Weekly Economic & Financial Commentary: Global Central Banks Holding Steady

This week saw monetary policy announcements from Australia and Canada that held policy steady, although their accompanying statements were perhaps less hawkish than expected. The Reserve Bank of India also held its repo rate at 6.50% but, given strong growth and upside inflation risks, said it would remain focused on the withdrawal of policy accommodation.

The Weekly Bottom Line: The (Re)balancing Act Continues

The major focus on the U.S. economic data calendar this week was the labor market, with the two main reports showing labor demand and supply are gradually coming back into better balance. The service sector also continued to expand while U.S Treasury yields continued to push further below their mid-October highs.

Strong US Jobless Report Sparks Optimism, But Challenges Loom Ahead

Friday’s jobless report from the US was strong. It could’ve gone both ways, but it went well. The US economy added nearly 200’000 new nonfarm jobs in November, average earnings were higher than expected on a monthly basis, but stable around the 4% level on a yearly basis. That’s twice the Federal Reserve’s (Fed) inflation target and sticky, but it didn’t bother much, and the jobless rate fell from 3.9% to 3.7%, as the participation rate slightly improved.

Sunset Market Commentary

Today’s waiting game ahead of the November US manufacturing ISM and Powell’s final public appearance ahead of the blackout period before the December 13 FOMC meeting freed up time to take a look at some of the key asset classes’ November performance.

Will RBA Maintain Tightening Bias After CPI Miss?

The Australian economy has been gradually losing steam all year and GDP data due on December 6 is likely to show that growth slowed further in the third quarter. Rising borrowing costs for households and businesses, combined with the patchy recovery in China, were a major factor why former RBA Governor Philip Lowe was more comfortable to stand pat than his successor Michele Bullock.

BoC to Deliver 'Dovish Hold' Next Week

Next week’s Bank of Canada interest rate decision itself is unlikely to be a surprise. The BoC is widely expected to hold the overnight rate steady at 5% for the third meeting in a row. But the statement will be watched closely for signs that a slowing economy and easing inflation pressures are shifting future interest rate cuts into focus.

Weekly Economic & Financial Commentary: Inflation Takes Another Leg Lower

The U.S. data this week signaled that the economic expansion remains intact even as inflation continues to slow. The year-ago rates of headline and core PCE inflation were the lowest since March 2021 and April 2021, respectively.

Investor Confidence Grows Amid Dropping Yields

Global equities rose on Friday, thereby securing a five-week winning streak. Last week was in some sense even more interesting than some of previous weeks where equities rose more than last. The reason is the underlying rotation where the soft-landing narrative is super visual.

Gold Advanced to 2072.22

Gold advanced to 2072.22. The shiny metal hit a record high this morning by abruptly surging towards 2135.39 in a move that looks like stop-loss in a thin market. It pared gains to 2079.09, above the pandemic high of 2075.47 nonetheless.

AUD/USD Slips Ahead of RBA Decision

The Reserve Bank of Australia is expected to hold rates at 4.35% at its Tuesday rate meeting. The central bank has paused for four straight months and the markets don’t expect any further hikes. Still, the RBA could send a hawkish message along with the pause to dampen speculation about a rate hike in 2024, with inflation still high at 4.9%, which is well above the 2% target.