More US exceptionalism
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Why is the United States showing economic exceptionalism while Europe remains pessimistic?
Well things certainly do seem to be going well for America right now, don't they? And how much of that is down to enthusiasm about wins through tariffs? And how much of Europe's pessimism right now is down to fears over tariffs? There's certainly more talk now about how Europe needs to get its act together to get out of the doldrums. Perhaps it can't all be done by the ECB. And what does this Europe US divide in terms of economic performance, what does that mean for central banks? Faster For Europe, slower for the US. We'll look at that today. It's Mondays, the 25th of November 2024. It's the morning call from NAB. Good morning. So the DXY finished the week on another high. Uh it was up a little over half a percent on Friday.
It got over one hundred and eight, which is the highest it's been for a couple of years. Against the rising US dollar, well the Aussie has also been rising. Okay, it fell a bit on Friday, but it was up naught point six percent over the week last week, just over sixty-five US cents now. The Canadian dollar was up naught point eight percent over the week, whereas Europe was a long way behind. The euro fell one point two percent, the pound fell not point seven. The CNY also down last week, down 0.2%. And alongside the rising US dollar, rising US equities. But uh more in the uh mid cap space. So the Russell 2000 uh up four and a half percent last week, compared to one point seven percent for the NASDAQ and one point three percent for the ASX two hundred, the CSI three hundred, meanwhile, last week down two point six percent.
Europe was somewhere in the middle. of all of that, the DAX up just naught point six percent over the week last week, and bond yields falling down over eleven basis points last week for ten year bunds, the same for Aussie ten years, ten year treasuries, though down less than four basis points, and a big week for oil. WTI was up one point six percent on Friday, six point three percent over the week, five point eight percent for Brent. Also last week a five and a half percent increase in gold prices and iron ore up four percent as well.
How are Bitcoin, gold, and oil prices reflecting the recent US market momentum?
Bitcoin, by the way, it fell finally one point nine percent on Friday, but it got up to ninety-nine thousand eight hundred and sixty at the end of the week. Couldn't quite break that hundred thousand mark. So there's quite a lot going on. Here's Nabs Rayatral in Sydney.
What do the latest US, French, and German PMI readings reveal about divergent growth trends?
Uh let's start with the uh the PMIs. It is a bit of uh American exceptionalism versus European underwhelmingness.
Absolutely, yes. Good morning, Phil. And uh yeah, we've been obviously banging on about uh exceptionalism, um, and it was really personified in those the contrast between particularly the French and the German PMIs and uh and the US ones that we had later. Most of the market reaction actually uh just stemmed directly from the European ones, the US ones, which did show another two point rise in services, um, sorta came and went without Too much market fanfare, but I think that's because we'd had such dramatic market moves beforehand, particularly in the Euro and European interest rate markets. And you know, the headline numbers were pretty startling. So for France, for example, their composite PMI down to 44.8 from 48.1.
It was expected to show a slight rise. Um, and in Germany, we've got um actually its services read. Has actually fallen below fifty. The German manufacturing number's been mired well below there for for many, many months. But um you know, so both of the two uh largest economies effectively in the Eurozone uh are outright contracting. And although there were some some gains for some of the smaller countries, so clearly not enough to offset the uh the weight from those two European heavyweights. So um, you know, really quite uh uh the the euro. was was really badly impacted. So we saw the euro plunging below one hundred five, which had been quite an important technical support level. I think we got down to what, one hundred three thirty five at some point, which was a two plus year low, um, even though we did recover a little bit, but um and then in the interest rate markets now we've seen um the money markets pricing the odds of a fifty point E C B rate cut when they meet in December at uh
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Chapters
8 chapters
1
Why is the United States showing economic exceptionalism while Europe remains pessimistic?
0:02–1:54
2
How are Bitcoin, gold, and oil prices reflecting the recent US market momentum?
1:54–2:09
3
What do the latest US, French, and German PMI readings reveal about divergent growth trends?
2:09–4:11
4
How likely is a Federal Reserve rate cut in December given the current CPI and core‑inflation data?
4:11–5:48
5
How are political instability and Mario Draghi’s reform proposals shaping Europe’s economic outlook?
5:48–8:41
6
What is driving the recent slowdown in UK retail sales and services/manufacturing PMI figures?
8:41–11:08
7
Will New Zealand’s RBNZ pursue an aggressive easing cycle amid global rate‑cut expectations?
11:08–13:12
8
What is the significance of the U.S. Thanksgiving turkey‑pardon tradition for the markets?
13:12–16:09