Aurelia Butler

The European Central Bank and the Bank of England sticking to their higher-for-longer rates stance, however, has blurred expectations for Europe. Following are forecasts from some major banks on economic growth, inflation, Fed policy and how they expect certain asset classes to perform. Real GDP growth forecasts for 2024 GLOBAL U.S. CHINA EURO UK INDIA AREA Goldman 2.6% 2.3% 4.8% Sachs 0.7% 0.6% 6.2% Morgan 2.8% 1.9% 4.2% 0.5% -0.1% 6.4% Stanley UBS Global 2.6% 1.1% 4.4% 0.6% 0.6% 6.2% Wealth Management Barclays 2.6% 1.2% 4.4% 0.3% 0.1% 6.2% J.P.Morgan 2.2% 1.6% 4.9% 0.4% 0.2% 5.7% BofA 2.8% 1.4% 4.8% 0.5% 0.1% 5.7% Global Research Deutsche 2.4% 0.6% 4.7% 0.2% 0.3% 6.0% Bank Citigroup 1.9% 1.1% 4.6% -0.2% -0.3% 5.7% HSBC 2.4% 1.7% 4.9% 0.5% 0.6% 6.0% —- U.S. inflation and Fed forecasts:The latest data showed that in the 12 months through December, U.S. consumer prices edged 3.4% higher after increasing 3.1% in November, tempering expectations of an interest rate cut in March. The pace of price rises, however, has slowed from a peak of 9.1% in June 2022. The Fed targets an inflation rate of 2%.The U.S. central bank’s policy rate currently stands in the 5.25%-5.50% range after 525 basis points of hike since March 2022. Rate cuts are seen coming as early as March.U.S. inflation (annual Federal funds Y/Y for 2024) target rate (Dec ’24) Headline CPI Core PCE Goldman Sachs 2.40% 2.50% 4-4.25% Morgan Stanley 2.10% 2.70% 4.375% UBS Global 4.50-4.75% Wealth Management Wells Fargo 2.80% 2.60% 4.50-4.75% Investment Institute Barclays 2.70% 2.4% 4.25-4.50% J.P.Morgan 2.50% 2.50% 4-4.25% BofA Global 2.80% 4.25-4.50% Research Deutsche Bank 2.10% 3.63% Citigroup 2.60% 4.50% HSBC 3.10% 4.50-4.75% —–Forecasts for stocks, currencies and bonds: S&P 500 US 10-year EUR/USD USD/JPY USD/C target yield NY target Goldman Sachs 5,100 4.55% 1.10 150.00 7.15 Morgan Stanley 4,500 1 140 7.5 UBS Global 4,700 3.50% 1.12 140 7.00 Wealth Management Wells Fargo 4,800-5, 4.25-4.75% 1.08-1.1 136-140 Investment 000 2 Institute Barclays 4.25% 1.09 145 7.20 J.P.Morgan 4,200 3.75% 1.13 146 7.15 BofA Global 5,000 4.25% 1.15 142 6.90 Research Deutsche Bank 5,100 4.10% 1.10 135 Societe 4,750 3.75% 1.15 Generale Citigroup 5,100 4.30% 1.02 135 7.25 HSBC 5,000 3.00% 1.05 136 7.10 More

NEW YORK (Reuters) – January is nearly over, which probably means your New Year’s resolutions are forgotten – or will soon be.A 2018 study of 108 million American activities by fitness app Strava found that Jan. 17 was the most likely day for resolutions to be tossed out the window.This puzzles one of the world’s foremost authorities on the matter: Katy Milkman, an economist and professor at the University of Pennsylvania’s Wharton School and author of the book “How To Change.”Why do people start out the New Year with such vim and vigor, but falter so quickly?”The ‘Fresh Start Effect’ is best exemplified by the New Year phenomenon, when everyone is extra-motivated to pursue their goals,” Milkman said. “But, by February, it’s not as socially acceptable to talk about resolutions or to wake up thinking about them.”Money is a favorite goal. When YouGov recently asked people about their resolutions for 2024, ‘saving more money’ was the top response at 23% – more than being happy, exercising or anything else.”Actual change requires more than just motivation, which is why so many resolutions fail,” Milkman said.Here are a few tips to keep your resolutions alive and generate lasting change.USE MULTIPLE ‘FRESH STARTS’Even if you stumble on your resolutions, which is likely, do not wait until next year to try again, Milkman said.Fresh starts can happen in a new month, a holiday, birthday or any day of the week.”It’s a misconception that if you’ve missed the boat, then you’re done,” she said. “There are many other boats.”GO BITE-SIZEDA big goal is just the exciting first step, followed by the small, routine paces to get you there.Milkman set a specific fitness goal for 2024: exercising on the elliptical machine four days a week.”Don’t just set a goal and think that’s enough,” she advised. “Make boring, concrete plans around how. Get into the weeds, the smaller details the better, because it will increase the likelihood that you will actually follow through.”USE COMMITMENT DEVICESMilkman recommends using “commitment devices” as incentives. For example, if you have a savings target, refrain from accessing that account until you have reached a certain level.Penalties for tripping up could include letting your partner change your account password, or forcing yourself to give a financial contribution to a cause you hate.IDENTIFY OBSTACLESYou probably know yourself enough to foresee the obstacles.Will you forget to put money into a Roth IRA? Set a reminder in your calendar. Do you dread exercise? Make it easier by binge-watching your favorite shows while on the treadmill.”That’s called ‘Temptation Bundling,'” Milkman said. “Make the goal pursuit process fun and do something you really enjoy at the same time.”REDUCE FRICTIONHaving to constantly make the right choice will eventually lead to failure because our willpower is only so strong. Instead, make such choices automatic. For instance, set up a recurring 1% payroll deduction for your retirement account instead of deciding every pay period.Incorporate all of these tips, and 2024 can be a year of fulfilled resolutions.”The way we think about our lives is not as one big continuum, but as a series of chapters in a book,” Milkman said. “There are chapter breaks, when you can close one chapter and begin the next. Then you can start to say, ‘That was the old me – this is the new me.'” More

