The swing in energy prices continues, when in the last month the direction was almost only up. As a result The price of gasoline The supervisor will go up 9 percent tonight and we will update accordingly The June CPI forecast To 0.3 percent. also At the price of coal (Constitutes about 20% -25% of the cost of electricity production) There is a jump, which brings an increase in the price of electricity in the summer. AlthoughThe government’s surplus in tax revenues and the low deficit so far will allow us, in our estimation, to facilitate a rise in prices, especially against the background of public pressure.
In the world
US Federal Reserve Is obliged to raise the interest rate by half a percentage point in the next 2 decisions, according to the summaries of the discussions from the last decision. However, in the last two weeks the markets have been pricing that the pace will moderate in light of fears of a significant slowdown in growth alongside expectations of a further decline in inflation. Surveys of companies and households indicate positive but moderate growth in the second quarter, andThe core prices of private consumption expenditure Dropped to 4.9 percent in April.
The sharp rise In yields and interest rates on mortgages Continuing to cool the residential housing market, this is noticeable in Canada, New Zealand and of course in the US. After mortgage lending, sales rates slowed significantly as well. Sales of new homes In the United States, it fell sharply, for the second month in a row, to 590,000 (at an annual rate) the lowest level since the peak of closures in April 2020.
Anyone who has recently tried to renew a passport or book a plane ticket feels the intense demand for tourism and recreation. A similar picture exists in Europe in the last 3 months in light of the removal of corona restrictions. Thus, despite the war in Eastern Europe sentiment sentiment In the eurozone Positive, andPurchasing Managers’ Index Lamai stood at 54.9 points, down from the previous two months but still in positive territory.
in parallel, Inflation Continues to rise, according to the initial estimate In Germany It reached 7.9 percent in May. The positive growth aside High inflationWhich, unlike the US, will still rise in light of the high weight of energy in European indices, will lead the central bank to raise interest rates this year.
This week Governor Central Bank She noted that in her estimation the interest rate will become positive by the end of the third quarter. Therefore, we expect In the next interest rate decision (June 9) The Bank will announce the termination of the acquisition plan in July, along with a high chance of a corresponding increase in interest rates. In our estimation, This supports the following Rising yields in Europe And the strengthening of the euroEspecially against the dollar which we believe already embodies a reasonable interest rate hike route.
And in China? upside down
GDP in China continued to shrink in May as well, but at a more moderate pace. This is according to the official purchasing managers’ indices, which have still recorded a contraction but are more moderate in light of some relief in the May restrictions. We still anticipate continued interest rate cuts and an expansionary government policy in the coming months.
The author is the head of the Economics and Research Division at Harel Insurance and Finance