The Day at a Glance | May 28 2024

The Top

• Federal Reserve officials want to see significant progress in inflation before starting to cut the federal funds rate. 

• According to a European Central Bank survey, Eurozone consumers reduced their inflation expectations last month ahead of the next monetary policy meeting on June 6^th, where a first rate cut for the European block is anticipated. 

• The IMF stated that Germany is facing growing spending pressures and the government should consider easing its debt brake, but sources from the Finance Ministry indicated that such a measure risks fueling inflation. 

• Japanese Finance Minister Shunichi Suzuki expressed concern over the negative aspects of the yen’s weakness at this time, reiterating Japan’s warnings against excessive currency movements. 

• Global oil prices stabilized on Tuesday as concerns over persistently high interest rates were balanced with expectations that OPEC+ will maintain its oil supply restrictions, alongside anticipated strong fuel demand during the summer in the U.S.

• The S&P 500 is up at the start of the short week.

Economic Environment

Federal Reserve officials want to see significant progress in inflation before starting to cut the federal funds rate. Fed authorities still expect inflation to return to 2% in the medium term, although recent data has not increased their confidence regarding the progress toward reaching said goal. In the most recent monetary policy meeting, officials suggested that the disinflation process would likely take longer than previously expected, with some suggesting willingness to tighten monetary policy further if inflationaryrisks materialize. This Tuesday, Minneapolis Federal Reserve President Neel Kashkari said that the central bank must wait for significant progress in inflation before starting to cut interest rates. Additionally, Kashkari said he had anticipated two rate cuts this year in the March meeting, but if inflation continues to stagnate, none may be required by the end of the year. Notably, U.S. consumer prices rose less than expected in April, suggesting that inflation resumed its downward trend at the beginning of the second quarter. Lastly, PCE inflation data will be released this week; the Fed’s preferred measure for tracking inflation is expected toremain unchanged at 2.7%.

Markets and Companies

Global markets carry negative sentiment. After Memorial Day in the United States, the main indices began the session mixed. The S&P is up +0.18%, the Nasdaq is down -0.08%, and the Dow Jones is down -0.2% as the market awaitsinflation data to be released at the end of the week. In Europe, markets are negative with the Stoxx 600 index recording a -0.50% decrease and most sectors in the red. Travel and leisure stocks fell by 1.6%, while oil and gas stocks rose by 0.3%. In Asia, markets closed negative, with Japan’s Nikkei 225 down -0.11% to close at 38,855.37 and China recording a -0.46% drop to settle at 3,109.6. Oil prices rose by more than 1% after posting losses last week, as the market focuses on an upcoming key OPEC+ meeting. Meanwhile, metals are up: gold +0.2%, silver +0.5%, and copper +2.5%. Lastly, cryptocurrencies are down.

The exchange rate fluctuated overnight, with a low of 16.63 and a high of 16.69, currently trading at 16.67.

Corporate News

• Apple shares rose nearly 2% following data reflecting a recovery in China.

• Nvidia rose 3%, continuing its rally after posting its quarterly results last Wednesday.

• GameStop surged more than 20% after the company announced on Friday that it had raised $933 million from a stock sale.