Summary
United States: Inflation Continues to Gradually Drift Lower
- The Consumer Price Index (CPI) rose 0.4% in September, a monthly change that was a bit softer than the 0.6% increase registered in August. The core CPI rose 0.3% during the month, a pace unchanged from the month prior. Overall, the cooling trend in inflation remains in place and price pressures are likely to ease further, in our view. That noted, a 0.5% rise in the Producer Price Index (PPI) shows that continued progress on inflation is likely to be slow.
- Next week: Retail Sales (Tue.), Industrial Production (Tue.), Existing Home Sales (Thu.)
International: U.K. Growth Remains Near A Stand Still
- U.K. GDP rose 0.2% month-over-month in August, only partly offsetting a large July decline, meaning a contraction in overall Q3 GDP cannot be ruled out. Services output rose in August, though consumer facing services activity remained soft, and industrial output declined further. Given the underwhelming economic trends, we still expect the U.K. to fall into recession by Q4 of this year.
- Next week: China GDP (Wed.), U.K. CPI (Wed.), Japan CPI (Fri.)
Credit Market Insights: Where Credit is Due: Student Loans Explain Fall in Consumer Credit
- Total consumer credit outstanding, which excludes mortgages, fell $15.6 billion in August. The precipitous decline stemmed from a $26.9 billion decrease in consumer installment loans held by the federal government. Notably, this line includes student loans originated and purchased by the U.S. Department of Education.
Topic of the Week: Israel-Gaza Conflict Views & Potential Implications
- Hamas’ attack on Israel marks another major geopolitical challenge permeating across the globe. Predicting the evolution of the Israel-Gaza conflict is difficult; however, Prime Minister Netanyahu’s declaration of war against Hamas and subsequent rhetoric seem to suggest a speedy de-escalation is not on the horizon.
