A bunch of central banks, including ECB President Christine Lagarde, speak at various events on Thursday against the backdrop of a growing consensus that major central banks’ policy tightening cycles are over, a conviction strengthened by recent inflation reports and other indicators.
Figures on Wednesday showed U.S. producer prices fell at their fastest pace since April 2020, and UK consumer inflation undershot all forecasts. Oil prices are now down more than 10% year-on-year.
With U.S. producer price data also reinforcing the disinflation theme, this week’s data has made financial markets certain that Fed Chair Jerome Powell will leave the Fed funds target rate unchanged at 5.25%-5.50% at the conclusion of next month’s policy meeting, according to CME’s FedWatch tool.
Meanwhile in Asia, Japan’s exports are struggling due to slumping China-bound shipments of chips and steel.
China’s October data shows a continued recovery in industrial output and retail sales, but enduring weakness in the real estate sector that remains a drag on the economy.
What’s propping up markets on the mainland however is the promise of bigger stimulus, and the central bank injected a large amount of cash via medium-term policy loans this week.
While markets didn’t react specifically to the news, investors also heard from the first meeting in a year between U.S. President Joe Biden and Chinese leader Xi Jinping on Wednesday, that the two leaders had agreed to resume military-to-military communications and cooperate on anti-drug policies.
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