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The New Zealand Services PMI fell back into

  • Services PMI 48.9
    vs. 50.6 prior.
  • Below the long-term
    average of 53.5.
New Zealand Services PMI

The RBA Assistant Governor Kohler highlighted how the
decline in inflation could be more gradual that previously thought and the main
risk is that high inflation today feeds into inflation expectations:

  • Decline in inflation
    to be more gradual than previously thought
  • Bringing inflation
    back to target is likely to be more drawn out.
  • Domestically sourced
    inflation has been widespread and slow to decline.
  • Still-strong levels
    of demand have allowed businesses to pass on cost increases
  • Wages growth has
    picked up, but now appears to have broadly stabilised.
  • Key risks is
    possibility that high inflation today feeds into inflation expectations
  • Encouragingly,
    measures of medium-term inflation expectations consistent with target.
  • Labour market
    conditions are easing but are still tight.
  • There is no doubt
    that the RBA cash rate is at a restrictive level
  • There is the risk of
    shocks, the road ahead could be bumpy.
RBA Kohler

The Japanese PPI missed
expectations with the 3-month and 6-month averages being in deflation:

  • PPI M/M -0.4% vs. 0.0%
    expected and -0.3% prior.
  • PPI Y/Y 0.8% vs.
    0.9% expected and 2.0% prior.

Japan PPI YoY

ECB’s Kazaks (hawk – non
voter) maintains a cautious approach as he hasn’t seen a peak in wage growth

  • Too soon to say that
    terminal rate has been reached.
  • Sees risk of
    spillover into inflation.
  • No clear peak of
    wage growth seen yet

ECB’s Kazaks

ECB’s de Guindos (dove –
voter) continues to support the “wait and see” approach:

  • Will be in a better
    position to reassess inflation outlook in December.
  • Expect a temporary
    rebound in inflation in the coming months
  • It is likely that
    euro area economy will remain subdued in the near-term.
  • There are signs that
    labour market is beginning to weaken
  • Will be in a better
    position to reassess inflation outlook and required action in December
  • Sees general
    disinflationary process continuing over the medium-term.
  • Will ensure policy
    remains sufficiently restrictive for as long as necessary
  • Forward guidance is
    out of fashion.

ECB’s de Guindos

BoE’s Mann (hawk – voter)
just delivered some general comments on inflation with no policy outlook,
although she remains one of most hawkish members:

  • Research points to increased
    inflation, increased inflation persistence, and increased inflation
    volatility associated with climate shocks, policies, and spillovers.
  • Carbon price shocks
    lead to more inflation persistence and then oil price shocks.
  • Redistribution of
    revenues from carbon taxes or emission certificate auctions have economic
    effects of direct interest to central banks.

BoE’s Mann

The UK Jobs data beat expectations across the board
with positive revisions to the prior figures:

  • October Payrolls
    change 33K vs. 32K prior (revised from -11K).
  • September ILO
    unemployment rate 4.2% vs. 4.3% expected and 4.2% prior.
  • September employment
    change 54k vs. -198k expected and -82K prior.
  • September average
    weekly earnings 7.9% vs. 7.4% expected and 8.2% prior (revised from 8.1%).
  • September average
    weekly earnings (ex bonus) 7.7% vs. 7.7% expected and 7.9% prior (revised
    from 7.8%).

UK Unemployment Rate

SNB’s Jordan maintains a hawkish tone as he
warns that they will not hesitate to tighten more if necessary, although the
conditions do not warrant such an action:

  • We will not hesitate to tighten monetary policy further if necessary.
  • Will
    review at the next meeting whether measures taken to date are sufficient to
    keep inflation within price stability range on a sustainable basis.
  • To
    this end, we will monitor inflation developments closely in the coming weeks.
  • I’m
    not sure whether the terminal rate has been reached.

SNB’s Chairman Jordan

The US NFIB Small Business Optimism Index ticked lower
to 90.7 vs. 90.8 prior. This marks the 22nd straight month that the
index sits below its 50-year average of 98. As such, it reaffirms that small
business sentiment is still struggling somewhat.

US NFIB Small Business Optimism Index

Fed’s Jefferson (neutral – voter) as other Fed
speakers recently, maintains a hawkish tone:

  • Uncertainty on inflation persistence may warrant stronger policy
  • Some
    measures of economic uncertainty, particularly for inflation, are elevated.
  • Policy
    decisions taken under uncertainty may look different from those optimal under

Fed’s Jefferson

The US CPI report missed across the board triggering
huge moves and making the market to bring forward rate cut odds:

  • CPI Y/Y 3.2% vs.
    3.3% expected and 3.7% prior.
  • CPI M/M 0.0% vs.
    0.1% expected and 0.4% prior.
  • Core CPI Y/Y 4.0%
    vs. 4.1% expected and 4.1% prior.
  • Core CPI M/M 0.2% vs.
    0.3% expected and 0.3% prior.
  • Core Services
    ex-Housing Y/Y 3.8% vs. 3.8% prior.
  • Real weekly earnings
    -0.1% vs. -0.1% prior (revised from -0.2%).


