Macro-News round-up:



    • UK inflation cooled more than anticipated in October, with household energy prices decreasing from a year ago and easing services sector price growth, providing relief to the Bank of England and PM Rishi Sunak.
    • Japan’s economy has contracted, with recession risks rising due to weak domestic demand and the growing impact of a slowdown in the global economy.
    • The People’s Bank of China has increased liquidity injections through medium-term lending facilities but kept its benchmark lending rate unchanged.

      The PBOC has already provided a positive surprise for markets. Short-term market interest rates have increased since September, as the CNY weakened against a stronger USD, and the PBOC has kept short-term funding costs high to deter CNY selling.

      However, this has resulted in a liquidity squeeze, and it appears that the PBoC is looking to sidestep the unhelpful rate environment and alleviate liquidity issues by turning to volume lending instead.

      China’s factory output and consumption have beaten forecasts, but the slowing property sector continues to weigh on economic growth.
    • The End of Fed’s Rate Hike?

      The disinflationary trend had stalled in recent months against the backdrop of a strong economy. However, slowing U.S. inflation has boosted hopes that the Federal Reserve may end its series of interest rate hikes.

      Historically, when the Fed reaches a peak, market rates tend to fall, making it a favorable time for long positions. Combined with data showing job and wage growth cooling in October, the data supports expectations that the economy could avoid a recession, and the Federal Reserve is expected to pivot to interest rate cuts as early as May next year.

      The European Union’s statistics office confirmed that GDP in the eurozone fell 0.1% quarter-on-quarter in Q3, for a 0.1% year-on-year rise. However, contrary to the usual trend, employment in the euro zone rose 0.3% quarter-on-quarter in the same period, for a 1.4% year-on-year increase.