Summary
United States: Move On Up
- The housing sector was in focus this week. During September, existing homes sales remained in a slump and declined to a fresh cycle low, while new home sales bucked the trend and rose solidly. Although the move up in mortgage rates will pose some near-term challenges for housing, growth elsewhere appears sturdy.
- Next week: GDP (Wed.), Personal Income and Spending (Thu.), Employment (Fri.)
International: Bank of Canada Quickens Monetary Easing, Eurozone Economy Continues to Struggle
- It was a somewhat lighter week for international economic data and events, save for the Bank of Canada (BoC) rate decision and a mix of sentiment data from global economies. The Bank of Canada lowered its policy rate by 50 bps to 3.75% and offered generally dovish-leaning commentary. In the Eurozone, the October PMIs were somewhat mixed but overall not that encouraging.
- Next week: Eurozone CPI & GDP (Wed. & Thu.), China PMIs (Thu.), Bank of Japan Policy Rate (Thu.)
Credit Market Insights: Financial Condition Indices Hit Early 2022 Levels
- Monetary policymakers are keenly interested in quantifying financial conditions, because households and firms respond to changes in them, which in turn translates into changes in real economic activity. Somewhat surprisingly, two financial condition indices from the Federal Reserve currently indicate conditions are about as loose as they were on the eve of the Fed’s hiking cycle.
Topic of the Week: Beige Flags in the Beige Book
- The latest Beige Book—which covers early September through mid-October—revealed a picture of softening economic growth. However, despite the bleak picture, contacts were overall optimistic about the longer-term outlook, though still exercised caution in their hiring and investment decisions.
