are based on our knowledge and experience at the time of preparation and are subject to change without notice.
AXA IM excludes any warranty (explicit or implicit) for the accuracy, completeness and up-to-dateness of the published information and expressions of opinion. In particular, AXA IM is not obliged to remove information that is no longer up to date or to expressly mark it a such. To the extent that the data contained in this document originates from third parties, AXA IM is not responsible for the accuracy, completeness, up-to-dateness and appropriateness of such data, even if only such data is used that is deemed to be reliable.
The information on the website of AXA IM does not constitute a decision aid for economic, legal, tax or other advisory questions, nor may investment or other decisions be made solely on the basis of this information. Before any investment decision is made, detailed advice should be obtained that is geared to the client's situation.
Past performance or returns are neither a guarantee nor an indicator of the future performance or investment returns. The value and return on an investment is not guaranteed. It can rise and fall and investors may even incur a total loss.
AXA Investment Managers Switzerland Ltd.