United States Fed Funds Rate
In July of 2023, the Federal Reserve implemented an anticipated move by raising the target range for the federal funds rate by 25 basis points, reaching the bracket of 5.25% to 5.5%. This decision, aligning with market projections, propelled borrowing costs to their loftiest point since January 2001.
Amidst this decision, policymakers reiterated their commitment to vigilant monitoring of incoming data's implications on the economic outlook. This proactive approach would enable them to make necessary adjustments to the monetary policy stance in case emerging risks could potentially hinder the achievement of both inflation and employment goals. Policymakers emphasized their consideration of a broad spectrum of factors, encompassing labor market conditions, inflationary pressures, inflation expectations, as well as global financial dynamics.
The release of meeting minutes on August 16th revealed that a majority of participants maintained their perspective on considerable upward risks to inflation. This perception suggested a potential requirement for additional tightening of monetary policy.
United States Inflation Rate
In July 2023, the annual inflation rate in the United States picked up momentum, reaching 3.2%, a rise from June's 3%, albeit slightly below the forecasted 3.3%. This shift marked an interruption in the twelve consecutive months of decrease, largely attributed to base effects. Notably, a year prior, inflation had initiated a descent from its peak of 9.1%.
During July 2023, the energy sector saw a decrease of 12.5% in costs, a less pronounced drop compared to June's 16.7%. This decline was less severe for fuel oil (-26.5% compared to -36.6%), gasoline (-19.9% compared to -26.5%), and utility gas service (-13.7% compared to -18.6%). Conversely, the cost of apparel increased by 3.2% (up from 3.1%), along with a larger uptick in transportation services costs, which rose to 9% (compared to 8.2%).
On the other hand, electricity prices experienced a more modest increase of 3%, a decrease from June's 5.4%. Inflation rates decelerated for food (4.9% compared to 5.7%), shelter (7.7% compared to 7.8%), and new vehicles (3.5% compared to 4.1%). Medical services witnessed a decline in cost by 1.5% (as opposed to the previous -0.8%), and prices for used cars and trucks dropped by 5.6% (compared to the previous -5.2%).
Meanwhile, core inflation, which excludes food and energy, eased to 4.7% in July from June's 4.8%, slightly below the projected 4.8%.
United States GDP Growth Rate
In the second quarter of 2023, the U.S. economy exhibited a robust annualized growth of 2.4% quarter-on-quarter, surpassing the 2% expansion of the previous period and exceeding market predictions of 1.8%. This revelation emerged from the advance estimate.
A notable driver of this growth was the sharp acceleration in nonresidential fixed investment, which soared by 7.7% (compared to the earlier 0.6%). This surge was led by a notable recovery in equipment investment, which posted a remarkable 10.8% growth (rebounding from the previous -8.9%), and intellectual property products, which increased by 3.9% (up from 3.1%). Additionally, private inventories contributed positively to growth, adding 0.14 percentage points, a notable reversal from the negative contribution of -2.14 in Q1.
In contrast, consumer spending experienced a significant slowdown, registering at 1.6% growth (in contrast to the previous 4.2%). This deceleration, despite surpassing market expectations, reflected a moderation in inflation and continued tightness in the labor market. While spending on goods witnessed a sharp deceleration (0.7% compared to the earlier 6%), expenditure on services remained robust, growing at 2.1% (compared to 3.2%).
Public expenditure increased at a much softer pace, posting a growth of 2.6% (compared to 5%). However, net trade exerted a negative impact on growth, subtracting 0.12 percentage points, primarily due to a 10.8% drop in exports and a comparatively smaller decline of 7.8% in imports. Notably, residential investment continued its downward trajectory, declining by 4.2% (compared to the previous -4%).
United States Unemployment Rate
In July 2023, the unemployment rate in the United States experienced a marginal decline, settling at 3.5%, compared to June's 3.6%. This figure notably surpassed market expectations, which had anticipated a rate of 3.6%. The ranks of the unemployed saw a reduction of 116,000 individuals, bringing the total to 5.841 million. In tandem, employment levels displayed a positive trajectory, rising by 268,000, culminating in a total of 161.262 million employed individuals.
