The Chinese PMIs
over the weekend were all in expansion with NBS PMIs beating expectations and
Caixin ones missing them:

  • NBS
    Manufacturing PMI 50.2 vs. 50.0 expected and 49.7 prior.
  • NBS
    Services PMI 51.7 vs. 51.5 expected and 51.0 prior.
  • Caixin
    Manufacturing PMI 50.6 vs. 51.2 expected and 51.0 prior.
  • Caixin
    Services PMI 50.2 vs. 51.8 prior.

China Caixin Manufacturing PMI

BoJ Governor Ueda
spoke over the weekend and just reaffirmed that there’s still a long distance
to go before exiting loose monetary policy:

  • The objective of the
    Bank’s monetary policy is achieving price stability
    , which is its
    mission as stipulated by law. Considerations of the Bank’s finances, etc.
    do not prevent it from implementing necessary policies.
  • A central bank’s
    ability to conduct monetary policy is not impaired by a temporary
    decrease in its profits and capital
    , provided that it conducts
    appropriate monetary policy.

BoJ Governor Ueda


The BoJ released
the Summary of Opinions of its latest September monetary policy meeting which
doesn’t contain anything new:

  • One member said
    inflation likely to slow ahead.
  • One member said
    inflation exceeding 2% but this is largely due to firms passing on higher
    import costs.
  • Inflation likely to
    keep rising next fiscal year due to expected rises in transportation,
    public service fees.
  • One member said
    seeing signs that positive cycle rising wages and inflation may be kicking
  • One member said
    there is chance next year’s wage growth may exceed that of this year.
  • One member said
    given recent FX, oil price moves, there is chance inflation may not slow
    much and overshoot expectations.
  • One member said no
    need to make additional tweaks to YCC as long-term rates moving fairly
  • One member said end
    to YCC, negative rate must be tied to success of achieving 2% inflation
  • One member said to
    sustainably hit price goal, wage gains must become sustained and lead to
    inflation driven by service prices.
  • One member said
    there is still some distance but Japan nearing achievement of price
    target, so latter half of current fiscal year will be crucial phase in
    determining next year’s price outlook, other factors.
  • One member said
    cannot determine now timing of policy tweak as that will depend largely on
    economic, price conditions at the time.
  • One member said BoJ’s
    communication, guidance must be made in a way that does not constrain too
    much its freedom on timing, order of policy move.
  • One member said it
    is important to prepare for exit from risk-management perspective as we
    could have clarity around January – March next year on whether 2%
    inflation target can be met in sustained, stable fashion.
  • One member said
    side-effect of YCC remains even after steps in July to make it more
  • One member said even
    if BOJ ends negative rate policy, monetary conditions will remain
    accommodative as long as real interest rates are negative.


The Switzerland
Manufacturing PMI beat expectations by a notable margin although it remains in

  • Manufacturing
    PMI 44.9 vs. 40.5 expected and 39.9 prior.

Switzerland Manufacturing PMI

The Eurozone
Unemployment Rate matched expectations as it remains at record low levels:

  • Unemployment
    Rate 6.4% vs. 6.4% expected and 6.5% prior (revised from 6.4%).

Eurozone Unemployment Rate

The Canadian
S&P Global Manufacturing PMI fell further into contraction:

  • Manufacturing
    PMI 47.5 vs. 48.0 prior.

Canada Manufacturing PMI

Manufacturing PMI beat expectations by a notable margin:

  • Manufacturing
    PMI 49.0 vs. 47.8 expected and 47.6 prior.
  • Prices
    paid 43.8 vs. 48.6 expected and 48.4 prior.
  • Employment
    51.2 vs. 48.3 expected and 48.5 prior.
  • New orders 49.2 vs. 46.8 prior.
  • Inventories 45.8 vs. 44.0 prior.
  • Production 52.5 vs. 50.0 prior.

