I. Performance of Global Equity Indices (in US dollars)
Data source: Bloomberg, 2024/06/24-2024/06/30, compiled by Tiger Brokers
II. Key Market Themes
i. US PCE slightly better than expected, consumer momentum uncertain, reigniting expectations of rate cuts!
On Friday, US May PCE inflation data was released. The core PCE, considered crucial by the Federal Reserve, increased by 0.08% month-on-month and by 2.57% year-on-year, slightly better than market expectations. Moreover, the PCE price index experienced its first month-on-month decline this year.
Simultaneously, US May personal income and spending data were also released as scheduled. Interestingly, personal income rose by 0.5% month-on-month, again surpassing market expectations, while personal spending only grew by 0.2% month-on-month, below market expectations. This comparison suggests that while the US economy remains resilient, there are signs of growing consumer concerns about the future, leading to cautious household spending.
In addition, recent revisions to Q1 GDP final values for personal consumption expenditures have been downward. As consistently assessed, although some Federal Reserve officials maintain a firm stance, Powell's testing has exposed signs of economic slowdown across multiple indicators. Currently, CITI's US Economic Surprise Index continues to decline, and this week's unemployment rate data may further validate this trend. We believe the expectation of 2-3 interest rate cuts by the Federal Reserve this year remains unchanged.
Data source: Bloomberg, compiled by Tiger Brokers
ii. The first US presidential debate ended with Trump almost "winning" outright. Which assets will be affected?
Recently, the first debate of the 2024 US presidential election between Biden and Trump, these two "old rivals," has concluded. Throughout the debate, Trump undoubtedly dominated both in terms of logic and momentum.
Following the debate, Trump's support has surged. According to data from forecasting agency Polymarket, his chances of winning peaked at 68%. CNN's senior chief national correspondent, John King, even remarked that "deep, widespread, and intimidating panic" has emerged within the Democratic Party.
Data source: realclearpolitics.com, compiled by Tiger Brokers
From the current policy plans of both parties, there is basic consensus in most areas such as trade, infrastructure, and manufacturing, with the greatest divergence in fiscal policy and immigration. If Trump wins, he plans to continue pushing for large-scale tax cuts, potentially further boosting the profit outlook for US stocks. Goldman Sachs predicts that if the Republicans, represented by Trump, gain full control of both houses of Congress, the S&P 500 could see a 3.9% increase based on fiscal and tax policies.
On immigration, Trump has vowed to introduce "the strictest immigration policies in history," which could directly impact current labor supply and potentially lead to further inflationary pressures. If concerned about significant market volatility, aside from traditional safe-haven assets, focusing on areas of consensus between the two parties could also be advisable.
Data source: Campaign website, China International Capital Corporation Research Department, compiled by Tiger Brokers
Disclaimer
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