Finimize - 👀 On pins and needles

Plus, everything you need to know for the week ahead |
Finimize

Hi Reader. Here’s a look at what you need to know for the week ahead and the things you might have missed last week.

Watching, With Interest

The next scene for US inflation could have big implications for interest rates and the banking sector.

Watching, With Interest

🔍 The focus this week: The US big picture

You could think of this week as a kind of scene-setter for what happens next for the US economy, its interest rates, and its banking sector. A big report on Thursday will reveal how consumer prices changed in June. And investors will be hanging onto its every word, hoping to see inflation fall further – a move that could nudge the Federal Reserve (Fed) closer to an interest rate cut. But the country’s banks may be divided on the idea: lower interest rates could be good for the overall economy and investments, but the higher rates have been good for their bottom lines. And we’ll find out more about that on Friday.

Back in May, overall US consumer prices climbed just 3.3% from the year before – slightly less than expected. That had Investors heaving a sigh of relief after a few unwelcome surprises earlier in the year. Economists expect June’s inflation report to show the overall pace of price gains falling to 3%, with the core measure, which excludes more volatile things like food and energy, holding steady at its three-year low of 3.4%. It would all be a step in the right direction, as far as investors are concerned, but the Fed has been clear about what it wants: a drop closer to its 2% target. So traders still don’t expect a first rate cut until September, followed by another in December.

The country’s biggest banks don’t seem to mind the wait – nor do they seem disappointed by the fact that the Fed is now forecasting just one rate cut this year, down from three a few months back. See, with higher interest rates, banks like JPMorgan, Citigroup, and Wells Fargo have been charging more for their loans. But they’ve not been passing on those high rates to their depositors, meaning they’ve been pocketing more profit.

What’s more, all 31 of the US’s biggest financial institutions just passed the Fed’s annual “stress test”, giving them the green light to increase their dividends and boost their share buybacks. And, combined with the potential of more profit due to higher-for-longer interest rates, that could prompt the banks to announce juicier shareholder payouts on Friday when they unveil their quarterly earnings updates.

📅 On the calendar

  • Monday: China loan growth (June), eurozone economic sentiment (July).
  • Tuesday: Nothing major.
  • Wednesday: China inflation (June).
  • Thursday: UK economic growth (May), US inflation (June). Earnings: PepsiCo, Delta Air Lines, Swatch.
  • Friday: China trade balance (June), US consumer sentiment (July). Earnings: JPMorgan, Citigroup, Wells Fargo.

👀 What you might’ve missed last week

Global

  • Forecasts for global interest rates slid, suggesting that borrowing costs will fall far slower than they climbed.


Europe

  • Inflation in Europe decreased slightly.
  • British fintech Revolut reported a record profit and a near-doubling in sales.


Asia

  • China’s factory activity shrank for a second straight month.

🤔 Why it matters

Of the 23 major central banks included in Bloomberg Economics’s latest research, only the Bank of Japan is not expected to lower borrowing costs within the next 18 months. Overall, its findings show the aggregate global benchmark interest rate decreasing by approximately 1.4 percentage points by the end of 2025. That’s a far slower move downward, compared to how quickly it moved upward. In other words, central banks aren’t expected to swiftly undo the unprecedented rate hikes they delivered in response to the post-pandemic inflation crisis.

Consumer prices in the eurozone rose by 2.5% in June from a year ago, down from the 2.6% pace seen in May and in line with economist predictions. But it wasn’t all good news: the closely watched core and services inflation measures both remained stuck at levels that are a bit too peppy for the European Central Bank’s liking. The data suggests that the Bank will probably take a break from lowering borrowing costs this month and wait at least until September for its next interest rate cut.

British fintech Revolut makes money from subscriptions, crypto trading commissions, and transaction fees when customers swap currencies and withdraw cash. And with more folk than ever using its services, the firm saw its revenue almost double in 2023 and net profit hit a record $428 million – a more than tidy pickup from its $7 million profit the year before. That strong showing is apparent in its valuation: recent reports have suggested that Revolut’s aiming to sell shares at a price that would value the company at $40 billion, 20% higher than three years ago.