US ISM Manufacturing PMI

Fed’s Bowman (hawk
– voter) is calling for another rate hike before pausing, which is in line with
the FOMC’s dot plot:

  • It will likely be
    appropriate to raise rates further and hold them at restrictive level for
    some time
  • Inflation remains too high.
  • Sees risk that high
    energy prices could reverse some of the recent progress on lowering
  • Frequency and scope
    of recent data revisions complicates task of projecting how economy will
  • Expects progress to
    be slow on inflation given the current level of monetary policy restraint.
  • Remains willing to
    support rate increase at a future meeting if data indicates progress on
    inflation has stalled or is too slow to return it to 2% in a timely way.
  • Regulators seem to
    be engaging in ‘heavy-handed’ supervision of banks.

Fed’s Bowman


BoE’s Mann (hawk
-voter) sound like she’s in favour of further tightening:

  • I see more resilient
    domestic demand in the UK economy.
  • I’m a hawk.
  • Says her inflation
    forecast is at the upper end of estimates

BoE’s Mann

Fed’s Harker
(neutral – voter) spoke alongside Fed Chair Powell (neutral – voter) in a
roundtable discussion and they both just stated that they are working to
achieve price stability and maximum employment (which is their mandate)

Fed’s Harker

Fed’s Barr
(neutral – voter) is on the “higher for longer” camp and expects growth and
labour market to soften over the next year:

  • Fed is at a point
    where we can proceed carefully on monetary policy
  • Most important
    question is not whether an additional rate hike is needed this year.
  • Most important
    question is how long we will need to hold rates at a sufficiently
    restrictive level
    . I expect
    it’ll take some time.
  • Full effects of past
    tightening are yet to come in the months ahead.
  • There has been a lot
    of progress on inflation.
  • Economic activity
    has been considerably more resilient than expected.
  • Sees higher
    probability than previously for a soft landing.
  • Labor market is
    tight, but supply and demand are coming into better balance.
  • Baseline projections
    is for below potential GDP growth over next year and further softening of
    labour market
  • Monetary policy is a
    blunt tool. Likely not appropriate to address specific financial stability
  • Supervisors expect
    banks to be ready and willing to use discount window.
  • There seems to be
    the right kind of slowing in housing.
  • Goods and housing
    services inflation is on the right path, downward.
  • The amount of credit
    tightening we are seeing is less than what I feared in March

Fed’s Barr


Fed’s Mester (hawk – non voter) supports one more rate
hike this year:

  • Monetary policy path
    depends on how economy performs.
  • Fed will likely need
    to hike rates one more time this year
  • Economy on ‘good
    path’ amid ongoing rebalancing of supply and demand.
  • Job market strong
    but slowing, coming into better balance.
  • Inflation ‘too high’
    but sees welcome signs of progress lowering price pressures.
  • Fed will need to
    keep rates high to ensure return to 2% inflation.
  • Economy has grown
    more strongly than expected.
  • Risks to inflation
    tilted toward upside.
  • Credit conditions
    have tightened in line with monetary policy.
  • Sees some signs wage
    pressures are easing.
  • Fed will keep rates
    restrictive to get inflation down.
  • Higher rates are
    needed to make sure the disinflation process continues
  • A.I. technology will
    change a lot in the economy.
  • Student loan restart
    won’t bring immediate change in consumer spending.
  • Doesn’t see dollar
    getting dethroned, dollar is very strong currency.
  • Likely to favour
    hike at the next meeting if the current economic situation holds
  • Long-term yield rise
    will affect monetary policy outlook
  • Fed likely at or
    near peak for interest rate target.
  • Higher long-term
    rates will moderate growth.
  • Yields up on a
    number of factors, including changed outlook on growth.
  • Doesn’t see a rate
    cut happening any time soon.
  • Expects to hit 2%
    inflation by end of 2025.

Fed’s Mester

The RBA left the cash rate unchanged at 4.10% as

  • Some further
    tightening of monetary policy may be required.
  • Board remains
    resolute in its determination to return inflation to the target.
  • Recent data are
    consistent with inflation returning to the target range over the forecast
  • Higher interest
    rates are working to establish a more sustainable balance between supply
    and demand in the economy.
  • Inflation in
    Australia has passed its peak but is still too high and will remain so for
    some time yet.
  • Timely indicators on
    inflation suggest that goods price inflation has eased further, but the
    prices of many services are continuing to rise briskly.
  • Central forecast is
    for CPI inflation to continue to decline and to be back within the 2–3 per
    cent target range in late 2025.
  • There are
    significant uncertainties around the outlook
  • Returning inflation
    to target within a reasonable timeframe remains the Board’s
  • Inflation is coming
    down, the labour market remains strong, and the economy is operating at a
    high level of capacity utilisation.


