Markets Weekly June 8, 2024

Hello my friends, today is June 8th and this is Markets Weekly. So this past week was another good weekend markets. We had the S&P 500 close at another new all time high. Now personally, I'm neutral here, no particular reason, just not feeling it. But I do think that the highs for the market are not yet in for the year. So today I want to talk about three things. First, we have to talk about the new entrants into the global rate cutting cycle where both the Bank of Canada and the ECB cut rates last week. Let's talk about why they did so.

你好，朋友们，今天是6月8日，欢迎收看《市场周报》。在过去的一周里，市场表现又一次很好。标准普尔500指数又创下了历史新高。虽然我个人对这个情况持中立态度，没有特别的原因，只是没有特别的感觉。不过，我确实认为今年的市场高点还未出现。那么今天我想谈三件事。 首先，我们要谈谈全球降息周期中的新进入者，加拿大央行和欧洲中央银行上周都降息了。我们来讨论一下他们为什么要这样做。

Secondly, the big data point in the past week was the non-forms payroll print that showed a surprising increase in jobs in the US. But underneath the surface though, it's a bit more mixed and many people are confused as to the state of the US labor market. Let's talk about why. And lastly, looking across the world, I'm noticing some pretty big moves in some emerging markets due to politics. So let's talk a little bit about what's happening in India and in Mexico.

其次，上周的重要数据是非农就业报告，显示美国新增就业岗位出人意料。然而，表面之下，情况更为复杂，许多人对美国劳动市场的状态感到困惑。让我们来讨论一下原因。最后，放眼全球，我注意到一些新兴市场由于政治原因出现了较大波动。所以，我们来说说印度和墨西哥发生了什么。

Okay, starting with the global rate cutting cycle. So as we discussed a few weeks ago, the Swiss National Bank kicked off the developed market, a central bank cutting cycle by cutting rates as inflation was approaching their target. This past week, both the Bank of Canada and the ECB joined them by cutting rates 25 basis points. So let's first talk about the Bank of Canada and listen to what Governor Tif Maklim has to say. The governing council decided monetary policy no longer needs to be as restrictive and lowered the policy rate by 25 basis points to 4.75%.

好的，先谈谈全球降息周期。几周前，我们讨论了瑞士国家银行在发达市场中央银行降息周期中率先开始降息，因为通货膨胀接近他们的目标。上周，加拿大央行和欧洲央行也跟进，分别降息了25个基点。让我们先谈谈加拿大央行，并听听行长蒂夫·马克莱姆的说法。管理委员会决定货币政策不再需要如此紧缩，并将政策利率下调25个基点至4.75%。

So Governor Maklim is basically saying that he cut rates because he is becoming more confident that inflation is heading towards the 2% target. And in addition, make note that he's not saying that he's easing monetary policy in so much as that he's making it less restrictive. So he thinks policy is still slowing down growth and inflation just a little bit less. So now if you look at data in Canada, it becomes obvious why he cut rates.

所以，总督马克林基本上是说他降息是因为他对通货膨胀率接近2%的目标越来越有信心。另外要注意的是，他并不是说在放松货币政策，而是说在减少其限制性。因此，他认为政策还是在放缓经济增长和通货膨胀，只是程度稍微小一点。所以现在如果你看看加拿大的数据，就会明白他为什么降息了。

So looking at this, looking at inflation data over the past few years, you'll note that in Canada inflation surge during the pandemic, and then it came down and over the past few months, it's come down steadily as and is now only slightly above target. Now monetary policy may be especially effective in Canada because of their mortgage interest rate channel. So in Canada, when you borrow a mortgage, you have to renew that loan every few years. And now that interest rates are higher, when someone who has a mortgage renews that loan, they get hit with much higher monthly payments and thus have less disposable income, less money to spend, reducing demand, and putting downward pressure on inflation.