Fed’s Goolsbee (dove – voter) highlighted the progress
on the inflation front:

  • Inflation progress
    continues, economic growth has been strong, labour markets are vibrant
  • This year could see
    the fastest non-war related one-year fall in US CPI inflation in a
    century, with an unemployment rate that never gets above 4%.
  • He attributed this
    unusual situation to factors such as a rebound in supply following
    COVID-19 disruptions, increased productivity, and well-anchored inflation
  • Still have a way to
    go before the US central bank 2% inflation goal is reached.
  • Positive supply
    development allows blockbuster economic growth without added inflationary
  • More concerned about
    possible external shocks than about the economy overheating.
  • Central bank should
    focus its attention mostly on inflation data.
  • Key to further
    progress on inflation is housing, there will be some bumps.
  • October CPI report
    ‘looked pretty good’.
  • Labor force
    participation has come back more than we would have expected.
  • Commercial real
    estate remains an area of concern
  • There are a lot of
    real pessimistic people that are spending a lot of money, that’s a puzzle.
  • Consumer sentiment
    data relationship to spending is ‘utterly broken’.
  • Inflation is a very
    real pain.

Fed’s Goolsbee

Fed’s Barkin (neutral – non voter) is wary of the
risks from both over and under tightening:

  • There are risks from
    over and under-correcting on inflation
  • The Fed is making
    real progress on inflation.
  • Housing prices
    remain strong despite slowing activity.
  • Hope to eventually
    bring interest rates back to normal.
  • A lot of frenzy has
    been taken out of the housing market.
  • Seeing banks pull
    back credit, a not-unexpected outcome.

Fed’s Barkin

BoE’s Pill (neutral – voter) highlighted the progress
on inflation and added that the resilience of the UK economy seems to be easing:

  • There is significant
    progress on inflation
  • 5% inflation would
    be much too high still.
  • We still have some
    work to do to curb inflation.
  • Resilience of the UK
    economy seems to be easing
  • BoE must focus on
    inflation and not tackling other issues in the economy

BoE’s Pill

The Japanese Preliminary Q3 GDP missed expectations:

  • GDP Q3 -0.5% vs.
    -0.1% expected and 1.2% prior.
  • GDP Y/Y -2.1% vs.
    3.5% prior.
  • GDP Deflator 5.1%
    vs. 3.5% prior.

Japan Q3 GDP

The Australian Wage price index came in line with expectations
with the yearly growth rate ticking higher:

  • Wage price index Q/Q
    1.3% vs. 1.3% expected and 0.8% prior.
  • Wage price index Y/Y
    4.0% vs. 3.9% expected and 3.6% prior.

Australia Wage Price Index YoY

The PBoC kept the MFL rate steady as expected at 2.5%
vs. 2.5% prior.


Chinese Industrial Production beat expectations coming
in at 4.6% vs. 4.5% expected and 4.5% prior.

China Industrial Production YoY

Chinese Retail Sales beat expectations coming in at
7.6% vs. 7.0% expected and 5.5% prior.

Chinese Retail Sales YoY

The UK CPI missed expectations across the board:

  • CPI Y/Y 4.6% vs. 4.8%
    expected and 6.7% prior.
  • CPI M/M 0.0% vs.
    0.1% expected and 0.5% prior.
  • Core CPI Y/Y 5.7% vs.
    5.8% expected and 6.1% prior.
  • Core CPI M/M 0.3%
    vs. 0.4% expected and 0.5% prior.


The US PPI missed expectations across the board:

  • PPI Y/Y 1.3% vs.
    1.9% expected and 2.2% prior.
  • PPI M/M -0.5% vs.
    0.1% expected and 0.4% prior (revised from 0.5%).
  • Core PPI Y/Y 2.4%
    vs. 2.7% expected and 2.7% prior.
  • Core PPI M/M 0.0%
    vs. 0.3% expected and 0.2% prior (revised from 0.3%).


The US Retail Sales beat
expectations with positive revisions to the prior figures:

  • Retail Sales Y/Y
    2.48% vs. 4.05% prior (revised from 4.10%).
  • Retail Sales M/M -0.1%
    vs. -0.3% expected and 0.9% prior (revised from 0.7%).
  • Control group M/M
    0.2% vs. 0.2% expected and 0.7% prior (revised from 0.6%).
  • Retail sales ex gas
    and autos 0.1% vs. 0.6% prior.