ECB’s Simkus (hawk – voter) leans towards keeping
rates higher for longer:

  • Inflation is on its
    way down.
  • Rates need to stay
    restrictive to tame prices
  • Prompt monetary
    policy response has been effective.

ECB’s Simkus

ECB’s Lane (dove – voter) acknowledges that the
progress towards the 2% target will be harder from now on and that the central
bank will need to keep rates at restrictive level for as long as needed:

  • Progress to 2%
    inflation won’t be as quick as to 4%.
  • Food inflation is
    still quite high now.
  • The key is to
    maintain rates at this level for as long as needed
  • It is still a
    substantial issue.
  • Services inflation
    now a big contributor.

ECB’s Lane

The Switzerland CPI missed expectations with inflation
being comfortably withing the SNB’s 0-2% target range on both the headline and
core measure:

  • CPI Y/Y 1.7% vs. 1.8%
    expected and 1.6% prior.
  • Core CPI Y/Y 1.3% vs.
    1.5% prior.

Switzerland Core CPI YoY

BoC’s Vincent leans on
the hawkish side as core inflation in Canada has proved to be stickier than

  • Firms continue to expect
    price changes to remain larger and more frequent
  • Still have a ways to go
    before pricing behaviour returns to normal.
  • If firms’ recent pricing
    behaviour settles into a new normal, it could complicate return to low, stable
    and predictable inflation.
  • More frequent and large
    price increases by firms are intimately linked to stronger than expected
  • Downward path of inflation
    has been slower than anticipated, inflation proved to be stickier than many
  • It is clear we are not out of the woods yet on inflation and unusual
    amount of uncertainty continues to cloud our view.

BoC’s Vincent


Fed’s Bostic (dove – non
voter) is on the “higher for longer” camp:

  • Fed still has a way
    to go to get inflation back to target.
  • Fed is in
    restrictive territory and that is helping inflation fall
  • I would be open to a
    robust review of 2% after it has been reached
  • Higher long-end
    rates matter if they slow growth too much, no sign yet
  • Higher long-term
    rates not impacting business beyond what would happen in a normal
    tightening cycle.
  • Says he sees the
    next move as a single quarter-point rate cut late next year.
  • Sees inflation
    approaching 2% target by end of 2025.
  • Still ‘work to do’
    but confident underlying price trends are slowing.
  • Share of goods with
    faster price increases has declined; businesses agree slowing trend likely
    to continue.
  • ‘Signs of balance’
    also coming to labour market, with slower jobs growth.
  • Businesses say it’s
    getting easier to hire and wage growth likely to slow.
  • Energy prices and
    geopolitics pose upside risks to inflation.
  • Assessing need for
    below-trend GDP growth to cure inflation depends on other trends like

Fed’s Bostic

The US Job Openings beat
expectations by a big margin in another sign that the labour market might be
softening but it remains pretty tight:

  • Job Openings 9.610M vs.
    8.800M expected and 8.827M prior.
  • Hires 5.8% vs.
    3.7% prior.
  • Separations rate
    3.6% vs. 3.6% prior.
  • Quits 2.3% vs.
    2.3% prior.

US Job Openings

Japan has likely intervened in the
FX market as the USD/JPY exchange rate crossed the key 150.00 level. Senior
Japan officials had no comment when asked about it, but it’s pretty evident by
just looking at the price chart.

