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Hedge Clippings | 26 July 2024 The US economy picked up in the second quarter, rising 2.4% - buoyed by consumer spending on services, which in turn were supported by wage increases - up from 1.5% in January to March. Overall, 2nd Qtr GDP rose 2.8%, but with inflation subsiding it's looking as though the Fed could start cutting interest rates when they next meet. Given that FOMC meeting doesn't occur until September 25th, there's plenty of water to flow under the bridge by then, but virtually all (as in 82 out of 100) of the economists surveyed by Reuters in the States are predicting that outcome, and most are then expecting another cut before the end of the year. If that's the outcome - (and surely 82% of economists couldn't be wrong?) - then the FED would appear to have achieved the soft landing they've been aiming for. Closer to home, the outlook is not so clear, but at least we'll have an answer - like it or not - sooner when the RBA meets in early August. Between then and now we'll have CPI inflation figures for both the month of June, and the June quarter, both due next Wednesday, along with Retail Trade. Following that, and with plenty of time for the RBA to chew over them, will be June's Labour Force figures on Thursday, and both PPI and Household Spending on Friday. While locally economists aren't all in agreement on the need for a rate rise, there aren't any we've heard calling for a cut - unless you include the Treasurer Jim Chalmers, who one might suggest has his own agenda and motivation for doing so. As a result we expect that the RBA will still be trading that well worn, but increasingly narrow path, not helped of course by the government's support of above inflation wage rises, and their recent tax cuts. The Last Word This week's Hedge Clippings includes a new video segment, "The Last Word" which we'll be recording and distributing each Friday in conjunction with Finance News Network. We'll take an overall view of markets and global economic issues over the last week, along with politics, with a dash of customary cynicism as appropriate - or in some cases, probably inappropriate, as we try to end the week with literally, the last word. News & Insights Investment Perspectives: Why are we listening to central banks? | Quay Global Investors Attention shifting from inflation to the growth outlook | Magellan Asset Management June 2024 Performance News Bennelong Concentrated Australian Equities Fund Digital Income Fund (Digital Income Class) |
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