What's Happening in Global Markets: New Evaluation for U.S. Banks, UK Interest Rates, Developments from China?
Recent developments in the global economy include a rise in confidence in the U.S. banking system, alongside updates and expectations regarding interest rate cuts in China and the UK.
Moody's Upgrades U.S. Banking System Outlook to Stable
Credit rating agency Moody's has revised its outlook for the U.S. banking system from negative to stable. This change is based on expectations that ongoing interest rate cuts and moderate economic growth will stabilize bank asset quality and boost profitability. The outlook change for U.S. banks underscores the importance of economic stabilization and the maintenance of banks' asset quality. Moody's assessment enhances positive expectations for financial stability.
Goldman Sachs Anticipates a Drop in UK Interest Rates
Goldman Sachs forecasts that the Bank of England (BoE) will lower borrowing costs at each of its next nine meetings, predicting a fall in interest rates to 2.75% by next autumn. The bank expects the BoE's policy rate to decrease further due to rapidly falling inflation and dovish Monetary Policy Committee comments. Goldman Sachs economists highlight that the market may be underestimating the extent of BoE's policy actions, maintaining their consecutive 0.25-point rate cut forecasts, with the final rate expected at 2.75% in November 2025.
Nomura: China's Interest Cuts Demonstrate Economic Revival Commitment
Nomura analysts assert that China's recent loan interest rate cuts underline Beijing's commitment to reducing borrowing costs and reviving the economy. They anticipate substantial cuts in both 1-year and 5-year Loan Prime Rates (LPRs), emphasizing the People's Bank of China's (PBOC) role in reducing borrowing costs in the real economy. Nomura expects fiscal stimulus of 2 to 3 trillion CNY from Beijing in the coming months, with fiscal policy announcements being significant at the upcoming NPC Standing Committee meeting.
Nomura Foresees Continued Leadership from BYD
Nomura analysts also predict that BYD will maintain strong sales in China, bolstered by successful international operations. The company's 2024 business strategy includes price cuts and the launch of a new plug-in hybrid platform. Nomura expects BYD to reaffirm its leadership in the Chinese market by delivering 4 million electric vehicles this year. Analysts foresee export growth and international expansion contributing to the company's medium and long-term growth.
Youth Unemployment Rate Declines in China
The unemployment rate among youths aged 16-24 in China fell to 17.6% in September. According to data from the country's statistics bureau, this marks a decrease from 18.8% in August. This reduction is seen as indicative of efforts to control youth unemployment. The improvement in job opportunities for this age group, excluding university students, is considered significant.
IMF Chief Warns High Prices May Persist
International Monetary Fund (IMF) Chief Kristalina Georgieva indicated that high prices may become entrenched. Georgieva highlighted that high debt and slow growth exacerbate economic challenges. The IMF's global growth forecasts stand at 3.2% for 2024 and 3.3% for 2025. Georgieva noted that climate risks could impair the economic outlooks of certain countries.
Global Job Vacancies Decline Amid Elections, Tax, and Geopolitical Tensions
A global survey found that the upcoming elections in the U.S., uncertainty over tax increases in the UK, and rising geopolitical tensions led to a decrease in global white-collar job vacancies in September. The latest monthly Global Jobs Index by employment consultancy Robert Walters showed a 5% decline in job vacancies globally compared to August. Companies in Singapore, the U.S., the UK, Australia, and Germany reported the most significant drops in open positions. Low business confidence is causing employers to be more cautious in hiring decisions.