© Investing.com
Investing.com – The latest leading indicators from the US, the region and Australia revealed subdued inflation rates over the past week, a recent sign that global inflation may indeed have peaked.
More recently, the complex supply chain problems caused by the COVID-19 pandemic and the war in Ukraine have eased, due to falling food and fuel costs.
Among the factors that also influence global economies, even if their effects show themselves after a while, is the increase in interest rates by central banks around the world to historical levels in response to the increasing pace of the entrenched inflation that lasted longer than expected.
Currently, Bloomberg Economics estimates that the global inflation rate will exceed 9.8% year-on-year during the third quarter of the year, falling to 9.5% in the fourth quarter and eventually reaching 5.3% by the end of 2023 .
However, there are still significant risks in supply chains that have not yet been addressed, in addition to the vulnerability of commodity prices to rise again once economic activity in China fully reopens, and the high cost of living it could continue to push wages higher.
Market movement
The US dollar lost about 1.4% of its value last week before recovering, which helped both the euro and the pound to their highest levels in 6 months at 1.0544 and 1, 2309.
It rose 0.95% last week, after closing November trading, up 6%, and reached as low as 0.6789 in its most recent trading.
Revenues surged after the latest jobs report came out stronger than expected, while shares fell on Wall Street amid fears the Federal Reserve takes more aggressive measures.
to go up
It fell globally at the close of trading on Friday after the release of the US jobs report and the yellow metal delivered its best weekly performance in 3 weeks, with the dollar lower on prospects for a slowdown in the ‘increase in US interest rates.
By the end of the session, the price of gold futures contracts fell 0.3% to $1809.60 an ounce, and the spot delivery price for the yellow metal fell 0.4% to i $1795.29 an ounce.
Gold prices rose about 2.3%, or $40.8, during the week ending Friday, posting their second consecutive weekly increase.
Jobs devastate the expectations of the past
The pace of job growth in November was much better than expected, as nonfarm payrolls increased by 263,000 jobs for the month, while the unemployment rate stabilized at 3.7% and data were very better than expectations, which indicated a growth of 200,000 jobs, and less Slightly below the October levels of 285,000 jobs.
These numbers won’t do much to slow the pace of the Federal Reserve’s interest rate hikes in light of its focus on reducing the inflation rate, which has reached its highest level in 40 years. Weaker than expected , at an estimated rate of 0.6% during the month.
After raising interest rates by 75 basis points in the past four meetings, Fed officials have indicated that the pace may slow soon and markets now expect the central bank to raise interest rates by 50 basis points at its meeting. December.
The Fed’s preferred inflation gauge has slowed
Inflation in the US continues to accelerate but is starting to show some signs of slowing, which is good news for policymakers looking to moderate the rapid hikes in interest rates that have reached historically high levels.
Prices measured by personal consumption spending rose 6% year-on-year in October, in line with expectations and versus 6.3% in September.
The core inflation index, which Federal Reserve Chairman Jerome Powell confirmed as one of the most important measures of inflation, rose less than expected by 0.2% month-on-month in October.
Although the report revealed that inflation rates had started to ease, it was still well above the Federal Reserve’s 2% target.
Support consumer confidence
With inflation and economic uncertainty continuing to weigh on US consumers, confidence eased in November, as widely expected.
The Conference Board’s consumer confidence index hit 100.2 last month, up from 102.2 in October, and the index hit its lowest level since July when it fell to 95.7 in light of the surge gas prices to historic levels, and November saw the second consecutive month of declines in the main rate.
Gas and food prices are the main reason for the decline in confidence and continue to dominate assessments of short-term economic conditions.
The Current Economic Situation index fell to 137.4 from 138.7 and the Economic Expectations index fell from 77.9 to 75.4. of optimism about the economy and the upward trend in spending.
Although inflation remained high, the strength of the labor market left buyers in relatively stable financial condition, buoyed by savings and job security.
As the primary driver of the U.S. economy, consumer spending remains resilient, as evidenced by data from the last two months of the year, which accounts for about 20% of total retail sales, according to the National Retail Federation.
Sales could grow over the holiday period, according to data from the National Retail Federation, to $960.4 billion, compared to $889.3 billion spent in the same period last year.
The European trend is to slow down the pace of lifting
Falling inflation rates fuel hopes for slower rate hike According to preliminary estimates from the European Union, the annual rate of inflation in the Eurozone fell to 10% in November, down from 10.6% in October.
This decline represents the first decline in the inflation rate in 17 consecutive months and the cost of energy continues to be a significant contributor despite slowing price increases last month to 34.9% versus 41.5% year-on-year .
However, the pace of growth of food price inflation increased marginally from 13.1% to 13.6%, while the inflation rate of industrial goods and services remained stable.
The European Central Bank is expected to meet later this month and is expected to raise interest rates again, with inflation more than five times the ECB’s target of 2%.
The central bank raised interest rates at the fastest pace on record this year, with consecutive hikes of 75 basis points.
At the next meeting, markets are broadly expecting a 50 basis point rate hike after some policymakers said inflation has finally peaked and the ECB has made enough progress to justify smaller steps.
A series of hikes is still likely in the future as price growth will take years to moderate and deposit rate expectations still peak at 3%, suggesting another 150 basis point rate hike.
