Daily update
Daily update
- The latest babble from Federal Reserve members gave bond investors reason to hope rate hikes are finished. Bond yields have retraced some of their recent increase. The swings in the bond market, in the absence of a coherent policy framework, add an avoidable risk premium to real interest rates which has economic consequences.
- Japan’s September consumer price inflation slowed across the various measures. The pattern broadly follows international norms. Durable goods prices have been in disinflation all year—although the durable goods price inflation was never as dramatic in Japan as it was elsewhere.
- UK retail sales volumes were weaker than expected in September. Warmer weather depressed clothing sales, but the weakness was quite broad. Retailers are blaming the cost of living. Retailers’ profit-led inflation has contributed to the cost of living. The switch in spending to favor services is not captured in this data.
- The US still does not have a functioning legislature. Markets are not likely to be surprised. The plan to empower the temporary speaker (which would have been market positive) has been rejected by Republicans. The UK’s governing Conservative Party lost two Parliamentary seats to the opposition Labour Party, with a very sizable swing of votes. Markets are not likely to be surprised.
