Summary
United States: Inflation Is the Name of the Game
- Thursday’s highly anticipated Consumer Price Index report surprised to the upside. Headline CPI rose 0.4% in September, and core CPI increased 0.6%. Even with some easing on a year-ago basis, the details of the report suggest inflation still has plenty of momentum and remains broad-based.
- Next week: Industrial Production (Tue.), Existing Home Sales (Thu.), Leading Index (Thu.)
International: Increasing Signs of an Impending U.K. Slowdown
- This week’s U.K. data offered increasing evidence of a slowing economy. August GDP unexpectedly fell 0.3% month-over-month and services activity dipped 0.1%, while industrial output dropped 1.8%. With GDP likely to also fall further in September, the U.K. economy is on course to contract for Q3 as a whole. The GDP data was not the only sign of softness, as labor market figures showed a decline in employment for the June-August period.
- Next week: China GDP (Tue.), U.K. CPI (Wed.), Canada CPI (Wed.)
Interest Rate Watch: CPI Keeps Pressure on FOMC to Be Aggressive
- If there were any question that the FOMC would not raise its target range for the fed funds rate by 75 bps at its next meeting on Nov. 2, those doubts were forcibly put to rest by the higher-than-expected CPI data this week.
Topic of the Week: China’s Economy and the Start of the 20th National Party Congress
- Against a slowing growth backdrop, China will host its 20th National Party Congress starting this weekend. By most accounts, Xi Jinping, current general secretary of the Chinese Communist Party, will be named to a precedent-defying third term as head of the CCP.
