ON DECK FOR THURSDAY, NOVEMBER 14
KEY POINTS:
- USD keeps strengthening ahead of Powell, data
- Banxico expected to cut
- Powell to speak on the outlook
- US core producer prices, claims on tap
- Australia keeps adding jobs
Light overnight developments coincided with further dollar strengthening, very slightly richer US Ts as gilts and EGBs outperform a touch partly on soft industrial output data, widespread declines across Asian equities led by China, a more positive tone out of European equities and little change thus far across N.A. equity futures.
Australia Continues to Add Jobs
Australia’s job market continued to chug along but to little effect on markets. Another 16k jobs were added in October (consensus 25k) and the prior month was slightly revised to 61k from 64k. The gain was split between full-time and part-time spots. The unemployment rate held at 4.1%.
They’ve had a ridiculously strong job market for a long time now. Employment is up by about 1.6 million since just before the pandemic, is 2.5 million higher than at the pandemic low, and 389k higher on a year-to-date basis. The UR, however, has risen from a low of 3.5% in late-2022 to 4.1% now which is still low, but driven by the move toward an all-time high labour force participation rate. The strength of the labour market including wages are part of the reason why the RBA keeps pushing back against nearer-term cuts.
Powell to Speak
Federal Reserve Chair Powell will speak on the economic outlook this afternoon (3pmET). There will be text plus moderated Q&A. Watch it on Bloomberg at Live <go> or register here. He speaks in the wake of yesterday’s core CPI print that continued to accelerate out of a temporary summertime soft patch (recap here).
Banxico Expected to Cut
The lone central bank to weigh in this week is expected to cut by 25bps this afternoon (2pmET). Consensus is almost unanimous with just two out of 27 expecting a surprise hold. Inflation has been falling toward the 2–4% target range (chart 1). The peso has depreciated by about 2½% to the dollar, about 1% versus CAD, only slightly to the CNH/CNY since just before the US election results became clear but has appreciated to the euro, yen and sterling. How they balance currency and trade policy risks will be key.
More US Inflation Data
US data will include claims and producer prices as follow up to yesterday’s CPI (8:30amET). The median estimate is for another subdued core PPI print of about 0.2% m/m SA but the mode is 0.3%. Jobless claims are expected to continue to be well behaved.
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