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June 21, 2024

US air travel and cocoa prices hit new highs while inflation surges across Germany

This week's chart pack includes a detailed analysis of commodity price movements in the US, the performance of global stock indices through Sharpe ratios, inflation rates across Germany's federal states, and a correlation analysis between MSCI EM indices and the S&P 500 sheds, which highlights the interconnectedness of global markets and the impact of US market dynamics on emerging economies.
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Siwat Nakmai
Denys Liutyi
Usama Karatella
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US air travel busier than ever

What the chart shows

The US {{nofollow}}Transportation Security Administration (TSA) tracks the number of travelers scanning their boarding pass with a TSA agent each day. This chart depicts the checkpoint numbers from 2019 to 2024, represented as a seven-day moving average. The figures for 2023 (red) were closely aligned with the pre-pandemic levels of 2019 (green). We can see that 2024 (burgundy) has so far surpassed both years.

Behind the data

The growth in US airport passenger traffic this year suggests a continued recovery in business travel, which in turn should boost demand for hotels and the hospitality sector in general. 

In fact, on 24 May, the TSA revealed it had screened more than 2.95 million airline passengers, setting a record for a single day. Moreover, five of the 10 busiest travel days on record have occurred since May 16 this year.

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US manufacturing shows mixed signals as large firms shrink and smaller firms grow

What the chart shows

This chart compares the performance of the US Purchasing Managers’ Indices (PMI) from both the Institute for Supply Management (ISM) and S&P Global since the global financial crisis, highlighting the gap between the two indices as well as average and standard deviation bands. The chart also shows their individual components—new orders, production or output, employment, supplier deliveries, inventories—with different weightings. 

Behind the data

Broadly speaking, the ISM and S&P Global manufacturing PMIs and their components appear relatively aligned over time. However, upon closer examination, discrepancies emerge. The {{nofollow}}US ISM Manufacturing PMI in May remained in contraction, albeit with a smaller magnitude than in 2023, primarily due to declining new orders. Yet, its employment and production components showed slight expansion. In contrast, the {{nofollow}}US S&P Global Manufacturing PMI in May continued to grow, driven by all components, especially output and employment.

When {{nofollow}}comparing ISM and S&P Global PMIs, it’s noteworthy that the ISM survey focuses more on public, larger and multinational firms, while the S&P Global survey covers private, smaller and domestically-oriented companies more comprehensively. As a result, the ISM index’s contraction and the S&P Global index’s expansion lately may reflect broader expectations of a more robust US economy relative to major global peers. Empirical evidence also suggests that the ISM-S&P Global PMI gap is already quite low at the current level of around -1 standard deviation.

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US commodity prices surge as cocoa hits record highs

What the chart shows

We have developed a comprehensive commodities heatmap for the US based on the HWWI Commodity Price Index, which tracks year-over-year percentage changes in a basket of 31 raw materials categorized into three major groups: energy, food and industrials. The blue shaded areas represent price decreases and yellow to red shades indicating price increases.

This heatmap, available for 44 developed and emerging markets (mostly OECD member economies), provides valuable insights into global commodity trends. It is integrated with Macrobond’s “Change region” function, which allows users to easily explore the same visual representation for any country of interest.

Behind the data

The US commodities market appears to be heating up again, with prices rising by more than 10% compared to the same period last year. Among industrial commodities, non-ferrous metals rose by more than 13% and rubber by more than 25%. In the food category, cereals are decreasing, even though rice prices are rising globally amid weather issues and India’s export curbs. The most obvious outlier is cocoa. Prices have soared primarily due to adverse weather conditions in major cocoa-producing regions such as West Africa, which have disrupted supply. Additionally, political instability and labor strikes in these areas have further constrained production.

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German inflation accelerates across most federal states

What the chart shows

The visualization depicts Germany's annual inflation rate, both as a national average and broken down by federal state. The data is ranked according to May’s figures and includes a visual comparison with the previous month’s data. This highlights the variations in inflation rates across different regions, offering a clear perspective on how inflation trends have changed from April to May.

Behind the data

The data reveals significant variation in inflation rates across Germany's federal states. Saxony and Saarland have the highest inflation rates while Berlin and Hesse show the lowest. This disparity highlights regional differences in economic conditions and cost pressures. Additionally, the comparison of inflation rates between May and April 2024 indicates that most states have seen an increase in inflation, suggesting a broader upward trend in prices.  

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Global markets show diverging risk-adjusted returns

What the chart shows

The chart compares Sharpe ratios (SRs), or risk-adjusted returns, across major developed-market (DM) and emerging-market (EM) stock indices: the latest one-year and three-year rolling SRs using all available data. Each box plot represents the distribution of SRs for an index, including the median, mean, interquartile range and 10th-90th percentile range. 

Behind the data

The data indicates significant variation in risk-adjusted returns across different markets. On the optimistic side, considering one-year rolling SRs for short-term perspectives, the SRs for Nikkei 225, Nifty 50, TAIEX, and S&P 500 continued to markedly top their long-run central values while softening from extreme highs one year ago. Looking at three-year rolling SRs for longer-term viewpoints, most remained above long-run norms, with the S&P 500 SR closer to its historical standard levels. On the pessimistic side, CSI 300 SRs—either one-year or three-year rolling—appeared relatively well below its central statistics. Meanwhile, Ibovespa’s one-year or three-year rolling SRs declined noticeably over the past year.

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Emerging markets show varied correlation with S&P 500

What the chart shows

The chart shows the five-year rolling weekly return correlations between MSCI Emerging Market Indices by country and the S&P 500, as of the most recent data, six months ago, and one year ago. It also illustrates the long-run correlations with a 15-year lookback period.

Behind the data

The S&P 500 is one of the most predominant stock indices in the global equity market, influenced by the world’s largest corporations, AI prospects, the Fed's stance, and market expectations. It is worth exploring the degree to which this market is correlated with emerging markets (EMs) that may be {{nofollow}}prone to global spillovers.

The South Korean, South African, Brazilian and Indian stock markets appear more associated with the S&P 500 than their EM peers. These markets exhibit their latest five-year rolling weekly return correlations of above 0.6, which are higher than six and twelve months ago and surpass their long-run averages. Meanwhile, Mexico's equity market, among the aforementioned markets, retains a higher long-term correlation with the S&P 500 than its EM peers, although it has been lower over the past year.

In contrast, the Egyptian and Qatari stock markets show much lower correlations with the S&P 500, with five-year rolling return correlations below 0.3 – close to their long-term values. Over the past six and 12 months, the relationship with US equities has softened for Egypt while it has strengthened for Qatar.

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Revision History
This chart features Macrobond’s unique Revision History data which shows how key macroeconomic indicators have been revised over time
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