US Retail Sales YoY

Fed’s Daly (neutral – non
voter) welcomes the progress on inflation but remains wary of risks and
declaring the end of the tightening cycle:

  • Recent data showing
    falling inflation “very, very encouraging”.
  • Refused to rule out
    rate hikes, said they should be “thoughtful, take our time, not rush to
    judgment and not make declarations”.
  • We have to be bold
    enough to say ‘we don’t know’ and bold enough to say ‘we need to take the
    time to do it right’.
  • What I worry about
    is that without a sufficient amount of information about whether we’re
    really on that disinflationary process that brings us back to 2 %, we have
    to ‘stop-start’.
  • A stop-start would
    hurt credibility.
  • Indicated little
    concern about sharp fall in yields recently.
  • None of the concerns
    that I’m hearing are really about a dire, fall-off-the-cliff economy.
  • Rate cuts are “not
    happening for a while”.

Fed’s Daly

The Australian Jobs data beat forecasts, although the
bulk of jobs added was from part-time:

  • Employment Change
    55K vs. 20K expected and 7.8K prior (revised from 6.7K).
  • Unemployment Rate
    3.7% vs. 3.7% expected and 3.6% prior.
  • Participation Rate
    67.0% vs. 66.7% expected and 66.8% prior (revised from 66.7%).
  • Full-time
    employment 17.0K vs. -36.6K prior (revised from 39.9K).
  • Part-time
    employment 38.0K vs. 46.5K prior.

Australia Unemployment Rate

BoE’s Greene is firmly in the “higher for longer” camp
as she’s worried about high wage growth and inflation persistence:

  • I am not thinking
    about rate cuts
  • Latest inflation
    data is good news.
  • But there are
    reasons to worry about inflation persistence.
  • We might need to
    stay restrictive for longer
  • UK wage growth is
    still incredibly high
  • Need to see how UK
    activity is holding up before next rate vote.

BoE’s Greene

ECB’s Centeno (dove –
voter) is not foreseeing interest rates going back to zero:

  • Interest rates will not
    desirably return to zero.
  • But interest rates will
    come down eventually.

ECB’s Centeno

BoE’s Ramsden maintains the view that rates will stay
higher for longer:

  • Latest projections
    indicate that monetary policy is likely to be restrictive for an extended
  • Monetary policy will
    need to be sufficiently restrictive for sufficiently long to return
    inflation to 2% target.
  • I do not judge that
    there are any financial stability grounds for adjusting our approach to
    monetary policy or the level of interest rates.

BoE’s Ramsden

Fed’s Cook (dove – voter) maintains the “wait and see”

  • I
    believe that a soft landing is possible.
  • Risks are two-sided, must balance risk of not tightening policy enough
    against risk of doing too much.
  • There’s
    a risk that continued demand momentum could slow pace of disinflation.
  • Small
    business conditions, housing sector. Lower-income households may be signalling stress
  • Also
    attentive to risk of renewed global economic shocks, including geopolitical and
    muted growth in China, Europe.
  • Fed
    policies have spillovers abroad.
  • Concurrent
    global central bank tightening may mean each central bank need do a bit.
  • Supply
    chain improvements, drop in commodity prices has also helped inflation’s fall.
  • Increased
    multifamily housing supply will contribute to the expected further reduction in
  • Labor
    supply, demand coming into better balance.

Fed’s Cook

The US Jobless Claims missed expectations once again:

  • Initial Claims 231K
    vs. 220K expected and 217K prior.
  • Continuing Claims
    1865K vs. 1847K expected and 1833K prior (revised from 1834K).

US Jobless Claims

Fed’s Mester (hawk – non voter) is taking a more
neutral approach as she’s not pre-committing to anything:

  • I am expecting
    growth to slow below trend
  • I don’t have a recession
    in my forecast.
  • It’s been a strong
    and resilient economy, but inflation has moved down.
  • Term premium played
    a role in the rise of Treasury yields.
  • Data suggests things
    are going off a cliff in the economy.
  • Has not assessed
    whether she will pencil in another rate hike in her December projections
  • Whether further
    hikes are needed depends on the economy.
  • We’re currently in a
    very good spot for policy.
  • We are now in a more
    balanced place.
  • It’s not about
    cutting rates, it’s how long we stay in a restrictive stance, and possibly

Fed’s Mester

The US Industrial Production missed expectations
across the board:

  • Industrial
    Production -0.6% vs. -0.3% expected and 0.1% prior (revised from 0.3%).
  • Manufacturing output -0.7% vs. -0.3% expected.
  • Capacity utilization 78.9% vs. 79.4% expected.

