Fearing fear

Daily update

We should be getting US personal income and spending data today, but because the US lacks a properly functioning government we are getting no such thing. This matters because the resilient middle-income consumer has kept the US from recession this year. Credit card data hints that this is still the case, but if fear of unemployment were to rise, downside risks would quickly emerge. The longer the government is shutdown, the greater the role of rumor in the economy—and as bad news sells better, there is a risk that unwarranted fear gains ground in the absence of actual facts.
The German consumer is spending happily—or at least with a certain grim persistence. October retail sales showed a solid performance. German consumers have been quite dependable this year—seen through household living standards, rather than GDP, the German economy has been fairly resilient.
French and Italian October preliminary consumer price inflation is unlikely to move markets too much. Unlike the US, European economies are not subject to external inflation shocks at the moment—as reflected by yesterday’s rather dull ECB decision.
US Treasury Secretary Bessent has declared that US taxpayers made a profit backing the Argentinean peso, and that it was now Argentinean investors’ turn. The peso weakened yesterday.