Investors are waiting for US GDP data. Eurozone growth exceeded expectations, but German CPI fell short of target by Vicky Ge Huang
Economic growth in the third quarter was higher, or even higher, depending on the forecaster. But economists agree that consumer spending drove much of the growth during this period, even though weak home sales and construction were a drag, writes Megan Leonhart in this issue. is written in.
The U.S. Bureau of Economic Analysis will release its first estimate of real gross domestic product (adjusted for inflation) at 8:30 a.m. ET. Despite strong economic growth, it remains likely that Federal Reserve officials will cut interest rates by a quarter of a percentage point at their Nov. 6-7 policy meeting.
The consensus among economists surveyed by FactSet was for real GDP to grow at an annual rate of 2.6%, slightly lower than the 3% growth rate seen in the second quarter.
FactSet estimates are at the lower end of current forecasts. The Bloomberg consensus call was for 2.9% growth as of Tuesday, compared to the New York Fed staff nowcast forecast of 2.9%. The Atlanta Fed's GDPNow model records 3.3% growth.
Economists at Goldman Sachs expected 3%. Sam Toomes, chief U.S. economist at Pantheon Macroeconomics, also said he wouldn't be surprised if GDP rose 3.5% in the third quarter. Moody's Analytics is also betting on a 3.5% rise.
Economists expect the Fed's decision to cut interest rates will depend more on inflation and jobs data than on initial expectations for real GDP growth in the third quarter.
Inflation indicators recommended by the central bank are expected to show price increases back on target in the third quarter. FactSet's consensus forecast is for the Personal Consumption Expenditure Price Index, which will be released Thursday, to grow 2.1% in September from a year earlier.
Top News Eurozone economy expands faster than expected
The eurozone economy grew faster than expected in the three months to the end of September, raising hopes that the eurozone could be on a soft landing after soaring inflation following Russia's invasion of Ukraine. Accelerating growth will ease concerns that a prolonged period of high interest rates is slowing the currency area's recovery.
Gross domestic product (GDP) in the 20 countries using the euro currency grew by 0.4% in the third quarter, accelerating from 0.2% in the April-June period, European Union statistics released on Wednesday showed. did. This exceeded the consensus of economists compiled by the Wall Street Journal, which expected eurozone growth to return to 0.2%.
Germany, Europe's largest economy, posted unexpected growth in the quarter as rising incomes boosted household spending, the country's statistics office said. read more .
However, Germany's inflation rate fell further below the European Central Bank's 2% target in September, making further rate cuts more likely at its next meeting in October. According to the German statistics agency Destatis, consumer prices rose by 1.6% compared to September last year, down from 1.9% in August. This was slightly below the 1.7% consensus of economists compiled by the Wall Street Journal. The German figures came after inflation cooled more quickly than expected in France and Spain. (Dow Jones News) Japan's election caused the yen to briefly fall, but it was only temporary.
A big election surprise this fall may have just occurred in Japan. Now, the country's central bank is in trouble due to a surge of political opposition. Japan's ruling party lost its parliamentary majority in Sunday's election. As a result, the country is plunged into an unprecedented state of political uncertainty. The uncertainty could delay an interest rate hike by the Bank of Japan, which is scheduled to meet this week. This is why the Japanese yen has fallen nearly 1% against the dollar this week.
BOC governor instructs lawmakers to further cut interest rates to support growth
Bank of Canada Governor Tiff Macklem told MPs he expects further interest rate cuts to revive the “weak” economy and bring inflation closer to the central bank's 2 per cent target. He said the timing, pace and extent of rate cuts would depend on future data.
Consumer confidence in the US economy soars in October, reaching nine-month high
The U.S. consumer confidence index rose to 108.7 in October from a revised 99.2 the previous month, the Conference Board said Tuesday. This is the highest confidence level since January. (Market Watch)
US job openings fall to lowest level in 3.5 years
U.S. job openings fell to a 3-1/2-year low in September as demand for labor weakened and companies waited for the economy to pick up. According to the Labor Department, the number of job openings in September fell to 7.44 million from 7.86 million the previous month. (Market Watch)
A Wall Street landlord bought his neighbor's house. It's a mixed blessing.