US Capacity Utilization

The US NAHB Housing Market Index missed forecast once
again and it’s getting near the cycle lows:

  • NAHB 34 vs. 40 expected and 40 prior.
  • Single family
    40 vs. 46 prior.
  • Next six months 39 vs. 44 prior.
  • Traffic of prospective buyers 21 vs. 26 prior.

US NAHB Housing Market Index

BoJ Governor Ueda delivered the same old comments:

  • Capex rising moderately.
  • Japan’s economy is
    likely to keep recovering moderately.
  • Japans’ trend
    inflation likely to gradually accelerate toward 2% through fiscal 2025
  • Must carefully watch
    impact of market moves, including FX, on economy, prices.
  • Will patiently
    maintain easy policy.
  • We cannot say yet
    with conviction our price target will be stably, sustainably met.
  • Important to
    scrutinise whether Japan sees positive wage-inflation cycle
  • Will take some time
    but inflationary pressure driven by cost-push factors are likely to
  • There is still high
    uncertainty on whether Japan can see positive wage-inflation cycle.
  • Govt, BoJ share view
    on desirable direction on economy, inflation.
  • Don’t expect 10-year
    JGB yield to rise sharply above our 1% reference even if yields come under
    upward pressure.
  • We will consider
    ending YCC, negative rate if we can expect inflation to stably, sustainably
    hit price target.
  • In what order, what
    part we will change policy will depend on economic, price, market
    developments at the time.
  • Making strong
    comments now on how we could change policy could have unintended
    consequences in markets.
  • When market
    expectations of future rise in long-term yields heighten, it is hard to
    deal with fine-tuning of YCC alone.
  • Keeping yields
    across the curve low with monetary easing has had big positive effect on
    economy by stimulating demand, creating jobs.
  • US Fed may at some
    point cut interest rates if effect of monetary tightening up till now
    works its way through US economy.
  • If any US rate cut
    is a result of soft landing in US economy, that could have positive impact
    on Japan’s economy.
  • If achievement of
    our price target approaches, we can discuss strategy, guidelines on
    exiting ultra-loose policy including fate of our ETF buying.
  • BoJ does not have
    specific plan yet on how it will sell ETFs.
  • When we sell ETFs,
    we will do in a way that avoids as much as possible causing market
    disruption, huge losses on the BoJ’s balance sheet.
  • Cannot say
    decisively that weak yen is negative for Japan’s economy.
  • Weak yen pushes up
    domestic inflation via rise in import costs.
  • Weak yen is positive
    for exports, profits of globally operating Japanese firms.
  • Won’t comment on FX

BoJ Governor Ueda

The UK Retail Sales missed expectations across the
board with negative revisions to the prior figures:

  • Retail sales Y/Y
    -2.7% vs. -1.5% expected and -1.3% prior (revised from -1.0%).
  • Retail sales M/M
    -0.3% vs. 0.3% expected and -1.1% prior (revised from -0.9%).
  • Retail sales (ex
    autos, fuel) M/M -0.1% vs. 0.4% expected and -1.3% prior (revised from
  • Retail sales (ex
    autos, fuel) Y/Y -2.4% vs. -1.5% expected and -1.5% prior (revised from

UK Retail Sales YoY

ECB’s Holzmann (hawk – voter) maintains his hawkish
stance but he’s definitely in the minority:

  • We stand ready to
    raise rates again if necessary.
  • Markets should know
    that it’s not the end of the story yet
  • Anything can happen
    in December meeting.

ECB’s Holzmann

The Canadian PPI missed expectations:

  • PPI M/M -1.0% vs. 0.2%
    expected and 0.4% prior.
  • PPI Y/Y -2.7% vs.
    0.6% prior.
  • Raw material prices
    M/M -2.5% vs. 3.9% prior (revised from 3.5%).
  • Raw material prices
    Y/Y -0.8% vs. 2.9% prior (revised from 2.4%).

Canada PPI YoY

The US Building Permits and Housing Starts beat

  • Housing Starts
    1.372M vs. 1.350M expected and 1.346M prior (revised from 1.358M).
  • Building Permits
    1.487M vs. 1.450M expected and 1.471M prior.

US Building Permits and Housing Starts

The highlights for next week
will be:

  • Monday: PBoC LPR.
  • Tuesday: RBA Meeting Minutes, Canada CPI, FOMC Minutes.
  • Wednesday: US Durable Goods, US Jobless Claims.
  • Thursday: US Thanksgiving Day, Australia/Eurozone/UK
    PMIs, ECB Meeting Minutes, New Zealand Retail Sales.
  • Friday: Japan CPI, Canada Retail Sales, US PMIs, US Black
    Friday (early markets close).

That’s all folks. Have a great weekend!

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