New Year, Familiar Economic Themes: A Macro Review of Early 2024

⚡️ Highlights:

1. Equities in the US and Japan have continued to perform well in 2023, with the S&P 500 reaching a new record high and the Nikkei 225 up 7.5% year to date.

2. Higher bond yields have been driven by upside inflation surprises and officials at the Fed and ECB pushing back on aggressive pricing for policy easing. This has also resulted in renewed strength for the US dollar.

3. The US economy is on track for a soft landing, which is likely to delay the timing of Fed rate cuts. Weakness in China and Europe is contributing to this decision.

4. China’s Q4 GDP data met expectations, but investment sentiment remains negative. The property development sector is showing signs of deterioration, with property investment down 9.6% and new home prices experiencing their steepest month-on-month fall since 2015.

5. The ECB is attempting to dampen expectations for rate cuts in 2024, despite market pricing indicating a significant possibility. Upside surprises in the UK’s December inflation report suggest that central banks will face challenges in bringing inflation back to target levels.

Analyzing Global and Australian Economic Trends in the New Year

The start of 2024 has brought familiar economic themes to the forefront, with markets experiencing a shaky beginning but showing resilience in certain areas. James Foster’s macroeconomic review provides a comprehensive analysis of these trends, highlighting key developments in global and Australian economies.

Global Market Dynamics

  • US and Japan Equities: Equities in the US and Japan have continued their upward trajectory from 2023, with the S&P 500 reaching a new record high and the Nikkei 225 up by 7.5% year-to-date.
  • Inflation Surprises and Policy Easing: Upside inflation surprises and central bank officials pushing back on aggressive policy easing have led to higher bond yields, contributing to a stronger US dollar.
  • US Economic Resilience: The US economy shows signs of a soft landing, potentially delaying Fed rate cuts. Strong retail sales in December and robust demand indicate a healthy economic state.
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China’s Economic Challenges

  • Q4 GDP Data: China’s Q4 GDP data aligned with expectations, but investment sentiment remains negative, particularly in the property development sector.
  • Property Investment Decline: Property investment in China has decreased significantly, with new home prices recording their steepest monthly fall since 2015.

Central Bank Policies and Inflation

  • Fed and ECB Stances: Federal Reserve and European Central Bank officials have been vocal about the strength of their respective economies, influencing market expectations for rate cuts.
  • UK Inflation Data: The UK’s December inflation report showed unexpected rises, signaling that central banks might face ongoing challenges in bringing inflation back to target.

Australian Labor Market and Economic Outlook

  • December Labour Force Survey: Australia’s December Labour Force Survey indicated a significant drop in employment, but the overall labor market remains robust with low unemployment rates and high participation.
  • Economic Forecast: The Australian economy is expected to maintain its strength, with minimal impact from the December labor market data.


The early months of 2024 have mirrored some of the previous year’s economic themes, with resilient equity markets, inflationary pressures, and robust economic indicators in key global economies. The Australian economy continues to show strength, despite some volatility in labor market data. Understanding these trends is crucial for navigating the complex global economic landscape in 2024.

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