China’s official manufacturing purchasing managers’ index tracks the country’s factory activity. In June, that measure fell for a second straight month, coming in at 49.5 – just shy of the 50 mark that separates expansion from contraction. Meanwhile, a measure of non-manufacturing activity in construction and services dipped to 50.5 in June – its lowest since December. Taken together, the indicators suggest that China’s 5% economic growth target this year could be difficult to meet. And potential tariffs from the US and Europe aren’t likely to help matters either.

🤝 Tom and Jerry, Woody and Buzz Lightyear, Butch Cassidy and the Sundance Kid.

You're a stellar fintech brand looking to get your name out there, and we're a newsletter with hundreds of thousands of brainy, switched-on readers.

Let's become the next picture-perfect duo: Talk to the team.

Get Your Name Out There

⏸ Want to turn off the Weekly Review? Hit pause

To stop receiving all Finimize emails (including the daily newsletter) Unsubscribe

View in browser

Older messages

🇬🇧 The UK voted in a new government

Friday, July 5, 2024

The UK voted for a landslide election result | US payroll results where up, but not everything's perfect Finimize TOGETHER WITH Hi Reader, here's what you need to know for July 6th in 3:08

🚗 Tesla went big on AI

Wednesday, July 3, 2024

Tesla's sales fell, but the stock still rose | Japanese unions wrangled the country's biggest wage hike since 1990 | Finimize TOGETHER WITH Hi Reader, here's what you need to know for July

🔝 Revolut comes out on top, again

Tuesday, July 2, 2024

Revolut released record profits | Nuclear energy is the solution to AI's power guzzling Finimize TOGETHER WITH Hi Reader, here's what you need to know for July 3rd in 3:14 minutes. ☕ Finimized

😺 Back at it again

Monday, July 1, 2024

Roaring Kitty took a stake in Chewy | China's got problems with its manufacturing game Finimize TOGETHER WITH Hi Reader, here's what you need to know for July 2nd in 3:08 minutes. 🗳️ Your vote

🗳️ UK voting day

Sunday, June 30, 2024

Plus, everything you need to know for the week ahead | Finimize Hi Reader. Here's a look at what you need to know for the week ahead and the things you might have missed last week. Britain Is In

You Might Also Like

Longreads + Open Thread

Saturday, July 13, 2024

Data, Microbes, Games, Wikis, 1177, Missions, Graeber Longreads + Open Thread By Byrne Hobart • 13 Jul 2024 View in browser View in browser Longreads Abraham Thomas writes about how to price a data

Obama in favor of Biden swap-out?

Saturday, July 13, 2024

Unexpected twist... ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌

Still not enough

Saturday, July 13, 2024

Bloomberg Weekend Reading View in browser Bloomberg US President Joe Biden now finds himself waging a war for reelection on two fronts: against Donald Trump and, more immediately, some skeptics in his

Banks get a brake-check

Friday, July 12, 2024

Bloomberg Evening Briefing View in browser Bloomberg The biggest US bank stocks have been trouncing the broader market this year. But their rally got a brake-check from earnings results that

😲 Wow, JPMorgan results

Friday, July 12, 2024

JPMorgan's expectation-beating results, analysts' predictions for earnings season, and a mutant frog | Finimize TOGETHER WITH Hi Reader, here's what you need to know for July 13th in 3:14

Smashing the Monopoly

Friday, July 12, 2024

The Latest Challenger to Take On Chicago ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏

Harry's Rant 7-11-24 Are We Near the Top?

Friday, July 12, 2024

image Harry's Rant July 11, 2024 Are we near the top of the stock market? More on this and the latest on bitcoin, the Nasdaq, TLT, gold and the Feds next move in today's Rant. Harry Dent posts

How to build the ultimate dividend portfolio

Friday, July 12, 2024

The following is a third-party sponsored message. It should not be considered a recommendation or endorsement by HS Dent Publishing. There's a free dividend workshop that shows how anyone can build

Forecast accuracy and efficiency at the Bank of England – and how forecast errors can be leveraged to do better

Friday, July 12, 2024

Derrick Kanngiesser and Tim Willems This post describes a systematic way for central banks to employ past forecasts (and associated errors) with the aim of learning more about the structure and

Leading with AI - Issue #476

Friday, July 12, 2024

From banking innovations in Singapore to Apple's latest AI features, explore the cutting edge of financial technology. July 11, 2024 FinTech Weekly brings you the latest in financial technology