United States: Long and variable lags evident in credit availability

Wells Fargo Research Team Wells Fargo

Summary

United States: Long and variable lags evident in credit availability

Ben Franklin famously said, “If you would know the value of money, try to borrow some.” Amid a light calendar for economic data, we focus this week on how lenders tightened standards for most loan types in Q3 even as demand for loans weakened, according to the Federal Reserve's Senior Loan Officer Opinion Survey (SLOOS).
Next week: CPI (Tue.), Retail Sales (Wed.), Housing Starts (Fri.)

International: British economy stalls during the third quarter

The U.K. economy stalled during the third quarter, as Q3 GDP registered a flat quarter-over-quarter outcome. While that was better than the consensus forecast for a small decline, the details of the report were less encouraging. Consumer spending, government spending and business investment all fell during the quarter, indicative of very weak domestic demand. We still expect the U.K. to fall into a mild recession through late 2023 and into early 2024.
Next week: Japan GDP (Wed.), China Industrial Production & Retail Sales (Wed.), U.K. CPI (Wed.)

Interest rate watch: Reserve Bank of Australia resumes rate hikes

While the Federal Reserve and many of the world's other major central banks are currently on hold, a few central banks are continuing to nudge interest rates higher. One such institution is the Reserve Bank of Australia (RBA), which, after remaining on pause since July, resumed its monetary tightening cycle this week with a 25 bps policy rate increase to 4.35%.

Topic of the week: Census projects population dip in 2080

This week, the U.S. Census Bureau released its first population projections incorporating the results of the 2020 Census. The projections, stretching into 2100, show population growth plateauing over the next few decades. The population is expected to peak at 370 million in 2080 before contracting in the following years.

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Wells Fargo Research Team

Wells Fargo

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.