Daily update
Daily update
- US October producer price inflation is due. These numbers better reflect corporate pricing power than does the consumer price data. The tone should be consistent with a December rate cut—in this situation, the Federal Reserve does not want rising real rates, and inaction would raise real rates over the course of this year.
- Yesterday’s US consumer price inflation data remains in thrall to the fantasy owners’ equivalent rent (at over a quarter of the index and rising over 5% a year, this is a price no one has ever actually paid). Middle-income homeowners’ true cost of living inflation has been below 2% y/y for six months. Egg-price inflation is more Fabergé than dairy, but this is a relative price anomaly, not underlying inflation pressure.
- The European Central Bank publishes the account of its last policy meeting. Investors probably do not care (happy in their views of a steady rate reductions). Bank of England Governor Bailey’s comments may be a little more interesting, as the Bank signalled some uncertainty about fiscal policy consequences.
- China announced some tax reductions for home buyers. This might indirectly support consumer spending (new home buyers have more spare cash to spend on furniture, et cetera). It is not, however, the consumer support markets really wish to see.
