July 13, 2024

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Built General Tough

Optimism and prudence

Sovereign yields climbed in anticipation of a stimulus.

The outlook for global growth continues to improve, particularly in Europe, where indicators and optimism are catching up. Sovereign yields climbed in anticipation of a stimulus.

The United States disrupted by employment

The latest US indicators are strong, with two big exceptions. The April jobs report said non-farm jobs only increased by 266,000, or a fraction of the expected million. The ISM PMI index was also lower than expected, although Markit’s rival services indicator surprised slightly on the upside.

According to ISM surveys, several business leaders
have had difficulty attracting and retaining their employees.

Some observers argue that the aid sent by the Biden administration to households, the extension of unemployment benefits and the increase in the average hourly wage in April (+ 0.7%) are the most likely reasons for the recent slowdown in the economy. employment. Indeed, according to ISM surveys, several business leaders have experienced difficulties in attracting and retaining their employees.

These disappointing figures put any question on tapering to a halt and partly explain the dollar’s decline to its level at the start of March, which is also attributable to the resumption of reflation.

Europe seems to be on the move

In contrast, the situation in Europe continues to indicate a general recovery in activity: retail sales climbed 2.7% in March, exceeding consensus forecasts, as did German industrial orders (+ 3%). .

Most European countries have now injected at least one dose of the vaccine into a quarter of their population (28% on average in the EU). The Netherlands and Belgium have started to ease restrictions on mobility, in particular allowing the terraces of bars and restaurants to reopen. In addition, the European Commission has announced its intention to let holidaymakers travel outside the EU by June.

In China, despite reduced government support,
the latest indicators are better than expected.

Overall, the current context suggests that Europe should post a strong recovery in the second half of the year.

Japan remains cautious, China confirms

The Japanese government has extended the state of emergency in Tokyo until May 31 in order to contain the surge in daily infections and save time on its vaccination schedule. In addition, Japan and the UK have agreed to step up their trade and security cooperation, following bilateral talks ahead of the G7 foreign ministers meeting.

In China, despite reduced government support, the latest indicators are better than expected: the Caixin services PMI index rose to 56.3 in April, the fastest growth rate this year. The growth rate of imports over two years reached 16.8% in April (excluding the base effect of the pandemic); and domestic tourism has soared over the five days of Labor Day and topped pre-pandemic levels.