NAGA’s Weekly Recap | May 8 — May 12 — 2023

This edition brings you crucial insights from around the globe.

We delve into the easing of US inflation and its impact on the Federal Reserve's interest rate strategy. Also, we explore Alphabet's stock surge following its AI-focused announcements. In the currency market, we analyze the recent fluctuations in the $GBP/USD pair. Finally, we navigate the oil market's turbulence amid concerns over physical demand and Iraq's potential export restart.

Join us for these insights and more in this week's succinct economic roundup!

US inflation below 5% for the first time in two years

US inflation dropped to 4.9% in the 12 months to April, marking the tenth consecutive month of slowing price increases, according to official data. The decrease follows the US central bank's steep hike in interest rates aimed at controlling inflation.

However, despite inflation now being below 5% for the first time in two years, core inflation remains elevated at 5.5%, and certain sectors such as housing, petrol, and used cars have seen significant price jumps from March to April. The Federal Reserve has increased interest rates 10 times since last March, pushing them to their highest levels since 2007.

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Alphabet ($GOOG) gains $131 billion in market value

Alphabet's stock soared by 9% following several AI-related announcements at its conference. CEO Sundar Pichai stated that they are "reimagining all our core products, including search".

The rally added $131 billion to Alphabet's market value, pushing the stock to its highest level since August 2022. This positive response contrasts with the stock's earlier drop after the introduction of "Bard", an AI that competed with ChatGPT.

Alphabet also launched a new language model, which supports over 100 languages and powers 25 new products and features, including the ability to write code.

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Physical crude markets are starting to show signs of weakness

Oil prices have continued to decline for a second day, with West Texas Intermediate falling below $71 per barrel, due to concerns about physical demand and the potential restart of exports from Iraq.

These concerns overshadow the US's plan to begin refilling its Strategic Petroleum Reserve after June. Weak refining margins and subpar buying in certain regions indicate a lackluster physical market. Moreover, signs of economic cooling have emerged in the two largest economies, the US and China, as evidenced by rising US jobless claims and a slowing recovery in China.

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$GBP/USD recalls BoE-induced fall to 1.2500 on downbeat UK GDP

The $GBP/USD pair is attempting to recover from Bank of England (BoE) induced losses following positive UK growth and activity data.

Disappointing UK data heading into Friday's London open has driven the $GBP/USD pair to an intraday low near 1.2500. Despite this, upcoming US inflation data and risk catalysts could still influence the pair.

Preliminary Q1 UK GDP reported a 0.1% quarter-on-quarter growth, while March's monthly GDP fell by -0.3%.

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This concludes our weekly recap. Have a great weekend and see you next week! 👋