USDJPY 1 hour chart


The RBNZ left the cash
rate unchanged at 5.50% as expected:

  • Demand growth in the
    economy continues to ease.
  • Committee agreed
    that the OCR needs to stay at a restrictive level
  • Interest rates are
    constraining economic activity and reducing inflationary pressure as
  • While GDP growth in
    the June quarter was stronger than anticipated, the growth outlook remains
  • With monetary
    conditions remaining restrictive, spending growth is expected to decline
  • Near-term risk that
    activity and inflation do not slow as much as needed.
  • Prolonged period of
    subdued activity is required to reduce inflationary pressure


The Eurozone August
retail sales missed expectations by a big margin:

  • Retail Sales M/M -1.2%
    vs. -0.3% expected and -0.1% prior (revised from -0.2%).
  • Retail Sales Y/Y -2.1%
    vs. -1.2% expected and -1.0% prior.

Eurozone Retail Sales YoY

ECB’s Centeno (dove –
voter) calls for the end of the tightening cycle given the current economic

  • Inflation is falling
    faster than when it was rising.
  • We can expect that the
    interest rate cycle has been completed by now and with present conditions

ECB’s Centeno

ECB’s de Guindos (dove –
voter) maintains a more cautious outlook:

  • We will continue to
    follow a data-dependent approach.
  • Economic activity
    likely to remain subdued in the coming months
  • Labour market remains resilient.
  • Underlying price
    pressures remain strong

ECB’s de Guindos

The US ADP for September
missed expectations by a big margin coming in at 89K vs. 153K expected and 180K
prior (revised from 177K):

  • small (less than 50
    employees) 95K vs. 18K prior.
  • medium firms (500 –
    499) 72K vs. 79K prior.
  • large (greater than
    499 employees) -83K vs. 83K prior

Changes in pay:

  • Job stayers 5.9% vs. 5.9% prior.
  • Job changers 9.0% vs. 9.5% prior.


The US ISM Services PMI
came in line with expectations at 53.6 vs. 54.5 prior:

  • employment index 53.4 vs. 54.7 prior.
  • new orders index
    51.8 vs. 57.5 prior
  • prices paid index
    58.9 vs. 58.9 prior.
  • new export orders
    63.7 vs. 62.1 prior.
  • imports 50.6 vs. 52.3
  • backlog of orders
    48.6 vs. 41.8 prior.
  • inventories 54.2 vs. 57.7 prior.
  • supplier deliveries 50.4 vs. 48.5
  • inventory sentiment
    54.8 vs. 61.5 prior.

US ISM Services PMI


ECB’s Kazimir (hawk –
voter) joins the higher for longer camp:

  • I believe that the
    last rate hike was the final one
  • A December rate hike
    is not a scenario I’d like.
  • We are on the
    trajectory of declining inflation.

ECB’s Kazimir

BoE’s Broadbent (neutral
– voter) didn’t offer much as he’s uncertain on the future rates trajectory:

  • It is an open
    question on whether there will be more rate hikes.
  • There are clear
    signs that rate hikes are having an impact.
  • But perhaps it may
    be that the effect is weaker than in the past or still delayed.
  • Sees UK inflation
    reaching target in 2 years’ time.

BoE’s Broadbent

ECB’s Lane (dove – voter)
acknowledged that credit dynamics have been weak, which should weigh on
economic growth and inflation:

  • Credit dynamic really has
    been quite weak
  • It is below what we would
    have expected last year.

ECB’s Lane

The US September
Challenger Job Cuts came in at 47.46K vs. 75.15K prior.

US Challenger Job Cuts

The US Jobless Claims
beat expectations once again:

  • Initial Claims 207K vs.
    210K expected and 205K prior (revised from 204K).
  • Continuing Claims 1664K
    vs. 1675K expected and 1665K prior (revised from 1670K).