TORONTO/OTTAWA (Reuters) – Inflation in Canada is likely to remain a bigger threat than in the United States due to the high growth in Canadian wages and shelter costs, which could see the central bank shifting to interest rate cuts after the Federal Reserve, say analysts.The Canadian economy is flirting with recession, contrasting with recent strong U.S. growth. That has begun to open up spare capacity in the economy, such as raising unemployment, which is a key part of taming pricing pressures.But factors peculiar to Canada, such as declining productivity, record levels of immigration and a relatively unionized workforce, could stand in the way of inflation returning to the Bank of Canada’s 2% target, analysts say.A slower move to rate cuts in Canada could help support the Canadian dollar. It could also delay a rebound in the economy and disappoint heavily indebted households, many of which are due to renew their mortgages at higher borrowing costs this year.”I still think inflation risk is higher in Canada than in the U.S. on a full cycle basis going forward,” said Derek Holt, head of capital markets economics at Scotiabank.”There are stark differences between Canada and the U.S. that I don’t find markets appreciate. There should be more differentiation between the Fed and BoC rate paths than is currently priced.”Money markets are betting that the Fed will shift to cutting rates as soon as March, while they are leaning toward April for the first easing from the BoC.Data on Tuesday showed Canadian inflation accelerating to 3.4% in December. That matches the U.S. rate but wage growth in Canada is much the hotter, at 5.7% last month.HIGHLY UNIONIZED WORKFORCEWage growth could be slow to ease as collective bargaining agreements lock in multi-year wage settlements, Holt said. Canada’s workforce is nearly 30% unionized, well above the 10% level in the United States.Declining productivity tends to add to the inflation pressures coming from higher wages by driving up unit labor costs. Canadian productivity fell in the third quarter for the sixth straight quarter.At BMO Capital Markets, Doug Porter, chief economist expects inflation to look fairly similar both sides of the border in 2024 but is more cautious about Canada.”If I had to say which way the risks lie, I might even assert that Canada’s inflation problem might be a little bit stickier here this year because of those wage pressures and the housing component,” Porter said.Mortgage interest cost is a big driver of shelter inflation in Canada but another factor is the rapid pace of immigration fueling a housing shortage. Canada’s population grew in the third quarter at the fastest rate since 1957, due almost entirely to new residents.Last month, the BoC called for policy changes to spur more housing construction and reduce pressure on inflation caused by a lack of shelter, especially at a time of record immigration. The central bank is due to make an interest rate decision and update its economic forecasts on Jan. 24. “We’ll get to the same place as the U.S. eventually but we do think that our rate cuts, in Canada, will be a few months after they occur in the U.S.,” said Andrew Kelvin, chief Canada strategist at TD Securities. More

