- The UK job market continues to experience a slowdown, with pay growth decreasing and redundancies increasing, according to a survey by KPMG and the Recruitment and Employment Confederation (REC).
- The consumer price inflation rate in Germany was confirmed at 3.8% year-on-year in October 2023, down from 4.5% in the previous month, marking the lowest level in over two years.
- A recent Reuters poll found that most FX strategists believe the dollar’s recent weakness will persist for the rest of the year, as the currency has lost almost 2.0% from last month’s peak, leaving the dollar index up around 2% for the year.
- The weakness is attributed to renewed expectations that the Fed is done with its rate hikes, which has put the dollar at a disadvantage.
- Market sentiment suggests that it may be challenging for yields to reach fresh highs this year, as the Fed’s pause in rate hikes has increased confidence that the central bank is done tightening.
- Speculation is building that the Fed could reverse its policy next year, with some expecting more aggressive rate cuts.
- Fed Governor Waller described Q3 2023 US GDP growth as exceptional, while acknowledging that more recent data points towards a slowdown.
- Fed Governor Michelle Bowman said, the economy is not only “still strong”, but may have picked up speed and require a higher interest rate. “I still think we will have to raise the federal funds rate further”.
- “If you saw inflation tick back up and you saw continued very strong economic activity in the real side of the economy, that would tell me we might need to do more,” Minneapolis Fed President Neel Kashkari
- All these comments from Fed officials could turn around expectations of a weaker dollar, contradicting the market’s interpretation of the last few days, assuming it is the end of the rate hike.
- The Atlanta Fed’s GDPNow model predicts that fourth-quarter gross domestic product will grow at an annualized rate of 2.1%, which could be seen as allowing inflation to continue slowing to the Fed’s 2% target.
- In contrast to the weakening job market in the UK, credit card debt in the US increased in Q3 2023 due to the strong economy, while credit troubles also rose.