EU Inflation
Paving the way for a 25bp rate cut tomorrow, EU inflation came in at 1.9% on the back of uncertainty, lack of consumer confidence and people sitting on their cash. So overall good on inflation but a sign of less good things in the EU. As ever, the overall inflation figure had some marked divergences with France, reporting inflation at just 0.6%, but Estonia, Slovakia and Croatia all at 4%+ while Belgium, Spain, the Netherlands and Austria all showed monthly deflationary readings. Given the fall in energy prices and unemployment sticking at 6.2%, the ECB’s priority will be to breathe life into the EU economy before inflation falls further and more widely.
EUR/USD 1.1405.
Musk by Numbers
Given the sheer size of US Government Federal spending across all agencies, which is USD 7.57 Trillion, the time it takes to implement spending cuts and, last but not least, what a South African colleague memorably described 30 years ago when we were at Barclays as “filthy data”, it is hard to see what Elon Musk achieved in the way of cutting that spending over his 4 month stint in the Department of Government Efficiency. The initial target was a spending reduction of USD 2 Trillion. That was first pared back to USD 1 Trillion and then to USD 150 Billion by the end of 2026. On the face of it, Elon Musk has spectacularly failed as spending has in fact increased by USD 190 Billion in the past 4 months versus the same period last year. Lots of disruption and tens of thousands of government officials have lost their jobs, and the USA is just as addicted to spending as it was previously. Meanwhile, Elon Musk returns to his SpaceX company and his quest to reach Mars. Chaos theory in practice.
USD/JPY 142.93.