The European Central Bank (ECB) survey has revealed that Eurozone consumers' inflation expectations have risen to 4%, which could potentially affect wage demands, spending, saving, and the setting of retail prices. This comes as the 12-month consumer inflation expectations figure also rose to 4%, leading to uncertainty in the European markets. However, easing natural gas prices and a decline in Germany's October Consumer Price Index (CPI) rate to 3.8% due to lower energy costs may alleviate some inflation concerns.
The ECB has dismissed discussions of rate cuts, with ECB's Nagel noting the topic is not on the table. Kazaks hinted at more rate hikes, while Lane called for more progress on underlying inflation. Makhlouf noted that as some risks are fading, new ones are emerging.
Retail sales data from the Eurozone underscores a slump in consumer spending, particularly in non-food items and automotive fuels. On the other hand, food, drink, and tobacco sales experienced a 1.4% increase. The ECB suggests this trend could induce disinflation.
Meanwhile in Japan, amidst declining futures post-S&P 500's winning streak, plans are underway for a US$60 billion bond issuance as part of its economic package. Bank of England's Andrew Bailey deems it 'too early' to discuss interest rate cuts.
In the US equities market, the S&P 500 is under scrutiny amidst a seven-day rally. Anticipation is building for a rate cut in 2023 as markets speculate on reaching the Federal Reserve's terminal interest rate.
In China, a grim oil demand outlook is emerging with falling refining margins and growing crude stockpiles reflecting wider economic low confidence. Oil prices are approaching three-month lows amid these demand concerns, while China pledges liquidity for debt-laden regions. Fed's Cook warns of commodity market destabilization from geopolitical tensions, while BoJ's Ueda hints at a policy shift before real wage increases. Amid these shifts, the US Dollar has strengthened as focus shifted to the Federal Reserve Chief.
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