MACROECONOMIC REPORT
new unicorns, and cryptocurrency performance.
Macroeconomic Report
Aug 20, 2024
Key Rate and CPI , %
On July 28, the Bank of England cut its key rate to 5.00%, with further rate cutsare likely to be cautious. In the US, the key rate remained at 5.50%, while its long-awaited 25-50 basis point cut is expected in September this year. US CPI declined to 2.90% in July from 3.00% in June.
The Central Bank of China reduced the key rate to 3.35% to stimulate economic sectors. The Bank of Mexico also reduced its key rate to 10.75% despite a possible increase in inflation. The central banks of Brazil and Indonesia adhered to the previously outlined policy, keeping key rates at the level set in June.
Eurozone GDP grew by 0.30% quarter-on-quarter, and China's economy grew 0.70% in the second quarter of 2024 compared to the previous quarter, missing expectations of 5.10% growth.
Industrial production in developed countries 2 years, YoY, %
US retail sales rose to 2.70% year-over-year in July, and China's retail sales rose 2.70%, compared with a 2.00% slowdown in June. Experts noted that the Chinese economy has negative signs that traditional growth drivers have weakened. One sign reflecting declining demand is overall auto sales, which fell 4.90% in July, the fifth consecutive decline.
US industrial production fell 0.20% year-over-year, and capacity utilization in the manufacturing sector fell to 77.8% from 78.8%. China's industrial production fell to 5.10%.
In the US, the unemployment rate rose to 4.30%. The US labor market added 114,000 jobs, far below expectations and below the 179,000 increase in June.
Yield curves for July 2024, 2023, and 2022 years
The yield curve of US Treasury bonds shifted downward amid the publication of data on gross domestic product growth for the second quarter. Meanwhile, UK bond yields declined on the prospect of further interest rate cuts.
The dollar index (DXY), which measures its strength against a basket of six other currencies, fell to 104.05 by the end of July from 105.85 at the end of June. Perhaps this correction in dynamics was due to the strengthening of the Japanese yen and uncertainty of the employment situation in the US.
During July, the S&P 500 index rose by 1.13%, the Dow Jones Industrial Average rose by 4.41%, and the NASDAQ Composite fell by 0.54%. Meanwhile, since the beginning of the year, the indices have been up 15.78%, 8.37%, and 17.46%, respectively.
Dynamics of key stock indices, YTD
- Nine out of eleven sectors of the US economy demonstrated positive dynamics. The leaders of growth were Real Estate (+7%), Utilities (+7%), Financials (+6%) and Industrials (+5%).
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The September WTI crude futures price in July fell by 4.61% to $ 77.91 per barrel, while Brent crude fell by 5.15% to $ 80.72 per barrel. This is deemed to be due to rising unemployment in the US and preventing an escalation of the conflict between Israel and Hezbollah in the Middle East. Nevertheless, compared to the beginning of the year, both grades of crude oil continue their positive trend, up 8.74% and 4.78%, respectively
- In July, the price of natural gas fell 22.04% after rising 2.90% in June due to a significant drop in demand amid a general intensification of US gas production.
- Year-to-date, the price of gold is up 18.57% and silver is up 21.80%. Over 5 years, the price of copper and aluminum increased by 53.30% and 28.11% respectively, while the price of steel decreased by 24.50%. The price of steel in July fell by 10.81%, driven mainly by a slowdown in construction and manufacturing activity that utilizes the metal.
Dynamics of energy commodities prices, YTD
- In July, the number of IPOs in the US totalled 10 IPO (-47.4% MoM) with an aggregate value of about $7.1 B (+115.1% MoM). Globally, there were 130 IPO (-12.2% MoM) IPOs valued at $13.9 B (-67.1% MoM ).
- The number of M&A deals completed totalled 1,712 (+20.7% MOM) for $92.8 B (+37.4% MoM), including 565 (+17.5% MoM) deals in the US for $42.4B (+9.6% MoM).
IPO dynamics in the USA, 2016 – 2024
M&A dynamics in the USA, 2016 – 2024
The list of unicorns was expanded to include 10 new non-public technology companies valued at more than $1 billion.
Ethereum-ETFs had a successful first day of trading on July 23, with volume of $ 1.07B. The most active ETFs were Grayscale Ethereum Trust, iShares Ethereum Trust (ETHA.O) and Fidelity Advantage Ether ETF.
Besides, Bybit exchange stopped servicing users from France amid MiCA adoption. From Aug. 2, user accounts will be limited to a "close only" transaction.
Dynamics of Bitcoin and Ethereum prices, YTD
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