WASHINGTON (Reuters) – The U.S. Supreme Court on Wednesday is due to hear arguments in a dispute involving a government-run program to monitor for overfishing of herring off New England’s coast that gives its conservative majority a chance to further limit the regulatory powers of federal agencies.The justices are weighing appeals by two fishing companies of lower court rulings allowing the National Marine Fisheries Service to require commercial fishermen to help fund the program. The companies – led by New Jersey-based Loper Bright Enterprises and Rhode Island-based Relentless Inc – have argued that Congress did not authorize the agency, part of the U.S. Commerce Department, to establish the program.More broadly, the companies have asked the court, with its 6-3 conservative majority, to rein in or overturn a precedent established in 1984 that calls for judges to defer to federal agency interpretation of U.S. laws deemed to be ambiguous, a doctrine called ” Chevron (NYSE:CVX) deference.”The bid by the commercial fishermen, supported by various conservative and corporate interest groups including billionaire Charles Koch’s network, is part of what has been termed the “war on the administrative state,” an effort to weaken the federal agency bureaucracy that interprets laws, crafts federal rules and implements executive action.The Supreme Court has signaled skepticism toward expansive regulatory power, issuing rulings in recent years to rein in what its conservative justices have viewed as overreach by the Environmental Protection Agency and other agencies.The fish conservative program was started in 2020 under Republican former President Donald Trump. It is being defended by Democratic President Joe Biden’s administration. The regulation at issue called for certain fishermen to carry aboard their vessels U.S. government contractors and pay for their at-sea services while they monitored the catch.The program aimed to monitor 50 percent of declared herring fishing trips in the regulated area, with program costs split between the federal government and the fishing industry. The monitors assess the amount and type of catch including species inadvertently caught.The cost of paying for the monitoring was an estimated $710 per day for 19 days a year, which could reduce a vessel’s income by up to 20 percent, according to government figures.The Biden administration has said the program is authorized under a 1976 federal law called the Magnuson-Stevens Act to protect against overfishing in U.S. coastal waters. It said in court papers the program was suspended for the fishing year starting in April 2023 due to insufficient federal funding. The Washington-based U.S. Court of Appeals for the District of Columbia Circuit and the Boston-based 1st U.S. Circuit Court of Appeals both ruled in favor of the government. Other cases now before the Supreme Court also involve the scope of agency powers. During arguments in November, the conservative justices signaled skepticism toward the legality of certain proceedings conducted in-house by the Securities and Exchange Commission to enforce investor-protection laws. During arguments in October, the court appeared skeptical of the payday lending industry’s challenge to the Consumer Financial Protection Bureau’s funding structure. Rulings in the fishing, SEC and CFPB cases are expected by the end of June. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.European stocks and bonds fell after European Central Bank president Christine Lagarde signalled that interest rates would come down in summer rather than spring and UK inflation rose unexpectedly for the first time in 10 months.The region-wide Stoxx Europe 600 fell 1.2 per cent shortly after Lagarde said that market expectations for an ECB rate cut this spring were “not helping” the fight against inflation.Asked if she agreed with fellow ECB governing council members who have signalled a rate cut is expected this summer, Lagarde said: “I would say it is likely too, but I have to be reserved.” Her comments came as London’s FTSE 100 fell 1.6 per cent after UK inflation increased to 4 per cent in December, prompting traders to scale back their bets on Bank of England rate cuts.December’s figure exceeded the 3.8 per cent forecast by economists in a Reuters poll and was the first rise in UK inflation since February 2023.Lagarde told Bloomberg TV at the World Economic Forum that the ECB would have information it required on wage pressures by “late spring”. Such data would be necessary before any decision to lower borrowing costs.“It now seems that hopes for early cuts in rates from global central banks were a tad optimistic,” said Charles Hepworth, investment director at GAM Investments.As European stocks reacted to the prospect of interest rate cuts later than previously expected, rate-sensitive real estate groups were among the worst performers. France’s Cac 40 dropped 1.1 per cent, while Germany’s Dax slipped 1 per cent.Bond markets were also hit by a sell off, with UK 10-year bond yields, which move inversely to prices, climbing 0.07 percentage points to 3.87 per cent.Before Lagarde spoke markets had fully priced in a cut to the ECB’s record high benchmark interest rate of 4 per cent by April, attributing a 30 per cent likelihood to a cut in March.Those probabilities slipped after her comments to 95 per cent for a cut by April and 20 per cent for a reduction in March.Matthew Landon, global market strategist at JPMorgan Private Bank, warned that Wednesday’s UK inflation figures would also almost certainly delay a policy pivot from the Bank of England: “markets may be too enthusiastic about how many cuts the [BoE] can manage this year.”Germany’s rate-sensitive two-year bond yield rose 0.04 percentage points to 2.63 per cent on Wednesday, its highest since early December. Prices of government debt had already been hit after US Federal Reserve board member Christopher Waller warned on Tuesday that the US central bank should also not rush to slash rates, saying policymakers should “take our time to make sure we do this right”.Speaking a day before the ECB’s quiet period starts ahead of its next meeting on January 25, Lagarde said she was increasingly confident that eurozone inflation would sustainably drop to the ECB’s 2 per cent target in the medium term. Annual price growth in the bloc has slowed from a peak of 10.6 per cent in October 2022 to 2.9 per cent last month. But the ECB president warned inflation was still too high in the labour-intensive services sector — at 4 per cent in December — and there was a risk of high wage growth, which pushed up pay per eurozone employee 5.2 per cent last year, keeping price pressures too high.“Short of another major shock we have reached a peak” in interest rates, she said. “But we have to stay restrictive for as long as necessary” to ensure inflation keeps falling. “The risk would be we go too fast [on rate cuts] and have to come back and do more [rate increases].”Her comments were backed up by Klaas Knot, head of the Dutch central bank and a member of the ECB rate-setting governing council, who told CNBC on Wednesday: “The more easing the markets has already done for us, the less likely we will cut rates, the less likely we’ll add to it.” More

“Debt is at extremely high levels,” she said. “What worries me on top of that is that we have projected fiscal deficits that are going to be higher than they were pre-pandemic.””Many countries borrowed a lot during the pandemic. That was short term in nature, and that’s coming due, so I think liquidity risks are something we should pay attention to”, Gopinath said. The impact of the pandemic, which gummed up the transport of goods, particularly from China, prompting countries to increase domestic production or seek alternative supplies, and Russia’s invasion of Ukraine that drove up energy and commodity prices, have forced governments to boost their spending and borrow more. More

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