Wall Street landlords don't have a big foothold in residential real estate yet, but they hope to in the future. In some areas, you can see what that means for the US housing market.
Florida financial regulators mistakenly ban banks from operating
Florida wanted to make it easier to invest in the state's fast-growing economy. For weeks, the government mistakenly made it illegal for most banks to sell investments there. The law, which took effect on October 1, prohibits banks from selling securities such as corporate bonds and shares of private companies for four weeks.
JPMorgan Chase charges four customers with bank fraud
JPMorgan Chase & Co. is pursuing people the bank says committed check fraud by withdrawing large sums of cash as part of the TikTok boom. The bank on Monday sued four individuals in federal court for allegedly exploiting a so-called glitch in Chase Bank ATMs that went viral on social media over the summer.
Wednesday Forward Guidance (all times Eastern)
7 a.m.: MBA Weekly Mortgage Application Survey
8:15am: ADP National Employment Report
8:30 a.m.: Preliminary estimation of GDP
10 a.m.: Pending Home Sales Index
Thursday
5:00 a.m.: Monetary policy meeting decision
8:30 a.m.: Unemployment Insurance Weekly Claims Report – Initial Claims
4:00 p.m.: U.S. Portfolio Foreign Securities Holdings Final Results
4:30 p.m.: Federal Discount Window Borrowing
Wealth manager says crypto sector could be legalized with Harris inauguration
Asset management firm Mirabeau Group says the cryptocurrency sector could face further regulation but could also gain legitimacy if Democratic candidate Kamala Harris wins the November 5 US presidential election. He said there is. Mirabeau's John Prasad said in a note that Harris could push for regulations that protect consumers and encourage safer investments. While this may initially curb speculative activity in cryptocurrency trading, it will ensure long-term stability. A Harris presidency could also introduce restrictions and taxes on energy-intensive cryptocurrency mining, he said. This will push the sector towards greener alternatives such as proof-of-stake, he said. “Tax regimes that align cryptocurrencies with traditional assets could also emerge, facilitating compliance and further legitimizing cryptocurrencies as a mainstream asset class.” – Renae Dyer
REFERENCE POINT As political uncertainty clouds the US policy outlook ahead of the presidential election, more money will flow into European assets and out of US assets, particularly into corporate bonds, says AXA Investment Managers states. (WSJ) Whether Donald Trump or Kamala Harris wins the White House, the crypto industry already looks like the big winner of the election. Bitcoin has risen more than 63% this year to almost an all-time high of $73,500. (Barron's Magazine) Billionaire investor John Paulson plans to work with Tesla CEO Elon Musk on a large-scale investment plan if Paulson becomes Treasury secretary in the second Trump administration. He said he intends to pass significant federal spending cuts. (WSJ) President Trump's election victory could lead to new tariffs on China, potentially costing farmers billions of dollars as trade is diverted to competitors such as Brazil. Australia's inflation rate has returned to within the Reserve Bank of Australia's target range for the first time since mid-2021, but the third-quarter data is unlikely to trigger an immediate rate cut. (WSJ) Gold hit a new high of just under $2,800 an ounce on Tuesday, continuing to outperform the broader stock market this year. The yellow metal is up 35% in 2024, while the S&P 500 is up 22%. (Barron's)
WSJ Pro Central Banking brings you central banking news, analysis, and insight from WSJ's global team of reporters and editors. This newsletter was edited by New York market reporter Vicki Ge Huang. Send your tips, suggestions, and feedback to [vicky.huang@wsj.com].
This article is a text version of the Wall Street Journal newsletter published today.
(Ended) Dow Jones News
10-30-24 0715ET
