United States: The machine of a dream

Summary

United States: The machine of a dream

• Nonfarm payrolls increased 199K in November, and the unemployment rate fell 0.2 percentage points to 3.7%. The decline in the already historically low unemployment rate suggests that while the labor market is cooling, it remains exceptionally tight.

• Next week: Consumer Price Index (Tue.), Retail Sales (Thu.), Industrial Production (Fri.).

International: Global Central Banks holding steady

• This week saw monetary policy announcements from Australia and Canada that held policy steady, although their accompanying statements were perhaps less hawkish than expected. The Reserve Bank of India also held its repo rate at 6.50% but, given strong growth and upside inflation risks, said it would remain focused on the withdrawal of policy accommodation.

• Next week: Bank of England Policy Rate (Thu.), European Central Bank Deposit Rate (Thu.), China Retail Sales & Industrial Output (Fri.).

Interest rate watch: At the summit, but when to climb down?

• We see the FOMC leaving the fed funds target range at its current level of 5.25-5.50% at the conclusion of its upcoming meeting on December 13. If realized, the third consecutive hold would suggest that the fed funds rate probably has reached its cycle peak. As such, the conversation will likely shift toward eventual rate cuts.

Credit market insights: Balancing Act: Household balance sheet changes in Q3

• Yesterday, the Federal Reserve Board released Q3 data for the financial accounts of the United States. The data showed U.S. household net worth fell over $1.3 trillion on the back of a declining stock market. Net worth of the household sector now sits at roughly $151 trillion.

Topic of the week: Oil prices leg lower

• Commodity prices have been a topic of conversation for most of the last two years. Geopolitical conflicts have whipped energy and food prices around for most of the last 24 months, and while geopolitical events persist, supply and demand imbalances are creating new volatility, particularly for oil prices.

Donwload the Full Report!