Assessing Global Financial Trends and Economic Outlook

Recent bond yield declines and cautious central bank approaches have buoyed short-term stock market sentiment. However, our analysis reveals forthcoming challenges for equities.

The Federal Reserve’s prolonged high interest rate stance, lofty valuations, overly optimistic earnings projections, weakening pricing power, and ongoing revenue growth deceleration pose risks. Discerning between a healthy slowdown and early recession signs remains complex, underscoring the narrow ‘bad news is good news’ zone.

As we anticipate the conclusion of the current economic expansion within 12-18 months, there’s optimism surrounding a softer landing scenario this year. The Federal Open Market Committee (FOMC) maintained its position last week, despite robust Q3 GDP growth and persistent inflation. While rising bond yields influenced this decision, Chair Powell cited “significant progress” in quelling inflation, primarily attributed to improved supply-side performance. Consequently, the potential for an additional Fed rate hike has diminished, even though Q4 2023 core inflation is expected to rise. Softening labour market data in the US, Euro area, and Canada, coupled with disappointing global business surveys, have prompted rates markets to factor in an increased risk of a sharp economic slowdown.

Euro area core inflation is predicted to fall below 3%, while stability prevails elsewhere. October’s Euro area inflation data fell short of expectations, with core inflation currently running at a 3% annual rate after adjusting for distortions. As wage growth is expected to align with prices, a further drop in Euro area core inflation during 1H 2024 should keep the European Central Bank (ECB) in a holding pattern. Recent inflation disappointments also indicate that the Norges Bank is likely to maintain unchanged rates in December. However, the Bank of England’s (BoE) stance remains uncertain. We anticipate the BoE’s status quo throughout 2024 but acknowledge that it may be compelled to raise rates if early 2024 witnesses a recovery alongside sustained high inflation.

In the US, recent developments have opened a window for a weaker US dollar. Still, it’s essential for those betting against the dollar to consider the durability of this trend. US exceptionalism persists, contrasting with a less stable global economic environment compared to a year ago. Although US yields could exert downward pressure on the US dollar, markets have already priced in Federal Reserve interest rate cuts in the first half of the year, while concerns regarding Treasury supply persist as a notable theme.

Geopolitical risk premiums may linger in the European natural gas sector, primarily influenced by weather-related factors. As of October 29th, Northwestern Europe’s natural gas storage is nearly at full capacity, yet the TTF natural gas price remains around 50 EUR/MWh. This pricing indicates concerns about potential supply interruptions resulting from the escalating Israeli conflict. Weather conditions have been milder than anticipated this winter season, but uncertainties about peak weather-related demand from December to February sustain the current risk premium in flat natural gas prices.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Read this next

Digital Assets

Philippine bars access to Binance, citing unregistered operations

The Philippines’ Securities and Exchange Commission (SEC) is moving to block access to Binance due to regulatory concerns, citing the platform’s operation without proper registration and authorization in the country.

Digital Assets

FTX cleared to sell investments in Grayscale and Bitwise funds

Bankrupt cryptocurrency exchange FTX has received approval from the bankruptcy court to start selling its stakes in digital trusts managed by Grayscale Investments.

Digital Assets

Nexo launches Dual Investment for yield earning and price prediction

“Dual Investment revolutionizes how users engage with BTC and ETH, offering a flexible, intuitive, yet sophisticated platform for predicting asset price movements, all while securing high yields.”


Aquis Stock Exchange goes live with cloud-based matching engine powered by AWS

“By running on AWS, the Aquis Stock Exchange is driving transformation across the capital markets industry while continuing to enhance the scalability, functionality and innovation that will benefit its members and stakeholders in an environment where security and resiliency are our highest priority.”


Options Technology certified as Microsoft Azure partner for Digital & App Innovation

“Securing our fifth Microsoft Solutions Partner status in less than 12 months is a testament to our commitment to innovation, excellence, and the highest industry standards. We are not only keeping pace with the evolving landscape of cloud technology but leading the way in shaping its future.”

Retail FX

N26 reports €213M in net loss, integrates stock and ETF

European digital bank N26 has shared its strategic roadmap for the next few years, underlining both its growth trajectory and financial targets. The announcement included key financial results for 2022 and projections for the coming years.

Digital Assets

Canadian ownership of crypto assets fell by 23%, study finds

Concerns about risks, volatility, lack of government guarantee, and potential fraud or hacking deterred others from buying crypto.

Institutional FX

Fortex adds GBE Prime to liquidity offering

“This collaboration enhances our liquidity distribution capabilities, offering our clients improved pricing, order execution, and risk management. We look forward to the positive impact this integration will have on our clients.”

Retail FX

Fullerton Markets Caps Off Stellar Year with Dual Triumph at Gazet International Awards 2023

Fullerton Markets, one of the fastest-growing brokerages in the Asia Pacific, has today announced its remarkable success at the prestigious Gazet International Awards 2023, where it secured two coveted accolades, reinforcing its position as a global leader in multi-asset brokerage and marketing a triumphant end to the year.