Global economy chart: A hectic week on the markets ends quietly

(Bloomberg) –A week The crisis that began with a $6.4 trillion plunge in global stocks and a broad-based rally in bonds ended relatively calmly, calming from historic levels. volatility triggered in part by the previous week’s disappointing US jobs report.
The shares recovered and Traders reduced massive bets on a rapid and furious easing of monetary policywhich underscores the nervousness in the market as investors try to gauge the timing and pace of interest rate cutsThe next test will come with inflation data This coming week.

Below are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:World

On the face of it, it was a stock market shock for the ages, a once-in-a-generation surge of turbulence that reverberated across global markets. But what if Monday’s event of extreme volatility wasn’t quite what it seemed? That’s the theory now resonating on Wall Street, after a frenetic week in which markets were roiled by heightened volatility. Cboe The volatility index recorded its biggest intraday jump on record.

The benchmark 10-year U.S. bond yield has returned to levels seen before last week’s U.S. labor market report, erasing most of the steep declines from earlier this week. After pricing in aggressive and large-sized interest rate cuts by the Federal Reserve, traders have also reduced their bets on about 100 basis points of easing for the year.

Australia’s central bank kept interest rates at their highest level in 12 years and virtually ruled out a rate cut in the next six months, splitting with global counterparts as it waits for inflation to ease. India and Serbia also kept rates steady. Kenya surprised with its first rate cut since 2020, while Uganda, Romania, Mexico and Peru also lowered rates.Asia

Bank of Japan Deputy Governor Shinichi Uchida sent a strong signal of dovishness amid historic financial market volatility in Japan by pledging to refrain from raising interest rates when markets are unstable. The yen weakened more than 2% against the dollar, bond futures rose and stocks rebounded immediately after his comments, which were the first public comments by a BOJ board member since the bank raised rates on July 31.

China announced a sweeping plan to boost consumption by improving services supply, seeking to reinforce a bright spot in domestic demand at a time when the manufacturing sector is losing momentum. The measures came after a Caixin survey showed services expanded for a 19th consecutive month in July.

Real wages of Japanese workers rose for the first time in more than two years, improving prospects for a recovery in consumption and the emergence of a positive growth cycle long sought by the Bank of Japan.

US

American consumers continued to struggle to pay their debts even though overall delinquencies had stabilized. The share of auto loan balances that were at least 30 days late was the highest since 2010. The share of credit card debt that was recently late rose to 9.05%, the highest in about 12 years. Meanwhile, loan balances on home equity lines of credit rose.

The Biden administration is close to finishing distributing $39 billion in grants under the Chips and Science Act, the landmark bipartisan legislation aimed at revitalizing the domestic semiconductor industry. The biggest test is still ahead.

The great post-pandemic boom in consumer travel is officially over. With the U.S. economy showing signs of slowing and the financial cushions many built up during the Covid-19 pandemic running out, travelers are curbing their post-lockdown wanderlust and tightening their belts.

Emerging markets

Mexico’s central bank cut its benchmark interest rate for the first time since March and said it would consider further reductions as policymakers look beyond the recent surge in inflation to focus on threats to economic growth. Banxico, as the bank is known, also said the balance of risks to the inflation path over the forecast horizon remains skewed to the upside, but it expects the effects of the shock on headline inflation to dissipate in coming quarters.

Brazil’s annual inflation accelerated to the upper limit of its target range, dealing another blow to the central bank’s efforts to contain price pressures spreading across Latin America’s largest economy.

Russia’s overheated economy, fueled by the Kremlin’s massive spending on its invasion of Ukraine, could be on the verge of cooling dramatically amid increasing restrictions on key sectors that have driven growth so far.

Europe

French unemployment unexpectedly fell in the second quarter, a sign that President Emmanuel Macron’s unpopular labor market reforms are yielding some results.

Orders at German factories rose in June, breaking a five-month slump in Europe’s largest economy. The increase was driven by the automotive industry, but sectors such as metal products manufacturing and other transport equipment also contributed. Domestic orders were particularly strong.