To and fro

Daily update

The latest rhetoric from Federal Reserve members is not changing policy uncertainty. Fed Governor Waller highlighted US labor market brittleness—their rather dour outlook supporting a December rate cut. Simultaneously, the cost of living (or, more broadly, affordability) is in political focus, and Fed Vice-Chair Jefferson acknowledged that by suggesting the pace of policy easing could slow.
Inflation in the US is likely to rise further into the first quarter. There may be some incentive for companies to accelerate any tariff pass-though, if they believe that the US administration will respond to higher consumer prices with further tariff cuts. If second-round effects like profit-led inflation become more apparent, the Fed is likely to be more price focused.
Political tensions between China and Japan have started to spill into economic policy. China issued a warning to its citizens travelling to Japan (China accounts for about a quarter of tourists to Japan, by numbers if not by spending). There are diplomatic initiatives to calm the situation, and so far the market response is controlled.
The US has started to release some official data—August factory orders and revised durable goods data could be published today. The November NAHB housing index (not official data) is also due.