ECB: ECB Accounts: Mild Tweaks On The Balance Of Views To Inflation Risks
Nov-27 13:15
- On the balance of views around medium-term inflation risks, there continued to be relatively narrow support for those who viewed it tilted to the upside, with “a few” matching that of September.
- There were some tweaks to the extent of those who saw downside risks, although they’re hard to read too much into. Specifically, “some” members viewed risks tilted to the downside in a chance compared to “several” members at both the September and July meetings.
- Considering the abatement of some downside growth risks and some additional upside inflation risks that Lagarde noted in the press conference, we suspect this is also reflecting a hawkish development with some seen as fewer than several but we can’t say for sure (it would also go against old Fed parlance which sees some as more than several, not that this has any sway here).
- More detailed colour on inflation risks from the accounts (link): "Some members viewed inflation risks as tilted to the downside over the medium term. From this perspective, inflation could turn out to be lower if higher tariffs led to lower demand for euro area exports and induced countries with overcapacity to further increase their exports to the euro area. In this regard, it was argued that excess capacity in China and initial signs of lower export prices and trade rerouting towards Europe posed a significant downside risk to the medium-term inflation outlook, especially since empirical evidence suggested that trade price shocks were likely to play out gradually over a couple of years. In addition, it was argued that the risk of major, generalised supply chain disruptions could be quite low, given that the European Union had not retaliated in the trade dispute with the United States, while China and the United States had been making progress in their trade negotiations. At a minimum, more information was needed to judge whether there was a material risk of general supply chain disruptions.”
- "A few members viewed inflation risks as tilted to the upside over the medium term relative to the September staff projections and noted that external forecasts for medium-term inflation stood above those projections. […] Recent developments in inflation expectations of both households and firms also pointed to some upside risks. From this perspective, there had already been an upward shift in the inflation outlook since the September meeting, which had diminished the risk of a sustained and material undershooting of the inflation target. In particular, such an undershooting was not seen as consistent with the growing evidence of a cyclical recovery of the economy, with a closing output gap and significant support from fiscal policy.”
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US DATA: Redbook Retail Series Maintains Solid Growth Through Most Of October
Oct-28 13:07
Retail sales maintained a 5.4% Y/Y month-to-date growth pace through the 3rd week of October, with a 5.2% rise in the latest week (5.0% prior), per the Johnson Redbook Retail Sales Index. This is close to retailers' targeted 5.6% gain.
- We await the Chicago Fed's CARTS preliminary ex-auto retail sales estimate for October, which will be out Friday, but judging from Redbook thus far it looks like another solid month (at least in nominal terms). Of course we didn't get the September "official" Census Bureau report on Oct 23 due to the government shutdown, and it's unclear how the October data will be affected.
- The report suggests that solid Halloween-related sales bode well for holiday shopping activity to end the year: "Sales of Halloween-related merchandise are increasing as the month goes on. Retailers report that cooler weather in many regions has driven steady demand for seasonal clothing. Halloween often serves as an indicator for holiday sales in November and December. If shoppers are willing to spend more on Halloween items, it often suggests a positive outlook for consumer confidence, which may lead to increased spending later in the year. To get a head start on the holiday season, some stores have begun stocking Christmas items alongside Halloween products. Additionally, many retailers have started reducing prices on Halloween merchandise earlier than usual in order to attract shoppers to higher-margin items."
GILT PAOF RESULTS: GBP375.0mln of the 1.125% Sep-35 linker sold.
Oct-28 13:03
- GBP375.0mln have been on offer.
- This leaves GBP14.651bln of the gilt in issue.
MNI:US AUG FHFA HPI SA +0.4% V +0.0% JUL; +2.3% Y/Y
Oct-28 13:00
- MNI:US AUG FHFA HPI SA +0.4% V +0.0% JUL; +2.3% Y/Y
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