In the United States, the pace of inflation is slowly decreasing. In October, services prices pushed the Consumer Price Index up by 2.6% annually, marking the first acceleration in this measure since Q1. Despite this persistent inflation, consumers are not deterred as they head into the holiday season with strong spending momentum. However, the sluggish progress on inflation may lead the Fed to reconsider its approach to easing in the future.
Looking ahead, next week will bring important data on Housing Starts on Tuesday and Existing Home Sales on Thursday in the U.S.
Internationally, various economic data from G10 and emerging economies have been released this week. The United Kingdom saw steady but modest growth in the third quarter. Japanese GDP growth slowed less than anticipated in Q3, aligning with expectations for potential normalization of Bank of Japan monetary policy. In emerging economies, Chinese economic data showed a mixed picture with some positive signs. Additionally, Mexico’s central bank reduced its policy rate by 25 bps to 10.25% and provided some dovish commentary.
Next week, keep an eye out for Canada’s CPI data on Tuesday and Eurozone PMIs on Friday.
In the credit market, credit card balances are on the rise, prompting banks to tighten lending standards in response to increased borrowing costs. Looking ahead, banks anticipate a stronger demand for credit cards in the next six months due to growing spending needs and decreased use of savings.
The topic of the week revolves around whether lower interest rates will stimulate a rebound in the manufacturing sector. With the Fed raising rates to combat high inflation, manufacturing companies have been focused on maintaining liquidity rather than investing in capital due to elevated financing costs. The question now is whether a shift to lower rates will lead to a resurgence in manufacturing activity.
For more detailed insights and analysis, you can refer to the full report from Wells Fargo Securities Economics Group. Remember, the information provided is for general use only, and Wells Fargo Securities, LLC does not guarantee its accuracy or completeness. It is always important to stay informed and consider the potential implications of economic trends on your financial decisions.
