28 February 2024
If you are covering the latest news in financial markets, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“US consumer confidence saw a reversal in yesterday afternoon’s February release, following three months of expansion, with January figures also revised lower. Survey responses showed food and petrol prices had less impact than in recent months, while concerns about the labour market and the US political backdrop rose as the risk of a partial government shutdown from March 1st in the absence of a budget agreement has increased. With recent labour market data proving strong, amidst historically low unemployment, it is possible that employees are weighing risks to job security from a variety of sources, such as recent AI developments and interest rates staying at elevated levels.
“Expectations for rate cuts over the course of 2024 have shifted lower in recent weeks to four quarter-point cuts, down from nearer seven just three months ago. Meanwhile, the 10-year US Treasury yield has drifted around 50bps higher since its lows in late December, becoming a renewed headwind for the US economy. With personal consumption expenditure inflation data due to be published tomorrow, the primary inflation indicator followed by the Fed, all eyes will be on the month-on-month figure - particularly in light of the recent strong CPI report. If it turns out that core inflation is proving sticky, as is expected, then we may see expectations of rate cuts continue to drift further out.”
