Continuing Uncertainty Saps Financial Markets of Direction

November 9, 2023

Fed Chairman Powell‘s remarks yesterday didn’t touch on current monetary policy, but he’ll be speaking publicly again today. Investors are hoping for clarification regarding what the Fed is likely to do.

Two earthquakes of slightly more than 5.0 on the Richter scale in the oil-producing region of Texas injects confusion into the next move in oil prices. WTI oil climbed 0.6%.

A lead NYT article claims that the intent of Hamas was to create a constant state of war in the Middle East until the Palestinian situation is resolved. The terrorist group seems to have succeeded.

Never-showing Donald Trump is widely considered the winner of last night’s Republican debate. Republican politics has become a huge source of uncertainty in U.S. foreign policy and an even bigger problem for Ukraine and Europe.

The dollar nudged 0.1-0.2% upward overnight. Gold is 0.3% softer

Equities are mixed, with Japan closing up 1.5%, the Dax and Ftse up 0.5%, but Australia’s market down 0.6%. U.S. stock futures are generally steady.

Bitcoin is today’s big mover with a jump of 3.7% to the best level since May 2022.

Chinese consumer price inflation fell to a 3-month low of -0.2%, while PPI inflation slid to a 2-month low of -2.6%. Some folks wonder if China is destined to follow Japan’s 1990’s road map into deflation.

Japan has never truly escaped the gravitational force of that experience. The economy watcher current and outlook indices dropped in October to respective sub-50 9- and 10-month lows of 49.5 and 48.4. But the Japanese current account surplus has swelled from 760 billion yen in September 2022 to JPY 2.724 trillion in September 2023. The seasonally adjusted current account of JPY 2.01 trillion compares to JPY 1.5 trillion in August.

Irish CPI inflation slowed to a 21-month low in October of 5.1% from 6.4% in the prior month and a 38-year peak of 9.2% in October 2022. Mexican CPI inflation of 4.38% last month was at a 32-month low and down from a 22-year high of 8.7% in September 2022.

The National Bank of Serbia as expected retained its policy pause, leaving its key interest rate unchanged at 6.5%. The last hike of 25-basis points was done in July, culminating 150 basis points of tightening this year and 400 bps of increase in 2022 from a pandemic low of 1.0%. On the one hand, CPI inflation has slowed from 16.2% in March to a 17-month low of 10.2% as of September. On the other, that’s still well above target, so tightening is on pause, pending a clearer assessment of the impact of monetary restraint now in the pipeline.

Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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