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Janet Mui: weekly economic update 10 January

Oil and gold responded sharply to the US drone strike on an Iranian general, but equities have been resilient. US employment remains healthy and there are tentative signs of an uptick in UK activity.

10/01/2020
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Authors

Janet Mui
Global Economist, Cazenove Capital
  • The US drone strike on an Iranian general rattled markets in the first week of 2020. Oil spiked higher but has subsequently surrendered its gains as the US and Iran have sought to de-escalate the situation.
  • With the US now the largest oil producer in the world, events in the Middle East have less of an enduring impact on the oil price.
  • The response of gold is a reminder of its value as a portfolio hedge against geopolitical risks.
  • UK economic activity remains subdued, though there are early signs of an improvement in sentiment following last month's election. The pound fell after Mark Carney suggested that the Bank of England would move quickly to cut rates if data did not improve.
  • The US added 145,000 jobs in December, slightly below expectations and the monthly average for 2019. Despite the softening momentum, we think the US labour market remains healthy.

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Authors

Janet Mui
Global Economist, Cazenove Capital

Topics

Cazenove Capital is a trading name of Schroders (C.I.) Ltd which is licensed under the Banking Supervision (Bailiwick of Guernsey) Law 2020 and the Protection of Investors (Bailiwick of Guernsey) Law 2020, as amended in the conduct of banking and investment business. Registered address at Regency Court, Glategny Esplanade, St. Peter Port, Guernsey GY1 3UF, (No.24546) . Schroders (C.I.) Limited, Jersey Branch is regulated by the Jersey Financial Services Commission in the conduct of investment business. Registered address at IFC1, Esplanade, St Helier, Jersey, JE2 3BX, (No.31076).

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