US DATA: Dallas Fed Weekly Growth Indicator Continues To Slow From High Levels
The Dallas Fed's Weekly Economic Index (WEI) showed a pickup in growth in the week ended Nov 1, to 2.22% from 1.99% prior (scaled to 4-quarter growth).
- On a quarterly (13-week moving average) basis though, growth is slowly moderating: from a near 2-month stretch of printing above 2.4% Y/Y, it's now edged lower to the slowest since mid-August.
- Overall we've seen this index as largely consistent with the strong GDP readings observed through Q2 and (likely) Q3 north of 3+ Q/Q SAAR.
- The prints may be obscured by the lack of official continuing/initial jobless claims data (which instead are imputed by the Dallas Fed for the purposes of its estimates), but he recent moderation suggests that whatever pickup in activity was occurring in Q3 may be abating slightly but underlying growth remains robust.
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EUROPEAN FISCAL: Stability Council Sees German Govt Debt At 80% GDP In 2029
The fiscal projection of the German "Stability Council" finds that "the Maastricht debt ratio could rise to around 80.25% of GDP by the end of the projection period in 2029" in Germany. This compares with a realised debt ratio of 62.5% of GDP in 2024.
- It is difficult to gain a firm view on current consensus on the German Maastricht debt ratio for the years ahead, but 80%+ seems to be towards the higher end of estimates we've seen previously.
- "The members of the Stability Council agreed that such a dynamic development of debt levels relative to economic performance, if it continued, would jeopardise the long-term sustainability of public finances. In order to counteract such a development, the Stability Council therefore considers consistent consolidation measures at all levels of government, comprehensive structural reforms and the investment- and growth-enhancing use of funds from the Special Fund for Infrastructure and Climate Neutrality to be urgently necessary."
- The Stability Council is a joint body of the German federal government and the states, and is enacted to strengthen "institutional conditions for ensuring long-term sustainable budgets at federal and state level".
In addition, the council notes: "By 2026, the general government deficit ratio could rise to 4¾% of gross domestic product (GDP) before falling again and reaching 3¾% of GDP in 2029. Taking into account the NEC, even with an assumed extension for 2029, the deficit ratio is likely to remain within the maximum permissible level of 3% of GDP, with the exception of 2026 and 2027. Exceeding this level in later years could have a negative impact on compliance with European fiscal rules."
Full press release here (in German).
OPTIONS: Euro Rate Call Condor Buying Continues
Tuesday's Europe rates/bond options flow included:
- DUZ5 107.10/107.00/106.90p Ladder, bought for 1.5 in 7.6k
- ERM6 98.1875/98.25cs 1x1.75 with ERH6 98.00/97.9375ps sold as a strip at 1 in 4k
- ERM6 98.37/98.50/98.75/98.87c condor, bought for 1 in 5k (also bought Monday in 14k)
- ERM6 98.50/98.625/98.750/98.875 call condor, bought for 0.5 in 18k
- 0RH6 98.12/98.37cs, bought for 3.5 in 4k
- 2RZ5 97.6875/97.8125cs vs 3RZ5 97.5625/97.6875cs, bought for 2.75 in 10k
US DATA: Manheim Car Prices A Little Softer, Downside For CPI
- Manheim used vehicle prices were softer than thought earlier in September, now seen to have dipped -0.2% M/M in the full month release vs a 0.05% M/M increase in the mid-month version.
- It follows a flat August, in what are relatively small moves after -0.5% in July, 1.6% in June, -1.4% in May and 2.8% in April.
- Typical lags from recent months suggest downside to CPI used car prices after what was a broadly as expected 1.0% M/M increase back in August (for whenever September might be released) whilst latest Manheim data suggest further weakness beyond that – see charts.