The broader measure of unemployment, encompassing those who desire employment but have ceased searching, as well as those working part-time due to the inability to secure full-time positions, was indicated by the U-6 unemployment rate. This gauge fell to 6.7% in July, a decrease from June's 6.9%.
The labor force participation rate, a key indicator of workforce engagement, remained stable at 62.6%. Importantly, this rate held its ground at the highest level recorded since March 2020.
United States Current Account
In the first quarter of 2023, the United States registered a current account deficit amounting to $219.3 billion. This figure stood higher than the upwardly revised deficit of $216.2 billion noted in the preceding quarter, as well as surpassing expectations of a $217.5 billion deficit. This deficit, equivalent to 3.3% of the current-dollar Gross Domestic Product (GDP), reflects the balance of trade and financial flows.
Examining the components, the secondary income gap expanded to $49.6 billion from the prior $40.7 billion. This shift was propelled by a decrease in receipts attributed to general government transfers, particularly fines and penalties, while payments increased due to a surge in private transfers, primarily insurance-related transfers.
Meanwhile, the primary income surplus narrowed to $31.3 billion, a decrease from the previous $38.1 billion. This shift resulted from a scenario where payments outpaced receipts. The surge in payments was mainly attributed to interest on loans and deposits, owing to elevated short-term interest rates.
In contrast, the goods and services gap contracted to $201 billion from the previous $213.5 billion. This was influenced by a surge in exports, notably of medicinal, dental, and pharmaceutical products, along with goods transferred through the Presidential Drawdown Authority. Imports, on the other hand, experienced a reduction, largely due to a decrease in petroleum and related products, as well as chemicals.
United States Federal Government Budget
In 2022, it is anticipated that the United States will exhibit a Government Budget deficit that corresponds to 5.8% of the nation's Gross Domestic Product.
Japan Interest Rate
During its July meeting, the Bank of Japan (BoJ) opted to maintain its key short-term interest rate at -0.1% and to keep 10-year bond yields hovering around 0%, a decision that garnered unanimous support from the board. However, the central bank made a notable adjustment to its yield curve control policy, aiming to enhance the flexibility of its stimulus approach for sustained efficacy. In this regard, the board clarified that the previously established 0.5% ceiling on yield movements serves as a reference point, rather than an inflexible limit.
Simultaneously, the BoJ unveiled insights from its quarterly outlook report, foreseeing a gradual economic recovery buoyed by pent-up demand. When examining inflation, the year-on-year rate of Consumer Price Index (CPI) is anticipated to decelerate due to the waning influence of previous import price hikes. Subsequently, these figures are projected to regain momentum, driven by improvements in the output gap and the concurrent growth of inflation expectations and wage levels.
The BoJ underscored its commitment to expanding the monetary base until inflation not only surpasses the 2% mark but also maintains a stable position above the target threshold. The committee reiterated its readiness to implement supplementary easing measures if circumstances necessitate such action.
Japan Inflation Rate
In July 2023, Japan's annual inflation rate held steady at 3.3%, maintaining its position from the previous month. Notably, this figure surpassed market predictions of 2.5%, signifying an inflationary trend beyond expectations. This upward price movement was observed across several sectors.
Price increases persisted in categories such as food (8.8% compared to June's 8.4%), housing (remaining at 1.1%), transportation (unchanged at 2.2%), furniture & household utensils (8.4% compared to 8.6%), clothing (rising to 4.1% from 3.9%), medical care (dipping to 2.2% from 2.4%), education (holding steady at 1.3%), culture & recreation (elevating to 4.8% from 3.5%), and miscellaneous expenses (slipping to 1.2% from 1.5%).
In contrast, the prices of fuel, light, and water charges experienced their sixth consecutive month of decline, registering at -9.6% (compared to the earlier -6.6%). This drop was primarily attributed to the price decrease in electricity, which saw a decline of -16.6% (compared to the previous -12.4%).
In the meantime, core inflation, which accounts for the underlying inflation trend by excluding volatile items, eased to a 4-month low of 3.1% in July, down from June's 3.3%. This figure aligned with consensus estimates but remained outside the Bank of Japan's 2% target for the 16th consecutive month.
