Concerns over global growth are weighing on oil prices, providing support for Treasuries. Alibaba sharply cut its guidance for the rise in revenues in FY2022 to 20-23% y/y, far below expectations.
The Eurozone is also battling a resurgence in Covid-19: Austria has announced a full national lockdown starting Monday, with Germany set to follow suit. A more cautious approach by Eurozone governments should continue to weigh on the euro.
For now, the US stands out against the backdrop of a slowdown in China, a dovish ECB, and a ‘stagnant’ Japan.
US consumer spending in October was strong. The 3m/3m annualised rate for core retail sales accelerated from 4.3% to 10.9%. US inflation is not just supply-led. There is clearly a strong upward impetus from demand too.
On a non-seasonally adjusted basis, initial claims have dropped to pre-pandemic levels.
Both wages and inflation could settle on a much higher growth path. For the record, the latest inflation dispersion data from Federal Reserve Bank of San Francisco show that the fraction of PCE items with price declines slid to just 11.8% in Q3.