US Initial Claims

ECB’s Villeroy (neutral –
voter) is just another member in the higher for longer camp as the ECB has
probably ended its tightening cycle:

  • Increase in bond
    yields may be excessive but it is helping to tighten financial conditions.
  • I don’t think an additional
    rate hike is justified now

ECB’s Villeroy

Fed’s Daly (neutral – non
voter) is comfortable with the recent rise in Treasury yields as it tightens
financial conditions on the Fed’s behalf:

  • Monetary policy is restrictive.
  • Progress isn’t
    victory, must remain resolute.
  • To ensure we fully
    achieve goals, we need to finish the work.
  • We need vigilance
    and agility.
  • The economy still
    has considerable momentum.
  • We are a long way
    from 2% inflation and a long way from sustainable employment.
  • Even with recent
    slowing in the labour market, job growth remains well above what needed to
    keep pace with growth.
  • It’s possible the
    slowing so far it will translate into steady march towards goal.
  • There are real risks
    in inflation projection.
  • Will need to see
    progress on a super – core inflation to be confident we are on path to 2%.
  • If we continue to
    see labour market and inflation falling, we can hold rates steady.
  • If financial
    conditions remain tight, that reduces need for more action from Fed
  • But if falling
    inflation stalls or financial conditions loosen, will need to raise rates
  • Need to keep an open
    mind, have optionality on rates.
  • With rising bond
    yields, the need to do additional tightening by Fed is not there.

Fed’s Daly

Fed’s Barkin (neutral –
non voter) is comfortable with the recent rise in Treasury yields as well:

  • Yields have come up
    amid fiscal issuance and strong data.
  • A 2% is a very
    reasonable inflation target.
  • Does not see the
    logic of throwing out target before hitting it
  • Rates feel high now,
    but they are not over the long term

Fed’s Barkin


The Japanese wage growth
missed expectations which is not what the BoJ wants to see in order to scale
back its easing measures:

  • Average Cash Earnings Y/Y
    1.1% vs. 1.5% expected and 1.1% prior.
  • Inflation-adjusted Real
    Wages Y/Y -2.7% vs. -2.5% prior. This is the 17th consecutive

Japan Average Cash Earnings YoY

ECB’s Schnabel (hawk –
voter) acknowledged the risks to the inflation outlook and the need to be

  • Overall, the recent news
    on inflation is encouraging.
  • Core inflation has proven
    more stubborn.
  • We cannot take it for
    granted that inflation will only move downwards from now on, because we could
    have new supply side shocks.
  • We cannot say that we are
    at the peak or for how long rates will need to be kept at restrictive levels
  • I still see upside risks
    to inflation.
  • Cites wages as upside

ECB’s Schnabel

The US NFP report beat
expectations by a big margin:

  • Nonfarm Payrolls 336K vs. 170K expected and 227K prior (revised from 187K).
  • Unemployment rate 3.8% vs. 3.7% expected and 3.8% prior.
  • Participation rate 62.8% vs. 62.8% prior.
  • Private payrolls 263K vs.
    160K expected and 177K prior (revised from 179K).
  • Manufacturing payrolls
    17K vs. 5K expected and 11K prior (revised from 16K).
  • Government payrolls 73K
    vs. 50K prior (revised from 8K).
  • U6 Unemployment rate 7.0%
    vs. 7.1% prior.
  • Average weekly hours 34.4 vs. 34.4 expected and 34.4 prior.
  • Average hourly earnings M/M 0.2% vs. 0.3% expected and 0.2% prior.
  • Average hourly earnings Y/Y 4.2% vs. 4.3% expected and 4.3% prior.

US Unemployment Rate

The Canadian Jobs report
beat expectations as well:

  • Employment change 63.8K vs.
    20.0K expected and 39.9K prior.
  • Unemployment rate 5.5%
    vs. 5.6% expected and 5.5% prior.
  • Full-time employment
    15.8K vs. 32.2K prior.
  • Part-time employment
    47.9K vs. 7.8k prior.
  • Participation rate 65.6%
    vs. 65.5% prior.
  • Average hourly wages permanent employees 5.3% vs. 5.2% prior.

Canada Unemployment Rate

The highlights for next
week will be:

  • Tuesday: US NFIB Small
    Business Optimism Index.
  • Wednesday: US PPI, FOMC
  • Thursday: Japan PPI, UK
    GDP, US CPI, US Jobless Claims, NZ Manufacturing PMI.
  • Friday: China CPI, China
    Trade data, Eurozone Industrial Production, US University of Michigan Consumer

That’s all folks. Have a
great weekend!



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