Global Macro Weekly

- By Chinedu Okoye 



China stops short of African Debt Relief, pledges more cash - Reuters

50.7 billion USD pledged over three years in credit and investments at this weeks triennial summit with African Leaders. These funds will go mostly to a select 30 infrastructure projectsto improve trade links, a much influx for a continent with a $100 billion infrastructure lending gap.

Beijing urged other countries to participate in the restructuring of African Debt. As it held out a lesser than expected checkbook for flashy deals expected by African leaders.



Fed Must Decide If Quarter-Point Cut Will Be Enough for Workers - Bloomberg

 https://www.bloomberg.com/news/articles/2024-09-07/fed-to-weigh-if-quarter-point-rate-cut-can-support-us-economy-jobs

"The Federal Reserve is set to begin unwinding its tightening campaign this month as inflation cools and the labor market slows. The big question policymakers now face is whether a small interest-rate cut will be enough to keep the economy in expansion mode."


Zero Equilibrium Take:

Neither a Small interest rate hike (25bps) nor a larger hike (50bps) would guarantee a continued economic growth. Policy makers would have to be as consistent as they were in hiking to cool off the overheating economy, with the cutting to manage the cooling we've seen in the labor market. 

The big issues here are the signs that go against a deep cut;

As of July; Retail sales 0.7% beating expectations. PCE Index was higher than the June Y-o-Y at 2.5%> CPI rose 3.2% Y-o-Y also slightly increasing from June. Jobs Openings in July also fell to 8.83 million. Jobless Claims in the week ending August however, dropped to 142k vs an expected 160k, and unemployment rate dipped to 4.2% after an unexpected rise in July to 4.3%.

Given these mixed signals — with inflationary pressures still present but the labor market showing signs of weakness — a deeper cut of 50 basis points (bps) in interest rates may indeed be premature. A more cautious approach to monetary easing could prevent further inflationary risks, while allowing more time to assess the ongoing labor market shifts.




Oil Breaches Key Levels Amid Economic Worries: A Bearish Signal for Markets? - Zero Equilibrium 

http://zeroequilibrium.blogspot.com/2024/09/oil-breaches-key-levels-amid-economic.html

Oil Dropped 7% week-on-week to 68.16 and $71.06 for WTI and BRENT Respectively.

Bullish signals, such as US Inventories plunged after seeing larger than expected drawdowns of 6.8 million barrels in the week ending August 30th, Libyan Oil suoply decline didn't stop the commodity from dropping 7.6% and 7.05% for BRENT and WTI Crude respectively.

Bearish signals stems from signs of cooling in the Chinese and American economy. Whether this prices could stabilize or keep falling is left to be seen. However the OPEC+ decision to halt planned production quota increases in 2025 in response to the sharp fall in Oil Prices. 

Gold held at above $2,500 levels ending the week at  2,516 (XAU/USD). A stronger gold and a weaker oil could signal negative expectations about the global economy that could simmer into assets as stocks also experienced a plunge on the week.


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