看了一下过去几年的通胀数据，你会注意到在疫情期间，加拿大的通胀激增，随后有所回落。在过去的几个月里，通胀稳步下降，现在只略高于目标水平。现在，加拿大的货币政策可能特别有效，因为他们有一个抵押贷款利率渠道。在加拿大，当你借用抵押贷款时，每隔几年就要续借一次。现在，由于利率上升，当有抵押贷款的人续借贷款时，他们的月供会大幅增加，从而可支配收入减少，支出减少，减少了需求，对通胀形成下行压力。

In fact, the Fed recently did a study on the on the pass through of policy to mortgage interest in a few countries and noted that whereas in the US, of course, the Fed hiked a bunch and that really didn't do much to mortgage rates since in America, we have 30 year fixed rate mortgages, the pass through from the policy rate to mortgages in Canada was particularly high. So it seems like it would make sense for the make of Canada to be cutting rates given that context. Now let's look at the ECB and let's listen to what Madame Laguard said.

事实上，美联储最近进行了一项关于政策传导到几个国家按揭利率的研究，并指出在美国，美联储大幅加息并没有对按揭利率产生太大影响，因为美国的按揭贷款通常是30年固定利率。然而，在加拿大，政策利率向按揭贷款传导的效果特别明显。所以在这种情况下，加拿大央行降息似乎是有道理的。现在我们来看看欧洲央行，并听听拉加德女士说了什么。

Then we decided to cut and we did so because overall our confidence in the path ahead because we have to be forward looking has been increasing over the last months. So Madame Laguard is basically saying that she feels more confident that inflation is heading towards 2% and so she's cutting rates a little bit. Later on in the discussion, she'll also elaborate that inflation has the rate of inflation has basically halved over the couple years and she's also feeling more confident in the ECB staff's forecast that inflation will get to 2% in a couple years. And so she's comfortable moderating the stance of policy. Now this is surprising to a lot of people because what stood out over the past few years was how poor central bank forecasts and private sector economists forecasts were in trying in the post pandemic inflation surge.

然后我们决定降息，我们之所以这样做是因为对未来走向的信心在过去几个月里有所增加。拉加德女士基本上是在说她对通胀率达到2%的信心得到增强，所以她稍微降低了利率。在后面的讨论中，她还会详细说明，过去几年的通胀率实际上已经减半，并且她对欧洲央行员工预测通胀将在几年内达到2%的信心增强。因此，她对调控政策的态度更为放心。 这令很多人感到惊讶，因为过去几年的显著特点之一是中央银行和私人部门经济学家在预测疫情后的通胀激增方面表现不佳。

Again, over the past few years, basically they were all on team transitory and were completely wrong. But of course on FedGuy.com, it was very clear to me that inflation would not be transitory and that we were in a new regime and I wrote about that a couple years ago. Now right now though, Madame Lagard is looking at the recent forecast from the ECB staff and noting that they've been pretty much on point and feeling more confident and so she's cutting interest rates. Now that actually surprised a lot of people because at this most recent meeting, the ECB updated their inflation forecasts and actually revised them upward by 0.2%. So many people were wondering why did the ECB cut rates and at the same time revise their inflation forecast upwards. It seems to be contradictory.

过去几年里，他们基本上都站在了“过渡性通胀”这个说法一边，但事实证明他们完全错了。当然，在FedGuy.com上，我早就非常清楚地指出，通胀不会是过渡性的，我们正处在一个新的经济环境中，我几年前就写过这方面的文章。现在，拉加德女士正在查看欧洲央行员工的最新预测，并注意到这些预测基本上都很准确，所以她变得更有信心，并决定降息。然而，这实际上让很多人感到惊讶，因为在最近的一次会议上，欧洲央行更新了他们的通胀预测，实际上提高了0.2%。所以很多人都在想，为什么欧洲央行在提高通胀预测的同时还要降息。这似乎是矛盾的。

Now I think the answer to this is found in later on in the Q&A session. Let's listen. More seriously, on the neutral rate, you know that I have refrained systematically from airing towards a particular number or identifying a neutral rate or a range around the neutral rate. I will simply say this, that if it has increased compared to where it was before COVID, we also know that we are far away from neutral rate now and by moving from 4% to 375% on the DFR, we are not close to the neutral rate. So we still have a way to go. So Madame Lagarde is basically saying that even though she's cutting rates, she still thinks that policy is restrictive by noting that policy while a little bit lower is still far above the neutral rate. So just like Governor Tifmaklim, she's simply moderating the stance of policy.

