Summary
United States: Payrolls Beat Expectations, but Signs of Moderation on the Horizon
- Total payrolls rose by 263K in November, with the unemployment rate holding steady at 3.7% and average hourly earning rising by 0.6%. Personal income and spending increased 0.7% and 0.8%, respectively, in October, while the core PCE deflator increased 0.2% (MoM) and 5.0% (YoY). The ISM manufacturing index fell to 49 in November, while construction spending slipped 0.3% in October.
- Next week: ISM Services Index (Mon), Trade Balance (Tue)
International: Is This the Peak?
- There have been recent signs that inflation might have peaked in some countries. In November, Eurozone price pressures cooled for the first time in over a year, as headline CPI slowed to a 10% year-over-year rate, from 10.6% in October. In addition to the Eurozone, Australian inflation data also showed an unexpected softening in price pressures. In October, headline CPI receded to 6.9% year-over-year.
- Next week: Reserve Bank of Australia (Tue), Bank of Canada (Wed), Mexico CPI (Thu)
Interest Rate Watch: FOMC Set to Hike by 50 bps on December 14
- Fed Chair Powell indicated in a speech this week that the FOMC likely will hike rates by 50 bps, instead of its recent pace of 75 bps, on December 14. But Powell also suggested that rates need to go even higher and remain in restrictive territory for quite some time.
Credit Market Insights: The Beige Book Brings A Mixed Bag
- Economic activity was slightly up on balance. Employment continued to grow and prices continued to disinflate across most regions.
Topic of the Week: China Inching Toward a Reopening?
- While our base case scenario remains unchanged in that we continue to believe Zero-COVID will remain the overarching policy in China, we do recognize that authorities have started to ease restrictions and further action toward reopening could be taken going forward.
