Weekly economic and financial commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: Another GDP Head Fake

Real GDP expanded by an annualized 2.6% during Q3. The Employment Cost Index moderated to 1.2% in Q3. Personal income improved 0.4%, while personal spending increased 0.6%. Pending and new home sales cratered 10.2% and 10.9%, respectively, in September. Consumer confidence fell to 102.5 in October.
Next week: ISM Surveys (Tue, Thu), Trade Balance (Thu), Nonfarm Payrolls (Fri)

International: Spooky Times Ahead

Survey data from the Eurozone painted a more pessimistic growth outlook, while the European Central Bank still opted to go for another 75 bps rate hike to quell inflation. Elsewhere, the Bank of Canada slowed down the pace of its rate hikes to 50 bps and signaled that the end of its tightening cycle is near. Last but not least, U.K. PMI survey data indicated that sentiment—and the overall growth outlook—is deteriorating.
Next week: Eurozone CPI (Mon), Reserve Bank of Australia (Tue), Bank of England (Thu)

Interest Rate Watch: FOMC Set to Announce Another 75 bps Rate Hike Next Week

The Federal Open Market Committee (FOMC) meets next Tuesday and Wednesday, and we expect it to announce a 75 bps increase in the target range for the federal funds rate. This move is widely anticipated by economists and market participants alike, and it would be a major surprise if the committee deviated from 75 bps.

Topic of the Week: Third Quarter Earnings Season in Full Swing

The corporate earnings season is in full swing with large technology companies having reported results for the third quarter this week. Despite some dissappointing results, S&P 500 operating margins are shaping up to remain solid in the third quarter, which bodes well for U.S. economy-wide margins released at the end of November.

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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 extends gains nearing $4,200 as US Dollar struggles

Gold heads north for the second consecutive day, trading near $4,180, with bulls aiming for the $4,230 area, the top of October’s trading range. Precious metals have been boosted by lower US Treasury yields and dovish comments from Federal Reserve officials this week, which have undermined speculative support for the Greenback.

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.