Business activity growth in Europe slowed in June 2023, pointing to a difficult end to the second quarter, according to preliminary data. The euro zone's flash composite Purchasing Managers' Index dropped to 50.3 in June from 52.8 in the previous month. This was below the 52.5 expected by analysts.
When the debate around the topic of recession or soft landing among economists and investors is still heating, new round debate about rate cuts is looming. The Fed indicated in its minutes for December meeting that three rate cuts are foreseeable, but the markets which have been over optimistic have priced in at least six rate cuts. The sort of narrative from the Fed made the markets disappointed.
In light of the cumulative tightening of monetary policy, the consumer spending has shown some signs of cooling off, which further take a toll on the retailers, just like Nike.
The Federal Reserve hasn't lost its role as one of the main driving forces for markets.The latest minutes shows that U.S. Federal Reserve officials are largely in favor of interest rate cuts in 2024, but there was unusually elevated degree of uncertainty over policy path, that is when or even if cuts will actually come this year.
The debate about recession or soft landing is hot right now. Overall, the jobs market is doing its part to get the economy to a soft landing; on the flip side, the notion of "rolling recessions," meaning that contractions could hit certain sectors individually while not dragging down the economy as a whole is still hanging there. The distinction may still apply heading into 2024.
