Downside surprises for G10 economic data

Wells Fargo Research Team Wells Fargo

Summary

United States: Slew of data to binge on

This week brought fresh reads on an array of macro data, and the underlying details continue to paint a picture of an economy that is gradually losing momentum in Q4. While retail and industrial activity were stronger than the headline data suggest, there are also some signs of weakening.
Next week: LEI (Mon.), Existing Home Sales (Tue.), Durable Goods Orders (Wed.)

International: Downside surprises for G10 economic data

This week's reports pointed to slowing growth and slowing inflation among the economies. After solid growth during the first half of the year, Japan's Q3 GDP shrank by 2.1% quarter-over-quarter annualized, a larger than expected decline. U.K. October inflation slowed sharply to 4.6% year-over-year.
Next week: Canada CPI (Tue.), Eurozone PMIs (Thu.), Japan CPI (Fri.)

Interest rate watch: Yields fall on slowing inflation

U.S. Treasury yields fell this week as markets digested slower-than-expected inflation data for October. As we go to print, the yield on the 10-year Treasury note is 4.45%, down from 4.65% one week ago. This week's inflation reports reinforced our view that the FOMC is done hiking rates.

Credit market insights: Credit card delinquencies creep up in Q3

The Federal Reserve Bank of New York released its quarterly Household Debt and Credit Report last week. Not only did each major category of household debt rise during the quarter, but delinquency rates also moved higher. Credit card debt delinquency rates, in particular, have climbed above their pre-pandemic average.

Topic of the week: Not-so-free bird: Thanksgiving related inflation decelerates, though still elevated

Consumers have faced price pressures over the past few years that have continued to gobble up their wallets, and this Thanksgiving will be no different. Though price hikes for most items on the Thanksgiving menu have eased considerably from a year ago, the cost of Thanksgiving staples are still broadly elevated relative to a few years ago.

Download the Full Report

Author

Wells Fargo Research Team

Wells Fargo

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.