Daily Flows & Insights – Positive Signs from US PCE & Euro Inflation Continues Downward Trend

Daily Flows

  • Multiple ADIs entered the market seeking funds on the last day of the month.
  • Investors with available funds were rewarded with a 5.50% interest rate for 12-month term deposits.
  • NCD margins rose to +55 as those pursuing funds had to outbid market levels.

Positive Signs from US PCE

  • In the U.S., the core personal consumption expenditure index increased by 2.3% QoQ, showing a decrease from 3.7% in Q2.
  • This data suggests that the ‘soft landing’ targeted by Central Banks might be achievable.
  • Inflation is aligning with expectations, and there are no significant cracks appearing in the U.S. economy.
  • The Fed will maintain a hawkish stance to prevent market-induced price-setting behaviour, ensuring less restrictive financial conditions.

Euro Inflation Continues Downward Trend

  • The Euro’s annual inflation dropped to 2.4% YoY, reaching the lowest point since April 2022 and falling below the forecasted 3.9%.
  • Inflation rates eased across various sectors: Services at 4.0% (vs 4.6%), Food, alcohol, and tobacco at 6.9% (vs 7.4%), and Non-energy industrial goods at 2.9% (vs 3.5%).
  • It is now evident that we have entered a global deflationary period, prompting questions about the timing and the state of the economy as inflation decreases.
  • Markets are shifting their focus to rate cuts and the overall strength of the economy.
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Curve Team
Jack Pedersen