ECB: Corporate Survey Sees Subdued Selling Price Momentum
Oct-31 13:18
The ECB corporate survey does however point to subdued selling price momentum and limited sign of US tariffs having a directly inflationary impact.
- “Contacts reported a further slight slowdown in selling price momentum in recent months. This was mainly driven by price moderation in the services sector, reflecting some cooling in price growth in labour-intensive sectors such as hospitality, intensifying competition in telecommunications, and sharply declining prices for shipping and related logistics services.”
- In light of some of the more hawkish GC members warning on food price inflation: “Food retailers and producers mostly reported prices being raised to pass through rising costs, which in some cases reflected effects of climate change and related regulation. Growth in food prices was, however, expected to moderate in the coming months.”
- “Reaction to the EU-US trade deal was mixed, and the impact on euro area activity and producer prices was still viewed as negative.”
- "There was reportedly little direct spillover to euro area prices (via global pricing or to cushion the impact on margins)" from the increases in US tariffs, offering somewhat of a pushback to the more hawkish GC members such as Schnabel who see tariffs as inflationary from a supply chain pressure angle.
- Wage assessment unlikely to alter ECB view on direction of underlying inflationary pressures: “Contacts reconfirmed a picture of moderating wage growth (Chart D). On average, the quantitative indications provided would imply that wage growth is expected to slow, from 4.5% in 2024 to 3.3% in 2025 (both figures unchanged from the previous survey round) and further to 2.6% in 2026 (0.2 percentage points below the previous survey round).”
- Note that this 2.6% average for wage growth through 2026 will help the ECB take greater confidence in its wage tracker, after last month’s update estimated wage growth ex-one off payments at 2.6% Y/Y in 1Q26 (latest update to be released on Wednesday).
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US PREVIEW: ISM Manufacturing: Marginal Improvement Seen Continuing
Oct-01 13:17
Today's ISM Manufacturing survey (1000ET) is expected to see another rise in the headline index in September, to 49.0 from 48.7 prior for a 2nd successive improvement in activity albeit below the 50 mark for a 7th consecutive month.
- Recall: August's ISM Manufacturing report was weaker than expected on the headline figure, with some sub-components telling a slightly more mixed story, and price pressures unexpectedly diminished. Overall the ISM survey continues to portray a manufacturing sector that is failing to convincingly regain traction after the summer's tariff-related policy uncertainty. Indeed, tariffs were mentioned extensively in the sector-by-sector anecdotes in the report, and not in a positive light.
- September's flash US PMIs brought a 2-month low for Manufacturing at 52.0 (52.2 consensus, 53.0 prior). That report noted: "Higher output was reported in the manufacturing sector for a fourth consecutive month, but the expansion was much weaker than the strong gain (a 39-month high) seen in August. New order inflows in the goods-producing sector also weakened to only a marginal pace, in part due to an increased rate of loss of exports due to tariffs." The report also reported "lower job gains" in manufacturing in the month, with the sector seeing "more of a focus on job losses due to cost cutting."
- September saw a very mixed round of regional Fed manufacturing surveys: The Dallas, NY, and Richmond Feds saw sizeable pullbacks in current activity vs August, while Philadelphia and KC saw big improvements.
- ISM New Orders are seen slowing to 50.0 (51.4 prior) with Employment up to 44.3 (43.8 prior). For Employment, regional Fed data has held up a little better than the national ISM series (see chart).
- Meanwhile, the ISM Manufacturing Prices Paid gauge is expected to tick down to 62.7 from 63.7 prior. This would mark a second consecutive monthly dip but still keep the prices gauge around the highest levels since late 2022. The expectation for a slight downtick in roughly accords with the proxy indicators we have seen.
- September's flash S&P Global PMI report noted "Manufacturing input price inflation remained elevated at one of the highest rates since the pandemic, albeit dipping slightly since August." Regional Fed manufacturing surveys showed pullbacks in NY, Philadelphia, Kansas City, and Dallas (Richmond, which reports % Y/Y changes, was steady).
MNI EXCLUSIVE: Former SOMA Desk Trader On Long End Rates
Oct-01 13:15
Former New York Fed trader Joseph Wang discusses how the central bank will deal with elevated long end rates -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
SOFR OPTIONS: BLOCK: Dec'25 SOFR Call Spd
Oct-01 13:14
- 5,000 SFRZ5 96.56/96.68 call spds, 1.25 ref 96.355 at 0910:53ET
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