Solid US producer prices add to signals the Fed will be cautious in November. South Korea cuts rates, but now looks to pause. Chinese inflation is weaker than expected and traders are underwhelmed by Saturday’s stimulus briefing.
In our bonus Deep Dive interview, ANZ Senior China Strategist Zhaopeng Xing outlines why the weekend briefing by China’s Finance Ministry did not deliver what investors were looking for.
5 things to know:
There are small signs emerging the Federal Reserve may pause rate cuts. The market ended the week pricing a 90% chance of a 25 bps cut on November 7 vs 97% on Monday. ANZ Head of G3 Economics Brian Martin says strength in Friday’s PPI inflation data suggests the Fed will tread carefully.
In Australia this week, the key data being watched by the RBA will be the September jobs report on Thursday. ANZ Chief Economist Richard Yetsenga expects unemployment will stay at 4.2%, as the jobs market retains the strength that has surprised the central bank recently.
South Korea’s central bank cut its key rate by 25 basis points to 3.25% on Friday. Despite the move being widely expected, ANZ Economist Krystal Tan says it turned out to be a ‘hawkish’ cut, with one decision maker dissenting and most anticipating a three-month pause from here.
New Zealand’s manufacturing PMI rose 0.8 points in September to a still-contractionary 46.9. ANZ Economist Henry Russell says a full recovery doesn’t look likely until into 2025.
China’s annual consumer price inflation was 0.4% in September, while producer prices fell 2.8%. Both were well below market expectations, says ANZ Senior China Strategist Zhaopeng Xing.
Cheers
Alex
PS: Bernard is away this week on family leave. Catch you tomorrow with key data on China’s trade balance, and a monetary policy decision today from Singapore.
