Weekly economic and financial commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: Service Sector Continues to Support Growth

During August, the ISM Services Index bested consensus expectations and rose to 54.5, hitting the highest reading since February. The monthly upturn highlights ongoing strength in the service sector and overall resilience of U.S. economic growth despite higher interest rates. An uptick in the prices paid component of ISM services index as well as this week's leg-up in oil prices are reminders of the obstacles ahead to fully tamp down inflation.
Next week: CPI (Wed), Retail Sales (Thu), Industrial Production (Fri)

International: China's Economic Free Fall Continues

This week, new data revealed China's economic slowdown is still in effect and a bottom has yet to be reached. China's August Caixin PMI indices showed a more robust deceleration in the services sector than expected. Service sector problems reflect Chinese households' unwillingness to spend and a preference to save, which not even the lifting of Zero-COVID policies has been able to alter.
Next week: Brazil CPI (Tue), Argentina CPI (Thu), ECB Decision (Thu)

Interest Rate Watch: If the Fed Is Done, How Long Will We Be on Hold?

Comments this week from N.Y. Fed President Williams suggested monetary policy is in a "good place" and Chicago Fed President Goolsbee said the Fed was "rapidly approaching the time when our argument is not going to be about how high should the rates go." These remarks are tacitly signaling the end of the tightening cycle. If that is indeed the case, we explore how the length of time the Fed stays on hold could be consequential.

Credit Market Insights: Fed's Beige Book Reveals Continued Uncertainty on the Outlook

This week, the Federal Reserve released its September Beige Book, covering economic conditions across the country for the months of July and August. For the most part, economic growth was steady and generally unchanged from the previous period.

Topic of the Week: US Open Highlights Consumers' Hunger for Experiences

Tennis fans have been converging on Queens, New York to catch the U.S. Open. Resale prices for tickets are higher than ever, but consumers appear more willing to pay up to witness this event.

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Wells Fargo Research Team

Wells Fargo

AUD/USD jumps to 0.7050, fresh one-month top after hot Australian CPI

AUD/USD attracts buyers for the second straight day on Wednesday, rising to a fresh high since September 23 during the Asian session. A hot Australian CPI print reaffirmed bets for an imminent RBA rate hike in November and boosted the Australian Dollar. Meanwhile, the US Dollar pauses after a three-day rally to a near two-week high ahead of the crucial FOMC rate decision, lending additional support to the currency pair.

USD/JPY sticks to modest gains above 157.50 as traders await Fed, BoJ meetings

USD/JPY attracts buyers for the third straight day, recovering further from a one-month low ahead of Wednesday’s FOMC decision and the BoJ policy update on Friday. Meanwhile, expectations that the BoJ may hold off on aggressive rate hikes weigh on the Japanese Yen, and the US Dollar advances to a nearly two-week high, supporting the currency pair.

Gold drops as oil price rebounds, Fed’s policy eyed

Gold slips 0.3% to near $4,050 in the Asian trade on Wednesday, as oil prices bounce back after a two-day correction. The precious metal is expected to face high volatility as the Federal Reserve is scheduled to announce the monetary policy later in the day at 18:00 GMT.

Ethereum ETFs near record monthly outflows as ETH tests $2,310

Ethereum (ETH) held steady on Tuesday, consolidating at $2,340, just above $2,300 after last week’s decline. Three measures sit within about $18 of each other: ETH’s realized price at $2,310, the 200-day Exponential Moving Average (EMA) at $2,315, and the $2,328 average cost basis of wallets holding 1K-10K ETH.

Bitcoin, Ethereum and XRP recover as Big Tech earnings take center stage

Bitcoin, Ethereum and Ripple extend their recovery on Wednesday as investors turn their attention to major technology companies' earnings reports. Microsoft and Alphabet are due to report their Q3 earnings on Wednesday, followed by Amazon on Thursday.

Anthropic pledged $270 billion to Amazon, Google, and Microsoft. Here's who actually gets paid

Anthropic owes Amazon, Google, and Microsoft at least $269.4 billion for computing power, even if it uses less. All three sell its models and handle its billing, and Amazon and Google own stakes and lend it money, so they get paid regardless of how the IPO goes. The Dario Amodei-led Anthropic filed its initial public offering (IPO) on Monday, seeking a listing on the Nasdaq under the ticker ANT.