Inflation is stabilizing in the United States. The German annual inflation rate fell to 4.5%.
Equity markets rose slightly last week following rather dovish comments from the Fed regarding its monetary policy. However, the resurgence of geopolitical tensions in the Middle East led to a rebound in the price of oil and gold, which weighed on the trend.
Bond yields have eased. The US 10-year rate fell towards the level of 4.60%, the German Bund fell back below the level of 2.75%.
In the United States, the Fed’s report highlighted the risk of too much tightening on the economy, which could mean that there will be no further increase in interest rates during the November meeting. These comments suggest the start of an easing of bond yields in the coming months.
In terms of inflation, producer prices continued to rise in September by 0.5%, in raw data, and by 0.2% excluding food, energy and commercial services. In addition, the consumer price index increased by 3.7% in September on an annual basis, a stable level compared to that of August but slightly above expectations. Excluding energy (-0.5%) and food products (+3.7%), the annual inflation rate was in line with expectations at 4.1% last month. On a monthly basis, consumer prices increased by 0.4% in raw data and by 0.3% excluding energy and food products.
The inflationary environment weighs on consumer confidence. This deteriorated in October as shown by the Michigan confidence index which stood at 63 compared to 68.1 the previous month.
Finally, the American labor market continues to show resilience. The number of registrations for unemployment benefits remained stable during the week of October 2, at 209,000.
In Europe, after slightly exceeding 6% in July and August, the German annual inflation rate stood at 4.5% in September. Although it has fallen to its lowest level since the start of the war in Ukraine, it still remains high for ECB members.
German consumer prices increased by 0.3% in September. In harmonized data, inflation stood at 4.3% on an annual basis and 0.2% on a monthly basis.
In China, faced with an economy that is slow to recover, the administration is considering increasing its budget deficit in order to support activity by issuing 137 billion in debt.
In this context, the S&P 500 index ended the week slightly up 0.45% while the Nasdaq technology index lost -0.18%. The Stoxx 600 Europe index, for its part, increased by 0.96%.
The essentials in brief
2023-10-16 15:31:20
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