现在我认为这个问题的答案可以在后面的问答环节中找到。让我们听听看。更严肃地说，关于中性利率，你知道我一直避免提及具体的数字或确定一个中性利率的范围。我只想说，如果与COVID之前相比中性利率有所上升，我们也知道现在还远未达到中性利率，从4%降到3.75%的DFR也还没有接近中性利率。所以我们还有一段路要走。拉加德女士基本上是在说，即使她在降息，她仍然认为政策是收紧的，因为尽管利率稍有下降，但仍然远高于中性利率。因此，就像Tif Macklem行长一样，她只是适度调整了政策立场。

It's still restrictive but slightly less so as inflation has come down a lot and I suspect that is what the Fed will be saying when it cuts rates later on in the year and that's what I'll write about this week. Okay, moving on to the non-forms payroll print. So this Friday, we had the non-forms payroll print. Again, it was a huge market moving event. The headline print showed a tremendous amount of jobs created much higher than expectations and the market took it in a hawkish way. We had the bond market basically sell off across the curve. More and more people thinking that the Fed is just probably going to cut maybe once or one and a half times this year.

虽然限制性依然存在，但由于通货膨胀大幅下降，现在稍微宽松了一点。我猜测美联储会在今年晚些时候降息时解释这一点，而这也是我本周要写的内容。好的，接下来我们谈谈非农就业数据的发布。这个星期五，我们有了非农就业数据的发布。再次强调，这是一个对市场产生巨大影响的事件。主要数据显示创造了大量的就业机会，远高于预期，市场对此做出了鹰派反应。整个债券市场基本上出现了抛售，越来越多的人认为美联储今年可能只会降息一到一次半。

Now, as usual, when we look at the non-form payrolls print, we got to look at a few things in addition to the headline print. Now headline print, beat expectations, no question about it, knocked it out of the ballpark. But moving on, let's look at the average hourly earnings. Again, higher than expected. Let's look at the unemployment rate. Well, that's not as good. We saw the unemployment rate take up a little bit to 4%. And then let's move on to labor force participation. Also take a bit. So on the surface, it looks like a job, good jobs print, but there are also things that are not as good. Obviously, the unemployment rate ticked up and the labor force participation rate ticked down.

现在，像往常一样，在我们查看非农就业数据时，我们需要关注一些除了头条数据以外的其他方面。头条数据超出了预期，这毫无疑问，非常出色。但接下来，我们来看平均小时收入。同样，高于预期。再来看失业率，这就没那么好了，失业率上升了一点，达到4%。然后我们再看看劳动参与率，也有所下降。所以表面上看，这份就业报告表现不错，但也有一些不那么好的地方。显然，失业率上升了，而劳动参与率下降了。

So the non-form payroll report is actually comprised of two separate surveys. One is the establishment survey where the government asks businesses and counts jobs. The other is the household survey where the government asks households and uses the responses from the survey to determine things like the unemployment rate. So a lot of confusion right now on the state of the U.S. labor market has to do with the fact that these two surveys are telling you two very different things. Now, when you look at job growth as portrayed in the establishment survey, which is what's reported as the headline print and in the NFP, you'll see that job growth has been really strong over the past few quarters. But if you look at the job growth as portrayed in the household survey, now the household survey is also recording job growth, you get a very different picture and that job growth has been much weaker.

非农就业报告实际上是由两个独立的调查组成的。一个是机构调查，政府向企业询问并统计就业岗位。另一个是家庭调查，政府向家庭询问，并根据调查结果来确定失业率等指标。因此，目前美国劳动力市场状况的混乱主要源于这两个调查结果的巨大差异。 当你查看机构调查中所展示的就业增长情况时（这是作为头条数据和非农就业报告中报道的），你会发现过去几个季度的就业增长非常强劲。但是，如果你查看家庭调查中的就业增长情况，你会得到一个截然不同的结论：家庭调查记录的就业增长要弱得多。

So many people in the commentary and commentary had been looking at this and confused. Now, if people who are more downbeat on the economy would place more weight on the household survey and say that, well, the household survey is showing you know, job growth is weak, but people who are more bullish on the job market are floating towards the job growth in the establishment survey. Now, the gap between these surveys is wide and widening and it's not super clear what's been driving that. Now, some possibilities are just a lot of weird things that are happening with the data.

