Rate cut speculation

Daily update

Federal Reserve Governor Waller advocated a December rate cut, citing labor markets. If Waller is seriously concerned about employment, this would be a worrying signal for the US economy, where growth depends on low unemployment fears. If this is an attempt to be picked as US President Trump’s new Fed chair, markets are likely to focus on the potential accommodation and ignore suggestions of economic risk.
US September retail sales and producer price inflation are due. Credit card spending data suggests that middle and higher income consumers in the US continue to be confident enough to spend (though not necessarily in retail outlets). Producer price inflation details will offer hints as to second-round inflation effects—are US manufacturers raising prices (and profits) as importers pay tariffs?
Final third-quarter German GDP was unrevised on the headline, but with some shifts in composition. Weak exports were to be expected (after the pre-US tariff surge), but weaker domestic consumption was a surprise. German firms do seem to be confident enough to invest.
Assorted sentiment polls are due. Data from Dallas suggested US companies are cautious, but that may be survey bias. UK retailers’ opinions today may also be biased by a desire influence political outcomes.