Weekly economic and financial commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: Supply and Demand Tug of War Is at the Forefront After a Mixed Week of Data

Lingering supply chain issues, rising prices and still-strong consumer demand continues to make its way into economic data. The week began on a positive note, including strong new home sales growth, the first gain in consumer confidence in three months, and robust personal spending data. On Thursday, however, third quarter GDP growth was only 2.0%, as the growing trade deficit proved to be a drag on growth. Goods spending fell 9.2% in the third quarter as the PCE deflator rose to its 4.4% year-over-year, its highest rate in over 30 years.
Next week: ISM Manufacturing (Monday), ISM Services (Wednesday), Employment (Friday)

International: Hawkish Undertones for BoC, BCB and ECB

The Bank of Canada (BoC) struck a more hawkish tone than expected at its October meeting, ending its quantitative easing program and signaling rate hikes could come sooner than previously expected. The Central Bank of Brazil (BCB) raised its Selic rate 150 bps to 7.75%. The European Central Bank (ECB) kept monetary policy unchanged at its October meeting, with comments from President Lagarde reasonably balanced, but with a mildly hawkish bent.
Next week: China PMIs (Sunday), Bank of England (Thursday), Canada Employment (Friday)

Interest Rate Watch: Taper the Paper

Next Wednesday, the FOMC will conclude its regularly scheduled two-day meeting, and we expect the central bank to use this opportunity to announce a tapering of its asset purchases. More specifically, we think the Fed will begin reducing its Treasury security and mortgage-backed security (MBS) purchases by $10B and $5B per month, respectively, starting in December.

Topic of the Week: World Series: Atlanta vs. Houston

The 117th edition of Major League Baseball's World Series got under way this week. The best-of-seven annual championship series between the Atlanta Braves and Houston Astros began on October 26. Both Atlanta and Houston have rapidly expanding metro areas. While Atlanta is a key logistics hub for the Southeast as well as a vital node in the global supply chain, Houston is a global hub of the energy sector.

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Wells Fargo Research Team

Wells Fargo

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold adds to Thursday's gains as softer bond yields drag USD to over one-week low

Gold attracts buyers for the second straight day on Friday amid a broadly weaker US Dollar, though it remains confined in a two-week-old range. The USD Index (DXY), which tracks the Greenback against a basket of currencies, fell to a nearly two-week low as Federal Reserve Chair Kevin Warsh’s remarks at the Annual IMF and World Bank Group Meetings did little to alter the rate outlook.

Busy week for Ripple’s RLUSD: What changes for stablecoin holders?

Ripple’s RLUSD is gaining ground across institutional finance, with a major bank launching custody services, a new wallet integration making it easier for developers to build payments and agentic experiences on the network, and a brokerage platform planning to use the stablecoin for settlement.

Hot inflation, falling yields: A new test for global markets

Global markets are confronting a difficult combination: renewed inflation pressure, expensive capital and growing scrutiny of the investment supporting the AI boom. The most revealing development this week was the demand for government bonds even as US inflation accelerated. My assessment is that investors should treat this as a test of financing resilience.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.