许多评论中的人一直在关注这个问题，并感到困惑。如果那些对经济前景持悲观看法的人更重视家庭调查，他们会说，家庭调查显示就业增长疲弱。而那些对就业市场更乐观的人则更倾向于依赖机构调查的就业增长数据。现在，这两项调查的数据差距很大，而且还在不断扩大。目前还不太清楚是什么原因导致这一差距。一种可能性是数据中存在许多奇怪的现象。

For example, as we know over the past few years, there's been tremendous amounts of migration and there's some work that suggests that the household survey is not properly accounting for this increase in migration and so that could be off. There are other people who point towards looking at the settlement survey and point towards the surge in part-time jobs. Again, in the establishment survey, a job is a job suggesting that the settlement survey is inflated because you have a whole lot of part-time job holders. Again, if you look at wages though, again, you have quantities and price, wages suggest upward pressure, upward demand for labor.

例如，正如我们所知，过去几年里有大量的移民，有些研究表明家庭调查没有正确反映这种移民增加，所以可能数据有偏差。还有人指出应该查看定居调查，并提到兼职工作的激增。同样，在机构调查中，一份工作就是一份工作，这表明定居调查的数据被夸大了，因为有大量兼职人员。再看工资，工资显示劳动力需求增加，表明对劳动力的需求在上升。

So right now, I think it's a very confusing what the state of the U.S. labor market is and I'm not sure if we're going to get any good answers. But it'd be very interesting to see how the Fed will be interpreting the team this. Again, the Fed, of course, has two mandates full employment price stability. Looking at full employment, it looks like the unemployment rate ticked up a little bit. Looking at price stability, it looks like wage growth continues to be above expectations.

现在，我认为美国劳动力市场的状况非常混乱，我不确定我们能否得到任何明确的答案。但看看美联储将如何解读这个局面会非常有趣。美联储有两项主要任务：确保充分就业和价格稳定。从充分就业的角度看，失业率似乎略有上升。从价格稳定的角度看，工资增长似乎超出了预期。

So we're heading into a place where I think the monetary policy is going to be a bit more conflicted between their two mandates. Okay, the last thing that I want to talk about is some interesting developments in emerging markets. Now, starting with Mexico, over the past week, the Mexican peso got absolutely clobbered and the Mexican stock market got absolutely clobbered as well. So the markets were really unhappy with political developments in Mexico.

我们正进入一个货币政策在其两项使命之间出现更多矛盾的时期。好吧，最后我想谈谈一些新兴市场中的有趣发展。首先说说墨西哥，过去一周里，墨西哥比索遭受了严重打击，墨西哥股市也遭遇了重挫。市场对于墨西哥的政治发展非常不满。

So what happened is that it seems like one of the parties there was basically one, a super majority in one house of a legislator and a very close to super majority in another house. Now, this seems to have given that political party confidence to try to make big changes to the structure of the Mexican government. Now, what I'm reading is that some of the proposals are basically to reduce some of the checks and balances in government, where let's say you have some independent advisory committees that oversee the government, well, the new party wants to get rid of those independent bodies. The new party also seems to want to weaken the rule of law by making judges to be democratically elected.

