Barclays_Global_Macro_Thoughts_Going_nowhere_fast.pdf

Restricted-ExternalFOCUS3June2024GlobalMacroThoughtsGoingnowherefastAjayRajadhyaksha+12124127669ajay.rajadhyaksha@barclays.comBCI,USMaxKitson+44(0)2035552386max.kitson@barclays.comBarclays,UKKaanhariSingh+85229032651kaanhari.singh@barclays.comBarclaysBank,HongKongWherenotedinthesourcenotes,theviewsexpressedwithinthisreportaretakenfrompreviouslypublishedresearch.Forfurtherdetail,includingimportantdisclosuresandanalystcertifications,pleasefollowthelinksoneachpageandonpage8.ThisdocumentisintendedforinstitutionalinvestorsandisnotsubjecttoalloftheindependenceanddisclosurestandardsapplicabletodebtresearchreportspreparedforretailinvestorsunderU.S.FINRARule2242.Barclaystradesthesecuritiescoveredinthisreportforitsownaccountandonadiscretionarybasisonbehalfofcertainclients.Suchtradinginterestsmaybecontrarytotherecommendationsofferedinthisreport.Pleaseseeanalystcertificationsandimportantdisclosuresbeginningonpage9.FICCResearchGlobalMacroRestricted-ExternalCompleted:03-Jun-24,10:26GMTReleased:03-Jun-24,10:30GMTRestricted-ExternalTheworldataglance•TheUSisslowingalittle,whileinflationremainsstickyacrosstheWest•TheECBlookssettocutthisweek,andlikelyonceaquarterfortherestoftheyear•KeepaneyeontheUSD,especiallyagainstAsiancurrencies•Thishasbeenanothergoodearningsseason,withBigTechcarryingthetorchagain•Makingsenseofitall3June20242Restricted-ExternalSomewhatsofterUSdata,andslightlyhigherEuroareainflation•ThereweremoresignslastweekofamildUSslowdown1oPendinghomesalesandthem-o-mFHFApriceindexbothsurprisedtothedownsideoDomesticfinalsalesinQ1werelowerthaninthefirstGDPreading(2.8%vs.3.1%)ifstillhealthyoRealconsumptionwasalittlesofterthanexpected,withrealgoodsspendingespeciallyweak•CorePCEinflationcameinat0.249%m-o-m,adownshiftfromQ1’sverystrongnumbers1oButYTD2024coreinflationisstilluncomfortablyhigh,evenifweexpectsofterreadingsincomingmonthsoCoreservicesPCEinflationwasup0.27%,alsomuchbelowQ1’space,butnotlowenoughforFedcomfortoArecentpaperfromtheClevelandFedarguesthatclosingthelastmileoninflationcouldwelltakeyears2•ThisthemeofstubbornlystickyinflationisalsostartingtoshowupinEuroareadata1oHeadlineinflationintheEurozoneat2.6%wasslightlyoverconsensus,butcoreat2.9%was20bpsaboveforecastsoInparticular,servicesinflationroseto4.1%;despitebaseeffectsinGermantransport,thisisstillaproblematicnumber•Atthesametime,theEuroareajoblessratefelltoanewrecordlowof6.4%;Julyisalmostcertainlyruledout1oWeexpecttheECBtocutonceaquarterfortherestoftheyear,startingfromthisweek1GlobalEconomicsWeekly:Whenindoubt,proceedcautiously(31May2024)2ClevelandFedmodelsuggestsinflationmayneedyearstoreturnto2%,ClevelandFed,30May20243June20243Restricted-ExternalMildsignsofaUSslowdownlastweekConsumerspendingdippedinAprilamidpaybackeffectsfromAmazon"sMarchsaleCorePCEpriceinflationmoderatedabitfurtherinAprilbutremainselevatedSource:BEA,HaverAnalytics,BarclaysResearchGlobalEconomicsWeekly:Whenindoubt,proceedcautiously(31May2024)3June20244Source:BEA,HaverAnalytics,BarclaysResearchGlobalEconomicsWeekly:Whenindoubt,proceedc