On a monthly basis, consumer prices inched up by 0.4%, representing the most significant increase in three months following a 0.2% gain in June.
Japan GDP Growth Rate
During the second quarter of 2023, the Japanese economy exhibited robust growth, expanding by 1.5% quarter-on-quarter. This performance outperformed market expectations of a 0.8% rise and marked an acceleration from the previously revised 0.9% growth recorded in the first quarter. These preliminary figures underscore the economy's sustained momentum, marking the second consecutive quarter of expansion and achieving the most rapid growth rate since the fourth quarter of 2020.
This expansion was notably bolstered by a favorable contribution from net trade. Exports rebounded with a growth of 3.2%, a stark contrast to the previous quarter's -3.8%, while imports continued their downward trend for the third successive quarter, contracting by -4.3% (compared to -2.3% in the previous quarter).
Conversely, government spending remained sluggish, holding steady at 0.1%, and capital expenditure showed no change, contrasting with the 1.8% growth observed in the preceding period. An important aspect, private consumption, which accounts for over half of the economy, experienced a decline, contracting by -0.5% following consecutive quarters of growth. This contraction was attributed to intense cost pressures.
Considering the broader context, the Japanese economy expanded by 1.1% over the past year, a deceleration from the 2.1% rise in 2021. This moderation can be attributed to persistent global headwinds that continued to affect the country's economic trajectory.
Japan Unemployment Rate
In June 2023, Japan's unemployment rate saw a marginal decrease, resting at 2.5%, a slight improvement from the previous month's 2.6%, which closely aligned with market projections. This rate marked the lowest unemployment figure recorded since January. The decrease in unemployment was attributed to a reduction of 40 thousand individuals, leading to a total of 1.73 million unemployed individuals, while concurrently, employment figures exhibited growth by 190 thousand, reaching a total of 67.55 million.
During this period, the labor force witnessed an expansion of 140 thousand individuals, summing up to 69.27 million. On the contrary, individuals detached from the labor force decreased by 60 thousand, reaching a total of 40.98 million.
Notably, the non-seasonally adjusted labor force participation rate observed a marginal uptick, reaching 63.1% in June, a slight improvement from the previous year's 63.0% in the same month. In contrast, the unemployment rate during the same period a year prior stood at 2.6%.
Meanwhile, the jobs-to-applications ratio exhibited a minor decline, moving from 1.31 in May to 1.30 in June. This reading pointed to the lowest level seen since July 2022.
Japan Current Account
In June 2023, Japan's current account demonstrated a remarkable surge, resulting in a surplus of JPY 1,508.8 billion, a substantial leap from the previous year's JPY 497.9 billion in the same month. This performance exceeded market predictions, which had anticipated a surplus of JPY 1,395 billion. This marked the fifth consecutive month of a current account surplus.
Key contributors to this positive trend included a significant transformation in the goods account, which swung from a deficit of JPY 11,048 billion in the prior year to a surplus of JPY 3,287 billion. This shift was attributed to a 0.5% year-on-year increase in exports, accompanied by a notable decline of 14.3% in imports.
Simultaneously, the primary income surplus experienced a narrowing, reducing from JPY 18,495 billion to JPY 16,825 billion. On the other hand, the services account gap expanded, reaching JPY 3,582 billion from the previous JPY 2,563 billion.
Furthermore, the secondary income registered a deficit of JPY 144.1 billion, contrasting with a minor surplus from the preceding year.
Japan Government Budget
In the year 2022, Japan's Government Budget exhibited a deficit equivalent to 6.40% of the nation's Gross Domestic Product.
📉 The scenario I am playing out assumes the start of declines in the current week. I do not exclude changing the scenario in case of a sudden change in the market situation. I am aware of the possibility of a correction at any time, this should be taken into account, In case of a change of outlook I will publish an update in the next post
🚀 If you appreciate my work and effort put into this post, I encourage you to leave a like and follow on my profile 🚀
In July of 2023, the Federal Reserve implemented an anticipated move by raising the target range for the federal funds rate by 25 basis points, reaching the bracket of 5.25% to 5.5%. This decision, aligning with market projections, propelled borrowing costs to their loftiest point since January 2001.