所以，目前的情况是，有一个政党基本上在一个议院中几乎占据了绝对多多数席位，并且在另一个议院中也接近超多数席位。这样的局势似乎让这个政党有信心尝试对墨西哥政府的结构进行重大改变。据我所了解到的信息，他们的一些提案包括削弱政府中的制衡机制。比如，现有的一些独立咨询委员会负责监督政府运作，但这个新政党想要废除这些独立机构。此外，这个新政党还想通过让法官由民主选举产生，而不是依照法律规定进行任命，从而削弱法治。

In addition, of course, the new party wants to also to give more stuff to the public and is proposing to increase benefits to senior citizens and so forth. Now, I think from what I read is that more and more market participants are worried that this is a trend towards basically a one party state where there's just less checks and balances and this one party may not be a super market friendly and so the markets are getting a bit concerned. Now, in addition to what happened in Mexico, we also had this tremendous sell off in India where we saw the Indian stock market take a huge plunge and then recover a few days later. Now, the huge reaction in Indian stock market seems to be due to the ruling party, the BJP performing less well than expected.

此外，新政党当然也希望能给公众更多的福利，并提议增加老年人的福利等等。我认为，根据我的阅读，越来越多的市场参与者担心这是迈向基本上一党制的趋势，这意味着检查和平衡机制减少，这个政党可能不太支持市场，因此市场有些担忧。 除了墨西哥发生的事情外，我们还看到印度股市出现了大幅度的抛售，印度股市大跌后几天才恢复。这次印度股市的大幅波动似乎是因为执政党印度人民党（BJP）的表现不如预期。

Now, they've had a majority for the for the past few sessions and now they unexpectedly lost their majority and the market seems to think that maybe that means that the ruling BJP party will have to compromise a bit and maybe become less business friendly. My understanding is that they that party is perceived to be business friendly. So, what I'm pointing out though is that I think going forward the outcomes of political elections are going to be much have a much bigger impact on markets than even the central bank. Now, just looking to our own election in the US, for example, President Trump, as we've discussed earlier, is proposing big changes in how he would like to run the country.

现在，他们在过去几届会议中一直占据多数席位，但现在他们意外地失去了多数席位，市场似乎认为这可能意味着执政的印度人民党（BJP）将不得不进行一些妥协，也可能变得对商业不那么友好。据我了解，该党一贯被认为是对商业友好的。但是，我想指出的是，我认为未来政治选举的结果将对市场产生比中央银行更大的影响。例如，拿我们自己的选举来说，总统特朗普（之前我们讨论过）正提出如何治理国家的重大变革。

For example, he would like to cheapen the dollar, he would like to have the or interest rates, he would have to have less independent monetary policy, basically pretty inflationary policies. So, my sense is that we were probably going to have something similar happen in November, depending on who wins. I think there's actually a real chance that if we have a sweeping Trump victory, again, the bond market would sell off, it'd be very inflationary, but the stock market could absolutely surge. And that could be the catalyst to take us to S&P 6000. Again, I think going forward, the fiscal authorities are going to have more influence on the markets than the monetary authorities who are going to be subordinate to the fiscal authorities. We're seeing that happen throughout the world. And I think it's happening here as well.

例如，他希望美元贬值，他希望利率更低，他希望有更少的货币政策独立性，基本上是非常通货膨胀的政策。所以，我的看法是，我们可能会在11月看到类似的情况发生，具体取决于谁获胜。我认为实际上，如果特朗普获得压倒性胜利，债券市场可能会出现抛售，这将非常通货膨胀，但股票市场可能会大幅上涨，并且这可能成为推动标准普尔500指数涨到6000点的催化剂。同样，我认为未来财政当局对市场的影响将超过货币当局，货币当局将从属于财政当局。我们在世界各地都看到这种情况发生，我认为这在这里也正在发生。

All right, so this week is an FOMC week. So I'll be back on Wednesday to give you my FOMC debrief. Yeah, and if you're interested in hearing more about my thoughts, remember to check out my blog, FETGuy.com. And of course, if you're interested in learning more about markets, check out my online courses at centralbanking101.com. Talk to you guys soon.

好的，这周是美联储公开市场委员会（FOMC）会议周。我会在周三回来给大家做一个FOMC会议的简报。如果你有兴趣了解我的更多想法，请记得访问我的博客FETGuy.com。当然，如果你想学习更多关于市场的知识，可以查看我在centralbanking101.com上的在线课程。很快再和大家见面。