Macro Economy Weekly | Bitmidas
2023–10–30
US May Survived But Europe Falls Into a Quagmire
The US PMI is above the threshold, personal consumption expenditure has increased significantly, GDP has doubled and economic growth has far exceeded market forecasts. The United States may enter a soft landing, but the Eurozone PMI hits a new low, or may enter a recession…
Important data this week
The initial value of the U.S. Markit Manufacturing PMI for October was 50, a six-month high, exceeding expectations of 49.5. The previous value was 49.8, returning to prosperity.dry line; the initial value of the US Markit service industry PMI in October was 50.9, a three-month high, and also exceeded the expected 49.9. The previous value was 50.9.50.1。
The preliminary value of the Eurozone manufacturing PMI in October fell to 43 from the previous value of 43.4, which was the lowest level since May 2020; the service industry's initial PMI value fell to 47.8 from the previous value of 48.7. The preliminary comprehensive PMI value was 46.5, lower than expected and the previous value, the highest since November 2020.Low level.
Data released by the U.S. Department of Commerce showed that the U.S. real GDP in the third quarter increased by 4.9% year-on-year on an annualized quarter-on-quarter basis compared with the initial value. More than double the 2.1% in the previous quarter, stronger than market expectations of 4.3%, the fastest growth rate since the fourth quarter of 2021, the main growth engine is the substantial increase in personal consumption expenditure.
The initial actual personal consumption rate in the United States in the third quarter is 4%, far exceeding the previous value of 0.8%, a record high since the second quarter of 2021.
The U.S. durable goods orders monthly rate in September was 4.7%, exceeding the expected 1.7%, and the previous value of 0.10%. Durable goods orders in September after two consecutive months of declines began to climb. The larger-than-expected increase suggests the outlook for U.S. manufacturing is improving. Among them, transportation equipment orders also see a rise, with the largest increase of 12.7%.
The initial annualized U.S. core PCE in the third quarter was 2.4%, far lower than the previous value of 3.7% and the market forecast of 2.5%. It has hit a new low since the first quarter of 2021.
The U.S. core PCE price index in September recorded an annual rate of 3.7%, lower than the previous value of 3.9% and the revised previous value of 3.8%. The market forecast was 3.7%, a new low since May 2021.
Boosted by rising energy prices, the U.S. PCE in September was 0.4%, expected to be 0.30%, and the previous value was 0.40%. The United States core PCE monthly rate was 0.3%, in line with expectations, hitting a new high since May 2023, driven by rising service prices.
Federal Reserve Balance Sheet
The Federal Reserve’s balance sheet continues to shrink, and its size has been reduced to US$7907.83 billion. The balance sheet reduction plan still goes as planned.
Recession Indicators-U.S. Debt Inversion
This week, U.S. consumer spending, GDP and other economic data far exceeded market expectations, reducing concerns about recession. The 10-year U.S. bond yield dropped from nearly 5% to 4.83%, and the 2-year yield also dropped from the 5.25% area to 5%. The 2/10 inversion spread converged.
Market Performance
U.S. consumer spending rose sharply and GDP growth doubled, supporting the U.S. dollar. The U.S. index fluctuated at a high level of 106 areas this week. Generally, it is easier to rise than to fall.
As the Palestinian-Israeli conflict escalates and the Middle East faces the risk of expanding wars, gold, as a safe-haven asset, continues to rise, breaking $2,000.
The U.S. debt sell-off has resumed, with yields rising sharply and corporate default rates rising, dragging down U.S. stocks. The S&P 500 pulls back, breaking down the 4300 and 4200 levels consecutively, and entering a short-term downward trend.
BTC broke through to a peak of $35k due to the hype related to the BlackRock spot ETF and then fell back to between $34k-$33k. Consolidating at a high level, BTC enters a bullish, and optimistic outlook has increased. Many institutions have become increasingly vocal about the market.
Summary
The U.S. PMI stands on the dividing line between boom and bust. The demand for U.S. manufacturers has improved for the first time since April, while service supply new orders have slowed down. After output largely stagnated in August and September, business activity at U.S. companies increased slightly in October. Manufacturers and service providers alike reported improved business activity levels as the downturn in demand eased. Growth in total output was the fastest in three months. Unlike the upbeat U.S. PMI data, demand has generally fallen across the European continent, suggesting the eurozone may be heading into a recession.
Thanks to the surge in consumer spending, the U.S. economy grew at its highest rate in nearly two years in the last quarter. According to preliminary data released by the government on Thursday, U.S. GDP annualized growth accelerated to 4.9%, more than doubling the data of the previous quarter. The main growth engine of the economy, namely personal consumption, increased by 4%, which is also the highest level since 2021; however, the United States calculates quarterly GDP data using a quarter-on-quarter discount, the number may amplify the actual fluctuation of economic growth, and the next period’s data may fall significantly.
Looking at this week’s data, the U.S. economy has shown strong resilience. Yellen said the U.S. can avoid recession and enter a soft landing. Compared with the strong economic data in the United States, the decline in PCE is not ideal. The Federal Reserve will maintain high interest rates for a long time, and the high U.S. bond yields will continue to put downward pressure on U.S. stocks. Gold and BTC have benefited from the impact of geopolitical conflicts. Special times and circumstances may cause BTC and U.S. stocks to continue to diverge, accelerating in the respective direction of differentiation.
Completion of this report: 2023–1028–11:00 (UTC+8)
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