Amidst this decision, policymakers reiterated their commitment to vigilant monitoring of incoming data's implications on the economic outlook. This proactive approach would enable them to make necessary adjustments to the monetary policy stance in case emerging risks could potentially hinder the achievement of both inflation and employment goals. Policymakers emphasized their consideration of a broad spectrum of factors, encompassing labor market conditions, inflationary pressures, inflation expectations, as well as global financial dynamics.
The release of meeting minutes on August 16th revealed that a majority of participants maintained their perspective on considerable upward risks to inflation. This perception suggested a potential requirement for additional tightening of monetary policy.
United States Inflation Rate
In July 2023, the annual inflation rate in the United States picked up momentum, reaching 3.2%, a rise from June's 3%, albeit slightly below the forecasted 3.3%. This shift marked an interruption in the twelve consecutive months of decrease, largely attributed to base effects. Notably, a year prior, inflation had initiated a descent from its peak of 9.1%.
During July 2023, the energy sector saw a decrease of 12.5% in costs, a less pronounced drop compared to June's 16.7%. This decline was less severe for fuel oil (-26.5% compared to -36.6%), gasoline (-19.9% compared to -26.5%), and utility gas service (-13.7% compared to -18.6%). Conversely, the cost of apparel increased by 3.2% (up from 3.1%), along with a larger uptick in transportation services costs, which rose to 9% (compared to 8.2%).
On the other hand, electricity prices experienced a more modest increase of 3%, a decrease from June's 5.4%. Inflation rates decelerated for food (4.9% compared to 5.7%), shelter (7.7% compared to 7.8%), and new vehicles (3.5% compared to 4.1%). Medical services witnessed a decline in cost by 1.5% (as opposed to the previous -0.8%), and prices for used cars and trucks dropped by 5.6% (compared to the previous -5.2%).
Meanwhile, core inflation, which excludes food and energy, eased to 4.7% in July from June's 4.8%, slightly below the projected 4.8%.
United States GDP Growth Rate
In the second quarter of 2023, the U.S. economy exhibited a robust annualized growth of 2.4% quarter-on-quarter, surpassing the 2% expansion of the previous period and exceeding market predictions of 1.8%. This revelation emerged from the advance estimate.
A notable driver of this growth was the sharp acceleration in nonresidential fixed investment, which soared by 7.7% (compared to the earlier 0.6%). This surge was led by a notable recovery in equipment investment, which posted a remarkable 10.8% growth (rebounding from the previous -8.9%), and intellectual property products, which increased by 3.9% (up from 3.1%). Additionally, private inventories contributed positively to growth, adding 0.14 percentage points, a notable reversal from the negative contribution of -2.14 in Q1.
In contrast, consumer spending experienced a significant slowdown, registering at 1.6% growth (in contrast to the previous 4.2%). This deceleration, despite surpassing market expectations, reflected a moderation in inflation and continued tightness in the labor market. While spending on goods witnessed a sharp deceleration (0.7% compared to the earlier 6%), expenditure on services remained robust, growing at 2.1% (compared to 3.2%).
Public expenditure increased at a much softer pace, posting a growth of 2.6% (compared to 5%). However, net trade exerted a negative impact on growth, subtracting 0.12 percentage points, primarily due to a 10.8% drop in exports and a comparatively smaller decline of 7.8% in imports. Notably, residential investment continued its downward trajectory, declining by 4.2% (compared to the previous -4%).
United States Unemployment Rate
In July 2023, the unemployment rate in the United States experienced a marginal decline, settling at 3.5%, compared to June's 3.6%. This figure notably surpassed market expectations, which had anticipated a rate of 3.6%. The ranks of the unemployed saw a reduction of 116,000 individuals, bringing the total to 5.841 million. In tandem, employment levels displayed a positive trajectory, rising by 268,000, culminating in a total of 161.262 million employed individuals.
