US PCE eyed as China rebound accelerates
A look at the day ahead in U.S. and global markets from Mike Dolan
U.S. stocks surf new records as the last full week of the quarter comes to a close, with China's furious monetary easing accelerating the rebound there and Wall Street eyeing the release of the Fed's favored inflation gauge.
After a barrage of interest rate cuts, real estate props and stock market supports this week, China's central bank cut its one-week reverse repo rate by another 20 basis points on Friday - trying to get across what it likely sees as an alarming economic slowdown that may see it miss 2024 targets.
Reuters reported Chinese cities Shanghai and Shenzhen are planning to lift remaining restrictions on home purchases to attract potential buyers and shore up flagging real estate markets.
Whether the widening stimulus proves effective or not, the forcefulness and intent is becoming clear. As is the backdrop.
China's industrial profits swung back to a sharp contraction in August, plunging almost 18% from a year earlier, according to new data.
But heading into a series of holidays next week, China's mainland stocks indexes <.CSI300 surged anew - adding another 4.5% again on Friday to notch their best week since 2008.
With new public borrowing central to the plan and hopes of some recovery afoot, 10-year Chinese government bond yields pushed higher. But the offshore yuan CNH= backed off 16-month highs amid reported selling by state banks.
Back on Wall Street, the persistent strength of the U.S. economy was underlined on Thursday by another surprising drop in weekly jobless claims, robust durable goods orders last month and second-quarter post-tax corporate profit growth that was revised higher to 3.5%.
Attention now turns back to inflation to see if the Federal Reserve's projected easing path is warranted in that light, and August PCE gauge is released later on Friday.
While consensus forecasts are for a 0.2% rise in 'core' PCE last month that would see the annual rate tick up to 2.7% from 2.6%, Fed governor Christopher Waller suggested last week softening components in that report were a key reason for the Fed's outsize 50-bp rate cut.
Federal Reserve Governor Lisa Cook on Thursday endorsed the size of that cut as a way to address increased "downside risks" to employment. "I whole heartedly supported the decision."
Treasury Secretary Janet Yellen said the economy was on course for a 'soft landing' and that would allow Fed rates to come down to 'neutral' levels - seen by Fed officials and financial markets as around 3% compared to the current 4.75-5.0% range.
Given the strength of the latest numbers however, futures now see only a 50% chance of another 50-bp cut at the Fed's next meeting in November. Another 25-bp move is baked in and some 75 bps by year end.
Ten-year Treasury yields US10YT=RR steadied on Friday after creeping higher over the past week, with the 2-10-year yield curve gap slipping back to a positive 15 bps. U.S. 30-year fixed mortgage rates edged down to a two-year low of 6.08% this week.
The dollar index .DXY was firmer, with the euro EUR= retreating as euro zone inflation numbers heaped pressure on the European Central Bank to keep cutting its interest rates next month and money markets there now fully price another 50 bps off ECB rates by yearend.
France's headline inflation rate plunged by more than expected to just 1.5% in September, well below the ECB's 2% target and weighed down by sharp declines in energy prices.
With annual crude CLc1 price declines running at almost 30% after a fresh plunge this week, the disinflation pulse will be building everywhere.
ECB sources say dovish members of the council are pushing hard for a third rate cut of the year at October's policy meeting, according to a Reuters report on Thursday.
The number of people out of work in Germany rose more than expected in September in the latest sign of the challenges facing Europe's largest economy.
Elsewhere, the Bank of Mexico lowered its benchmark interest rate by 25 bps to 10.50% on Thursday, the second straight cut as price pressures have eased in Latin America's No. 2 economy.
And Japan's yen JPY= jumped on Friday, recovering earlier losses, after Japan's former defense minister Shigeru Ishiba won the leadership contest of the country's ruling Liberal Democratic Party and was set to become its next prime minister.
Ishiba is a critic of past monetary stimulus and told Reuters the central bank was "on the right policy track" with rate hikes thus far.
