MARKETS & INVESTING
MPC cannot be as confident in the outlook given the stickiness in services , but the trend is downward . Following the release of the Office for National Statistics ( ONS ) labour market report on 14 May , which showed wages , excluding bonuses , grew by 6.0 % in the first three months of 2024 compared with the same period a year earlier . Elsewhere in the ONS report , there were some signs that Britain ’ s labour market was cooling . The unemployment rate rose to 4.3 %, its highest since the three months to July 2023 , and vacancies fell for the 22nd time in a row in the three months to April1 .
Positioning for the rates pivot US rates are only 25bps higher than the UK , but US GDP is growing at 3 % and has been for the past year . Growth has been much stronger in the US than in the UK and eurozone , but this could be changing . The UK economy has recovered the ground lost in last year ’ s mild recession and should stay positive as consumer confidence improves and spending increases in line with rising real incomes . Core inflation is now lower in the eurozone and the gap with the UK is closing fast . We think that the US economy is slowing as the consumer retrenches . That in turn should put US inflation back on a downward path .
Slower growth , tighter credit and falling inflation should give central banks confidence that policy is sufficiently restrictive . We think that there is a reasonable chance that the data will allow the Federal Reserve to cut in September , but the prospects are clearer in the UK for an August move and in the eurozone looks a done deal for June . Within our CT Universal MAP funds , we maintain an overweight position to US bonds .
IMPORTANT INFORMATION . FOR PROFESSIONAL INVESTORS ONLY Your capital is at risk . This material should not be considered as an offer , solicitation , advice or an investment recommendation . This communication is valid at the date of publication and may be subject to change without notice . Information from external sources is considered reliable but there is no guarantee as to its accuracy or completeness . Issued by Threadneedle Asset Management Limited , No . 573204 and / or Columbia Threadneedle Management Limited , No . 517895 , both registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority . Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies . 1 Office for National Statistics , Labour market overview , UK : May 2024
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