The broader measure of unemployment, encompassing those who desire employment but have ceased searching, as well as those working part-time due to the inability to secure full-time positions, was indicated by the U-6 unemployment rate. This gauge fell to 6.7% in July, a decrease from June's 6.9%.
The labor force participation rate, a key indicator of workforce engagement, remained stable at 62.6%. Importantly, this rate held its ground at the highest level recorded since March 2020.
United States Current Account
In the first quarter of 2023, the United States registered a current account deficit amounting to $219.3 billion. This figure stood higher than the upwardly revised deficit of $216.2 billion noted in the preceding quarter, as well as surpassing expectations of a $217.5 billion deficit. This deficit, equivalent to 3.3% of the current-dollar Gross Domestic Product (GDP), reflects the balance of trade and financial flows.
Examining the components, the secondary income gap expanded to $49.6 billion from the prior $40.7 billion. This shift was propelled by a decrease in receipts attributed to general government transfers, particularly fines and penalties, while payments increased due to a surge in private transfers, primarily insurance-related transfers.
Meanwhile, the primary income surplus narrowed to $31.3 billion, a decrease from the previous $38.1 billion. This shift resulted from a scenario where payments outpaced receipts. The surge in payments was mainly attributed to interest on loans and deposits, owing to elevated short-term interest rates.
In contrast, the goods and services gap contracted to $201 billion from the previous $213.5 billion. This was influenced by a surge in exports, notably of medicinal, dental, and pharmaceutical products, along with goods transferred through the Presidential Drawdown Authority. Imports, on the other hand, experienced a reduction, largely due to a decrease in petroleum and related products, as well as chemicals.
United States Federal Government Budget
In 2022, it is anticipated that the United States will exhibit a Government Budget deficit that corresponds to 5.8% of the nation's Gross Domestic Product.
Japan Interest Rate
During its July meeting, the Bank of Japan (BoJ) opted to maintain its key short-term interest rate at -0.1% and to keep 10-year bond yields hovering around 0%, a decision that garnered unanimous support from the board. However, the central bank made a notable adjustment to its yield curve control policy, aiming to enhance the flexibility of its stimulus approach for sustained efficacy. In this regard, the board clarified that the previously established 0.5% ceiling on yield movements serves as a reference point, rather than an inflexible limit.
Simultaneously, the BoJ unveiled insights from its quarterly outlook report, foreseeing a gradual economic recovery buoyed by pent-up demand. When examining inflation, the year-on-year rate of Consumer Price Index (CPI) is anticipated to decelerate due to the waning influence of previous import price hikes. Subsequently, these figures are projected to regain momentum, driven by improvements in the output gap and the concurrent growth of inflation expectations and wage levels.
The BoJ underscored its commitment to expanding the monetary base until inflation not only surpasses the 2% mark but also maintains a stable position above the target threshold. The committee reiterated its readiness to implement supplementary easing measures if circumstances necessitate such action.
Japan Inflation Rate
In July 2023, Japan's annual inflation rate held steady at 3.3%, maintaining its position from the previous month. Notably, this figure surpassed market predictions of 2.5%, signifying an inflationary trend beyond expectations. This upward price movement was observed across several sectors.
Price increases persisted in categories such as food (8.8% compared to June's 8.4%), housing (remaining at 1.1%), transportation (unchanged at 2.2%), furniture & household utensils (8.4% compared to 8.6%), clothing (rising to 4.1% from 3.9%), medical care (dipping to 2.2% from 2.4%), education (holding steady at 1.3%), culture & recreation (elevating to 4.8% from 3.5%), and miscellaneous expenses (slipping to 1.2% from 1.5%).
In contrast, the prices of fuel, light, and water charges experienced their sixth consecutive month of decline, registering at -9.6% (compared to the earlier -6.6%). This drop was primarily attributed to the price decrease in electricity, which saw a decline of -16.6% (compared to the previous -12.4%).
In the meantime, core inflation, which accounts for the underlying inflation trend by excluding volatile items, eased to a 4-month low of 3.1% in July, down from June's 3.3%. This figure aligned with consensus estimates but remained outside the Bank of Japan's 2% target for the 16th consecutive month.
