US
In June, the US job market experienced a slight slowdown, as the economy added 209,000 jobs, falling short of the estimated 225,000 by economists surveyed by Bloomberg. This is the first time in 15 months that nonfarm payrolls have come in lower than Wall Street's expectations. Revised data also revealed that May saw the creation of 306,000 jobs, about 33,000 less than previously reported. However, there is a silver lining as the unemployment rate for June stood at 3.6%, down from May's 3.7%, in line with economists' expectations.
Meta's Threads, the recently launched Twitter competitor, has experienced rapid growth within just one day of its public debut, primarily due to its association with Instagram's extensive userbase. Mark Zuckerberg, the CEO of Meta, announced that the text-based social media platform has garnered a remarkable 70 million sign-ups. According to reports, by Thursday afternoon, users had already generated over 95 million posts and received 190 million likes, based on internal company data.
Mexico
Mexico's annual inflation rate continued its downward trend in June, marking the fifth consecutive month of deceleration, according to data from the statistics agency INEGI. The inflation rate stood at 5.06%, slightly surpassing the market forecast of 5.02%. However, it is worth noting that this figure represents the lowest rate since March 2021. The decline in inflation can be attributed to the sustained cycle of rate hikes implemented by the central bank. This positive development indicates progress in stabilizing prices and bodes well for the country's economic outlook.
On Wednesday morning, the dollar peso exchange rate reached a significant milestone, with one dollar dipping below 17 pesos for the first time since 2015. The rate stood at 16.98 pesos per dollar around 7:30 a.m. local time, reflecting the peso's strongest position since December 2015.
Although the peso slightly weakened later, trading at 17.00 to the dollar before 9 a.m., it has appreciated by an impressive 14.77% against the US dollar this year, making it the second-best performing currency globally. Factors contributing to this positive performance include Mexico's high interest rates, currently at 11.25%, and substantial inflows of foreign capital and remittances.
Europe This week, European stocks concluded with losses as investors analyzed concerning indicators from EU economies. The Caixin/S&P Global Purchasing Managers Index for the euro zone revealed a contraction in business output during June. S&P Global reported that the economy experienced a stagnation, primarily due to a decline in service sector growth, despite easing inflationary pressures. The survey identified weak demand and a significant decrease in new orders for manufacturers as contributing factors to the economic slowdown. These negative signals are causing investors to exercise caution and evaluate the potential implications on the market.
On Friday ECB Vice President Luis de Guindos stated that underlying inflation pressures in the euro zone are beginning to alleviate, which is a significant focus for the European Central Bank. However, he cautioned that price growth in services could remain persistent, potentially keeping overall price growth elevated.
Over the past year, the ECB has consistently increased interest rates at each meeting and plans to implement another hike this month. The central bank's rationale is rooted in the belief that tightening policy should continue until a notable improvement is observed in the outlook for underlying prices, excluding volatile food and energy costs.
Asia
China’s service sector activity slowed considerably in June, according to the Caixin/S&P Global purchasing managers’ index survey, although remained in expansion territory for a sixth straight month.
During her diplomatic visit to Beijing aimed at enhancing bilateral ties, US Treasury Secretary Janet Yellen voiced her criticism of Chinese restrictions imposed on American companies. Yellen emphasized that Washington, along with its allies, will actively respond to Beijing's "unfair economic practices." Despite the criticism, Yellen also expressed a conciliatory stance by highlighting the US intention to pursue diversification rather than complete separation from China. This nuanced approach suggests the US aims to address grievances while maintaining some level of engagement with the Chinese economy.
Japanese officials are expressing concerns over the potential consequences of China, the largest buyer of Japanese seafood exports, halting purchases following Tokyo's decision to release treated radioactive water from the damaged Fukushima nuclear plant into the sea. This week, the U.N. nuclear watchdog granted Japan permission to discharge over a million metric tons of water, which is equivalent to 500 Olympic swimming pools, that was used to cool the plant's fuel rods following the 2011 tsunami.
Despite Japanese assurances that the water has been filtered to remove most isotopes and is safe, the planned release has faced opposition both domestically and internationally. The apprehension lies in the potential impact on the seafood export industry and the potential loss of the Chinese market for Japanese seafood.
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