Daily update
Daily update
- German September producer prices are expected to stay in deflation (this is not a surprise, they have been in deflation for over a year). While other factors will add noise to consumer price data, producer prices are a better reflection of corporate pricing power. The deflation signals should secure expectations for further rate cuts from the ECB.
- China’s central bank cut the reference rates for personal and business mortgages. The move was widely signaled. The optimistic reading is that this reiterates the authorities’ intent to offer significant support to the economy. The pessimistic spin is that the cost of credit is not the problem with China’s domestic demand, and more needs to happen to reduce fear about the future.
- There are several Federal Reserve speakers on the agenda today. Fed Chair Powell’s “data dependency” policy has added uncertainty about policy, especially as the data quality is not very dependable. The symbolic dissent at the September policy meeting also raises questions about the policy path. The importance of individual comments by Fed members is therefore increased.
- The US election season enters its final and more frantic stages. Economics are not driving politics (economic perception and economic reality are increasingly opposed). Investors are giving limited attention to policy proposals at the moment.