On a monthly basis, consumer prices inched up by 0.4%, representing the most significant increase in three months following a 0.2% gain in June.
Japan GDP Growth Rate
During the second quarter of 2023, the Japanese economy exhibited robust growth, expanding by 1.5% quarter-on-quarter. This performance outperformed market expectations of a 0.8% rise and marked an acceleration from the previously revised 0.9% growth recorded in the first quarter. These preliminary figures underscore the economy's sustained momentum, marking the second consecutive quarter of expansion and achieving the most rapid growth rate since the fourth quarter of 2020.
This expansion was notably bolstered by a favorable contribution from net trade. Exports rebounded with a growth of 3.2%, a stark contrast to the previous quarter's -3.8%, while imports continued their downward trend for the third successive quarter, contracting by -4.3% (compared to -2.3% in the previous quarter).
Conversely, government spending remained sluggish, holding steady at 0.1%, and capital expenditure showed no change, contrasting with the 1.8% growth observed in the preceding period. An important aspect, private consumption, which accounts for over half of the economy, experienced a decline, contracting by -0.5% following consecutive quarters of growth. This contraction was attributed to intense cost pressures.
Considering the broader context, the Japanese economy expanded by 1.1% over the past year, a deceleration from the 2.1% rise in 2021. This moderation can be attributed to persistent global headwinds that continued to affect the country's economic trajectory.
Japan Unemployment Rate
In June 2023, Japan's unemployment rate saw a marginal decrease, resting at 2.5%, a slight improvement from the previous month's 2.6%, which closely aligned with market projections. This rate marked the lowest unemployment figure recorded since January. The decrease in unemployment was attributed to a reduction of 40 thousand individuals, leading to a total of 1.73 million unemployed individuals, while concurrently, employment figures exhibited growth by 190 thousand, reaching a total of 67.55 million.
During this period, the labor force witnessed an expansion of 140 thousand individuals, summing up to 69.27 million. On the contrary, individuals detached from the labor force decreased by 60 thousand, reaching a total of 40.98 million.
Notably, the non-seasonally adjusted labor force participation rate observed a marginal uptick, reaching 63.1% in June, a slight improvement from the previous year's 63.0% in the same month. In contrast, the unemployment rate during the same period a year prior stood at 2.6%.
Meanwhile, the jobs-to-applications ratio exhibited a minor decline, moving from 1.31 in May to 1.30 in June. This reading pointed to the lowest level seen since July 2022.
Japan Current Account
In June 2023, Japan's current account demonstrated a remarkable surge, resulting in a surplus of JPY 1,508.8 billion, a substantial leap from the previous year's JPY 497.9 billion in the same month. This performance exceeded market predictions, which had anticipated a surplus of JPY 1,395 billion. This marked the fifth consecutive month of a current account surplus.
Key contributors to this positive trend included a significant transformation in the goods account, which swung from a deficit of JPY 11,048 billion in the prior year to a surplus of JPY 3,287 billion. This shift was attributed to a 0.5% year-on-year increase in exports, accompanied by a notable decline of 14.3% in imports.
Simultaneously, the primary income surplus experienced a narrowing, reducing from JPY 18,495 billion to JPY 16,825 billion. On the other hand, the services account gap expanded, reaching JPY 3,582 billion from the previous JPY 2,563 billion.
Furthermore, the secondary income registered a deficit of JPY 144.1 billion, contrasting with a minor surplus from the preceding year.
Japan Government Budget
In the year 2022, Japan's Government Budget exhibited a deficit equivalent to 6.40% of the nation's Gross Domestic Product.
📉 The scenario I am playing out assumes the start of declines in the current week. I do not exclude changing the scenario in case of a sudden change in the market situation. I am aware of the possibility of a correction at any time, this should be taken into account, In case of a change of outlook I will publish an update in the next post
🚀 If you appreciate my work and effort put into this post, I encourage you to leave a like and follow on my profile 🚀
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💲 To keep up to date with all my activities I invite you to visit my Telegram 💲
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💲 To keep up to date with all my activities I invite you to visit my Telegram 💲
💲 www.t.me/Investmatez 💲
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