Yesterday we have received the Philadelphia Fed’s manufacturing index reading, which had fell to 22.2 in October from 22.9 in September, while the forecast was for a reading of 19.7. According to Philly Fed, the index suggested a steady growth where the broad indicators reporting readings are all near the expected September numbers, and the firms remain optimistic while are also expecting higher capital spending in 2019. In addition, as Reuters reported, the St. Louis Fed President, James Bullard stated that most recent Fed’s interest rate increase has placed the monetary policy where it should be and no further hikes are seen as required in an economy where inflation remain weak. As previously written, policymakers are expecting rate hike again in December and a few times in 2019 before the central bank benchmark overnight lending rate reaches a restrictive level of around 3.40% in 2020, and there was a broad agreement according to the minutes from September policy meeting, on the continual gradual rate increases to manage the US economy where the unemployment is near the 50 year low and economic growth is stronger than expected. As the inflation remains under control, James Bullard argues that Fed should stop in place until something changes.
More readings came from the US where the number of people filing for unemployment fell last week more than forecasted, to a seasonally adjusted 210k, while the expectations were for a reading of 211k.
From Europe, retail sales dropped more than expected in the UK in the previous month, as consumers shopped less food products. The retail sales fell 0.8 percent in September, which was double the drop that was forecasted by economists. The decline in food store sales was the largest recorded since October 2015.
In addition, on Thursday the DIHK (Germany’s Chambers of Industry and Commerce) had cut its forecast for economic growth in 2018, from 1.8% to 2.2% and predicted a slowdown to 1.7% in 2019, as Germany is experiencing growing risks domestically and abroad. As Reuters is reporting, the forecasts are based on the assumption that global trade disputes will not escalate and Brexit does not happen without a deal, as companies had named shortage of skilled labor as the biggest domestic concern. The protectionist US trade policies are also influencing the willingness to invest and DIHK is expecting gross capital investment growth to drop to 2.9% next year, compared to 3.3% this year.
ECONOMIC CALENDAR EVENTS FOR OCTOBER 19th
CNY GDP q/y
CNY Fixed Asset Investment ytd/y
CNY Industrial Production y/y
CNY NBS Press Conference
JPY BOJ Gov Kuroda Speaks
GBP Public Sector Net Borrowing
CAD CPI m/m
CAD Core Retail Sales m/m
CAD Common CPI y/y
CAD Median CPI y/y
CAD Retail Sales m/m
CAD Trimmed CPI y/y
USD Existing Home Sales
USD FOMC Member Bostic Speaks