At its recent meeting, the Fed maintained interest rates at 5.50% and reiterated its commitment to its current inflation target. However, the growing likelihood of rate cuts, as indicated in the latest dot plots, has led to a global decrease in the dollar’s value
The US inflation rate was reported at 3.1% annually, aligning with forecasts and marking a decrease from prior figures. The monthly Producer Price Index (PPI), though lower than anticipated at 0.0%, showed an uptick from previous levels. Retail sales exceeded both expectations and past data, registering at 0.3%, signaling a positive trend in the sector. The Manufacturing Purchasing Managers Index (PMI) was 49.4, meeting forecasts but falling short of past levels. The ISM Manufacturing PMI stood at 46.7, consistent with prior data but below projections. The Service PMI was 50.8, meeting expectations and surpassing the pivotal 50 mark. The ISM Non-Manufacturing PMI climbed significantly to 52.7, outperforming both forecasts and previous data. Job openings and staff turnover data (JOLTS) contracted notably, with figures significantly lower than expected at 8.733 million. Non-farm employment figures, vital to global markets and decision-makers, were 199,000, surpassing both forecasts and previous numbers. A promising rise in average hourly earnings at 0.4% was noted, while the unemployment rate dipped to 3.7%. The US economy contracted by 4.9%, below expectations.
In Europe, central banks held interest rates steady amid declining inflation, fostering a positive outlook
The European Central Bank kept rates unchanged at 4.50%. Inflation in the region decreased, aligning with forecasts at 2.4%. German inflation fell to 3.2%, meeting expectations. The EU’s manufacturing PMI was 44.2, surpassing both expectations and prior data. The region’s GDP shrank by 0.1% in the 3rd quarter, as anticipated. In the UK, inflation dropped more than expected to 3.9%, while the Central Bank maintained its policy rate at 5.25%. The UK GDP contracted by 0.3% monthly. The Swiss National Bank kept the 4th quarter Libor rate steady at 1.75%, as expected. Switzerland’s economy grew by 0.3% quarterly.
Asian markets remained volatile
China’s Caixin Manufacturing PMI was 50.7, below expectations and past data but still above the critical 50 level. China’s CPI fell to -0.5%, exceeding expectations and prior figures, raising deflation concerns. The unemployment rate was 5%, as expected, and the PBOC set the lowest loan rate at 3.45%. The Australian Central Bank held rates at 4.35%. Australia’s GDP contracted by 0.2% in the 3rd quarter. Japan’s GDP shrank sharply by 0.7% quarterly.
In Turkey, the Central Bank continued aggressive interest rate hikes, raising the policy rate by 250 basis points to 42.50%. The unemployment rate declined to 8.5%. Retail sales fell by 13.7% annually. The Manufacturing PMI dropped to 47.5. Industrial production contracted by 1.1% annually. Inflation was reported at 61.98%, lower than expected but higher than previous levels.
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