Markit PMI data shows that services sector activity continued to expand in Dec'23 at faster pace in the US and UK, while it remained in contraction in Eurozone (led by France and Germany)
Sonal Badhan,
Economist,
Bank of Baroda
Mumbai, January 5, 2024: Better than expected labour market data from the US has pushed global yields back up. The yield gap between short-term and long-term US securities narrowed. Initial jobless claims in the US fell by 18k to 202k (est.: 215k) for the week ending 30 Dec’23. Even private payrolls data (ADP) indicate that employment went up by 164k (est.: 115k) in Dec’23 from 101k in Nov’23—posting fastest increase since Aug’23. Markit PMI data shows that services sector activity continued to expand in Dec’23 at faster pace in the US and UK, while it remained in contraction in Eurozone (led by France and Germany). Solid economic data from the US has raised uncertainty around timing of Fed’s rate cut, with CME Fed Watch Tool suggesting that chances of no rate cut in Mar’24 have gone up to 35% from 13% a week ago. Nearly 60% chances are still priced in for 25bps rate cut.
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