Key developments that should provide more direction to U.S. markets later on Friday:
* U.S. August PCE inflation gauge, personal income and consumption, August trade balance, August retail and wholesale inventories, final September sentiment survey from University of Michigan
* Federal Reserve Board Governor Michelle Bowman speaks
Chinese stocks roar on stimulus-fueled optimism https://reut.rs/3Bx3wx6
China c.bank cuts seven-day reverse repo rate to aid economy https://reut.rs/4drAxIq
China cuts reserve requirement ratio for big banks https://reut.rs/4emfxEk
Breadth of PCE price inflation https://reut.rs/3QkRA6l
Jobless claims https://reut.rs/3ZFOP55
By Mike Dolan, editing by XXXX
mike.dolan@thomsonreuters.com
අදාළ වත්කම්
නවතම පුවත්
වියාචනය: XM Group සමාගම් ක්රියාත්මක කිරීම පමණක් වන සේවා සපයන අතර වෙබ් අඩවියේ හෝ වෙබ් අඩවිය හරහා ලබා ගත හැකි අන්තර්ගතය බැලීමට සහ/හෝ භාවිත කිරීමට පුද්ගලයෙකුට ඉඩ සලසමින් අපගේ මාර්ගගත වෙළඳ පහසුකම වෙත ප්රවේශය ලබා දෙන අතර වෙනස් කිරීමට හෝ පුළුල් කිරීමට අදහස් නොකරයි. එවැනි ප්රවේශය සහ භාවිතය සෑම විටම (i) නියමයන් සහ කොන්දේසි, (ii) අවදානම් අනතුරු ඇඟවීම් සහ (iii) සම්පූර්ණ වියාචනයට යටත් වේ. එබැවින් එවැනි අන්තර්ගතයක් සාමාන්ය තොරතුරුවලට වඩා වැඩි යමක් සපයා නොමැත. විශේෂයෙන්ම, අපගේ මාර්ගගත වෙළඳ පහසුකමේ අන්තර්ගතය පෙළඹවීමක් හෝ මූල්ය වෙළඳපොළවල කිසිදු ගනුදෙනුවක් සිදු කිරීමට ඉදිරිපත් කිරීමක් නොවන බව කරුණාවෙන් සලකන්න. ඕනෑම මූල්ය වෙළඳපොළක වෙළඳාම් කිරීම ඔබේ ප්රාග්ධනයට සැලකිය යුතු අවදානමක් එක් කරයි.
අපගේ මාර්ගගත වෙළඳ පහසුකමේ ප්රකාශිත සියලු කරුණු අධ්යාපනික/තොරතුරුමය අරමුණු සඳහා පමණක් අදහස් කෙරෙන අතර මූල්ය, ආයෝජන බදු හෝ වෙළඳ උපදෙස් සහ නිර්දේශයන්; හෝ අපගේ වෙළඳ මිල පිළිබඳ වාර්තාවක්; හෝ ඕනෑම මූල්ය උපකරණයක ඉදිරිපත් කිරීමක් හෝ ඒ සඳහා පෙළඹවීමක්; හෝ විශේෂ ඉල්ලීමකින් තොරව ඔබ වෙත ලබා දෙන ලද මූල්ය ප්රවර්ධනයන් ලෙස නොසැලකිය යුතුය.
ඕනෑම තෙවන පාර්ශවීය අන්තර්ගතයක් මෙන්ම XM විසින් සකසන ලද අන්තර්ගතය එනම් අදහස්, පුවත්, පර්යේෂණ, විශ්ලේෂණ, මිල ගණන් සහ වෙනත් තොරතුරු හෝ මෙම වෙබ් අඩවියේ අන්තර්ගත තෙවන පාර්ශවීය වෙබ් අඩවි සඳහා සබැඳි සාමාන්ය වෙළඳපොළ විවරණයක් ලෙස "පවතින පරිදි" සපයා ඇති අතර එහි ආයෝජන උපදෙස් ඇතුළත් නොවේ. ඕනෑම අන්තර්ගතයක් ආයෝජන පර්යේෂණයක් ලෙස අර්ථ දක්වා ඇති ප්රමාණයට, ආයෝජන පර්යේෂණයේ ස්වාධීනත්වය ප්රවර්ධනය කිරීමට නිර්මාණය කර ඇති නෛතික අවශ්යතාවලට අනුකූලව අන්තර්ගතය සකසා නොමැති බවත් එලෙස අරමුණු කර නොමැති බවත් ඔබ සලකා පිළිගත යුතු අතර එබැවින් එය අදාළ නීති සහ රෙගුලාසි යටතේ අලෙවිකරණ සන්නිවේදනයක් ලෙස සලකනු ලැබේ. ඉහත සඳහන් තොරතුරු සලකා මෙතනින් ප්රවේශ විය හැකි, ස්වාධීන නොවන ආයෝජන පර්යේෂණ සහ අවදානම් අනතුරු ඇඟවීම පිළිබඳ අපගේ දැනුම්දීම ඔබ කියවා තේරුම් ගෙන ඇති බව සහතික කර ගන්න.
