Summary
United States: Q4 Appears Off to a Slower Start
- This week delivered an onslaught of economic indicators that provided a first glimpse of economic activity during Q4. In short, the remarkable strength on display during Q3 looks to be fading as the year begins to wind to a close. The labor market was front and center. After September’s surprising surge, nonfarm payrolls advanced at a more moderate pace in October, rising by 150,000 net new jobs during the month.
- Next week: Trade Balance (Tue.), Consumer Credit (Tue.), U. of Mich. Sentiment (Fri.)
International: Bank of Japan Continues Its Monetary Policy Tweaks
- The Bank of Japan delivered another monetary policy tweak this week. It held its policy rate and 10-year yield target steady at -0.10% and 0.00%, respectively, but said it would treat the 1.00% upper bound for 10-year yields as a “reference”, rather than a “hard cap” as it had done previously. We believe the case for a more substantial policy adjustment is gradually building and expect a 10 bps policy rate hike at the central bank’s April 2024 monetary policy meeting.
- Next week: Reserve Bank of Australia Policy Rate (Tue.), Mexico Policy Rate (Thu.), U.K. GDP (Fri.)
Interest Rate Watch: FOMC on “Hawkish Hold”
- For the third time in the past four policy meetings, the FOMC refrained from hiking its target range for the federal funds rate this week. Although the FOMC is keeping the door open to more policy tightening, we believe the bar to further rate increases is higher now than it was a few months ago.
Credit Market Insights: Households Grow More Pessimistic about Credit Conditions
- Earlier this month, the New York Fed released September data for its Survey of Consumer Expectations. The data revealed that inflation expectations held mostly steady, but households’ perceptions and expectations for credit conditions deteriorated slightly over the month.
