US DATA: Manheim Used Vehicle Prices Slip 2% M/M In October
Used vehicle prices from Manheim wholesale data point to a sizeable decline in October, which could filter through to CPI used prices at the end of this year, but with tighter inventories suggesting perhaps limited downward pressure beyond that.
- Manheim wholesale used vehicle prices fell -2.0% M/M in October vs the -1.6% M/M indicated in the mid-month estimate, as usual on a mix-, mileage- and seasonally adjusted basis.
- It leaves used vehicles priced “mostly unchanged” compared to Oct 2024.
- However, the press release (link) suggests this comparison with the mid-month estimate is a little misleading when it comes to intra-month dynamics: “As October progressed, used retail sales were higher each week, and we ended with tighter inventory levels. This led to slower rates of depreciation than normal in the last week of the month. With tighter days’ supply and solid demand, we may see lower depreciation trends for the rest of Q4. Consumers should see higher tax refunds next year and as more dealers catch wind of that, we could expect more demand at wholesale and retail earlier than usual next year.”
- It follows -0.2% M/M in September, 0.0% in Aug and -0.5% in July.
- This latest weakness won’t start to show up until the November CPI report (whenever that is released), with typical lags suggesting neutral prints for CPI used car prices in the near-term. Looking beyond that though, the above points on tighter supply indicates downward pressure might be limited.
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FRANCE: Rpts-Lecornu Could Be Reappointed; Wider Deficit Targets To Pass Budget
France's political environment remains in a state of uncertainty ahead of caretaker PM Sebastien Lecornu's appearance on France 2 this evening at 20:00CET (14:00ET, 19:00BST). Earlier, Lecornu claimed that the prospect of a dissolution of parliament was fading. The fact that it is Lecornu speaking, and not President Emmanuel Macron, may lend credence to this view. It would be the head of state speaking to announce a dissolution.
- Instead, after meeting this afternoon with figures from the centrist/centre-right 'presidential bloc', Lecornu will hold talks with Macron at ~18:00CET on the political situation.
- Le Parisien reports that "According to our information, one scenario is holding the upper hand more than ever in recent hours: a reappointment of Lecornu [...]. "this would allow the president to [buy some] time and perhaps pass a budget before the end of the year, because that remains the priority," explains a senior figure in the executive."
- A major issue remains the prospect of the suspension of the 2023 pension reforms. A senior figure from the conservative Les Republicains has warned, "We don't see how the right could not censor a government that reverses the pension reform."
- Le Monde notes, the caretaker PM said earlier, "The public deficit target must be kept below 5%" in the next budget, or "between 4.7% and 5%." [...] The 5% figure is striking. It means that Sébastien Lecornu is prepared for the public deficit to fall by only 0.4 points of GDP in 2026, half the amount targeted by François Bayrou." A softer stance on fiscal consolidation would also be a sign of efforts to bring the Socialists on board.
BONDS: BTP/Bund edges below 80.00bps
- The BTP/Bund spread is slowly edging below the 80bps level as the Italian 10yr Futures holds onto more gains than the German Bund.
- Next immediate support comes at ~77.9bps, the September low.
