A quiet start to the week with limited key data, however towards the end we have US PCE inflation data (Thu) and Friday’s key US employment report. The UK Chancellor Reeves’ budget will also be scrutinised (Wed). Through the week we will also have some key corporate earnings, including Alphabet and HSBC (Tues), Meta, Microsoft, and UBS (Wed), Amazon, Apple and Samsung (Thu), and Exxon and Chevron (Fri). Election murmurs will likely keep markets on tenterhooks with just eight days until voters go to the ballots.
In terms of data, US job openings, and the Conf. Board consumer confidence is due on Tuesday. Q3’24 GDP prints for the likes of the eurozone, France, Germany, Mexico and US will garner market focus on Wednesday. China’s manufacturing and non-manufacturing PMI kick-starts Thursday, and we have eurozone CPI and unemployment, and in the US personal income and spending, and the key PCE inflation data. The China Caixin manufacturing PMI, UK S&P Global PMI, US ISM manufacturing and US employment report come out on Friday.
A mixed week for asset classes amid less dovish Fed rhetoric and a paring back of the central bank’s rate cut expectations. The yield on the 10-year rose 16bps to 4.24%, while the S&P Index fell 0.96%. Meanwhile the dollar, DXY Index, gained 0.74%, and Brent crude rallied 4.09%, closing at $76.05pb.
The Fed’s Hammack said that while there’s been good progress on lowering inflation, the central bank’s work isn’t finished with inflation still above their 2% target. In her first major speech since becoming president in August, she warned that geopolitical events and housing costs could continue to put upward pressure on prices. Ahead of that Logan, Kashkari and Schmid cautioned on cutting rates too fast. In contrast, Daly stated that she expects the Fed to continue to cut interest rates.
The IMF lowered its 2024 global economic growth forecast to 3.2%, with varied regional adjustments: the US projection increased to 2.8% due to strong consumer spending, while China decreased to 4.8% amid property sector concerns. The eurozone faces challenges with a downgrade to 0.8% growth, particularly in Germany (projected zero growth), while the UK saw an increase to 1.1% and India maintains a robust 7.0% forecast. Chief Economist Pierre-Olivier Gourinchas noted that while inflation has largely been controlled, there are concerns about overly restrictive monetary policy. The IMF warned about rising protectionism ahead of the US presidential election, suggesting that increased tariffs could reduce global output by 0.8% in 2025 and 1.3% in 2026. Looking forward, the organisation predicts “mediocre” global growth of 3.1% over the next five years, below pre-pandemic levels, and urges governments to avoid protectionist policies in favour of reforms promoting innovation and investment.
Elsewhere, China’s recent stimulus measures have drawn global attention and scrutiny, with officials like Janet Yellen questioning their adequacy to boost domestic demand. While September showed some positive signs in fiscal revenue and high-tech manufacturing, industrial profit growth has slowed. Over the weekend China’s industrial production figures disappointed, falling 27.1%yoy in September, the steepest decline since the pandemic. The market sentiment has shifted from initial optimism to a more cautious, data-dependent approach as investors await the upcoming National People’s Congress meeting next week (4-8 Nov) for further clarity on central government actions.
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