Daily Market Color October 22, 2024Global News Dominates Headlines Again, as IMF Sees Slower Worldwide Growth Rates trade within a tight range while gold hits another all-time high. Swap rates closed nearly flat today after trading within a 5bp range throughout the session. A 1-2bp climb at the belly of the yield curve pushed all Treasury yields above 4% other than the 3y (3.98%). Meanwhile, gold rose to $2,749 per ounce, yet another all-time high after starting the year at ~$2,060. Across the pond, the euro hit its lowest level since early August after European Central Bank President Lagarde suggested that rate cuts will continue for the foreseeable future, though she remains unsure of the pace of rate cuts. IMF says it expects the Bank of Japan (BoJ) to hike further. Just after recent comments from BoJ officials and Japanese politicians tempering expectations for near-term rate hikes, the IMF’s mission chief for Japan Nada Choueiri indicated that he expects the BoJ to continue raising rates in the longer-term. He said, “We have seen indicators of consumption starting to increase, and we have seen employees’ scheduled earnings starting to increase…” The IMF expects the neutral interest rate in Japan to land at 1.5% by 2026YE, higher than economist expectations of 1%. Markets still largely expect the BoJ to hold rates steady at 0.25% at its October 31st policy meeting. IMF lowers 2025 global growth forecast. The International Monetary Fund (IMF) reduced its 2025 global output projections to 3.2% growth, 0.1% lower than their estimate from July. IMF Chief economist Pierre-Olivier Gourinchas cited “growing uncertainty in the global economy” as the catalyst for the reduction, specifically due to geopolitical risks and protectionist trade policies that could diminish global activity. The updated forecast also comes after the IMF noted concerns about global public debt last week, which is expected to hit 93% of global GDP by the end of 2024.
