Welcome to this week’s market review brought to you by TreasuryONE and ETM Analytics.
💡 Interest Rate Decisions: Last week, both the Fed and SARB paused their interest rate cutting cycles amidst ongoing economic uncertainties. This decision reflects the cautious approach both banks are taking due to mixed economic signals and uncertainties, particularly those stemming from tariff issues and political decisions in the U.S.
💡Economic Outlooks: The U.S. economic outlook appears grim, with experts predicting potential negative growth as early as Q1 of 2025. Economic indicators like retail sales and PMIs are showing weakness, although non-farm payroll figures have been somewhat positive, highlighting a mixed economic scenario.
💡Inflation Concerns: A key point of discussion has been inflation, especially in the U.S., where recent data suggests an upward trajectory exacerbated by tariffs. The situation puts additional pressure on the Fed, complicating their future monetary policy decisions.
💡Global Influence: André highlights the significant impact of U.S. economic policies on global markets, including South Africa. Even though SARB is not directly following the Fed’s lead, it remains highly sensitive to shifts in U.S. policy and economic conditions due to their global repercussions.
💡Future Predictions: The discussion also covers expectations for the remainder of the year, with both André and Ilze-Mari agreeing that interest rates are likely to remain stable in both the U.S. and South Africa. The potential for economic downturn and ongoing tariff discussions could force the Fed to reconsider its quantitative tightening strategies.