Daily update
Daily update
- The Federal Reserve should leave policy unchanged. The meeting will be followed by Fed Chair Powell delivering the full benefit of his economic insight at the press briefing (this should not take long). Powell will try to prevent markets from expecting earlier rate reductions. This task would be a lot easier had Powell not trashed the Fed’s reputation for forward guidance.
- Yesterday’s US consumer price inflation data hint deflation may become a bigger threat. Durable goods prices (in deflation for 12 consecutive months) shows just what transitory inflation looks like. Core inflation excluding shelter has been around 2% y/y for three months (as so much of shelter is a fantasy price, this gives a sense of real world underlying inflation pressures). Producer prices are due today.
- UK manufacturing production numbers are of limited interest; UK manufacturing is not a key part of global supply. Service data is more interesting, but structural changes in the UK economy mean that activity may be missed. UK Prime Minister Sunak survived a Parliamentary vote last night, possibly dampening speculation of an earlier general election.
- Euro area October industrial production is more relevant than the UK data, but the switch to spending on having fun means the numbers are likely to remain depressed.
