SignalPlus Macro Analysis (20240604): Inflation Rebound, US Economic Slowdown

Last week's economic data prompted quite a bit of rethinking, as U.S. economic data finally returned to the state it was in at the beginning of the first quarter (GDP downgrade, consumption decline), while global inflation momentum unexpectedly began to rise again, with the Eurozone HICP year-on-year accelerating back to 2.9% (previously 2.7%).

The slowdown in U.S. economic data has now become so widespread that it cannot be ignored. The Atlanta Fed's GDP forecast has now dropped below 2%, and real disposable income growth has slowed to below 1%. Additionally, rising credit card delinquency rates, increasing rental costs, and a weak job market all indicate that the U.S. economy will soften before the election, while the Federal Reserve is still grappling with the tricky issue of persistently high inflation, with few meetings left before November.

Due to last Friday's PCE showing consecutive slowdowns, a 10% drop in oil futures, and expectations for an ideal slowdown in the economy, macro assets have rebounded significantly over the past few trading days. This week, a series of important data releases are scheduled, including today's JOLTS, Wednesday's ADP and ISM services index, and Friday's non-farm payroll data.

The non-farm payroll data may be the most important event of the week; however, next Wednesday will also see the FOMC meeting and CPI data released on the same day, making it the most anticipated day before summer. Please fasten your seatbelts!

Regarding the election, former President Trump has benefited significantly from his recent guilty verdict, with his chances of winning the November election rising to over 50% (compared to Biden's 35%). It seems that a considerable portion of voters view this as "political persecution" against Trump, which actually works in his favor. If this former president is elected again, the main impact will be on fixed income, as the market generally expects him to exert new political influence on the Federal Reserve, implementing loose monetary policy, free-spending fiscal policy, and further tax cuts. At least for the market, the fourth quarter is sure to be very interesting.

In the cryptocurrency space, as the U.S. stock market rebounds and overall risk sentiment improves, market sentiment has been boosted since last Friday, with BTC once again challenging $70,000 and ETH hovering around $3,800. However, trading activity remains sluggish, funding rates are low, and actual volatility is not high, with prices staying within recent ranges. We expect this situation to last at least until Friday's non-farm payroll data, and the next significant volatility will likely wait until after next Wednesday's CPI and Federal Reserve meeting. Currently, it seems there is little upward resistance. Good luck to everyone!