Global Macro and Markets
G-7 Macro: OK, sure, there is some US macro data today, but let’s not pretend anyone will watch the service sector ISM data today while the final stages of this US election rage. The same goes for the smattering of European service PMI and production data. Today is all about US politics.
Australia: The RBA will meet today to consider their monetary stance. We see nothing in the recent data to shift them from their position of leaving rates at 4.35% for as long as it takes to ensure that inflation sustainably comes within their target. 100% of the Bloomberg consensus seems to agree. The statement text will be worth a look to see if the position is shifting at all, though we don’t expect any significant semantic changes.
Philippines: October CPI inflation is released at 0900 SGT/HKT, and is expected to edge higher to 2.3% YoY, though still well within BSP’s target. What happens next with policy rates will depend not just on Philippine inflation but on how Asian currencies like the PHP respond to the US Presidential election result. A period of uncertainty lies ahead until we have more clarity.
The gradual phasing out of fuel tax cuts in November and December is likely to push inflation temporarily back up to close to or above 2%. In addition, the increase in industrial electricity prices last month may continue to push up some goods prices with a time lag. Nevertheless, we continue to expect inflation to remain below 2% for most of next year, but the cumulative pressure of price hikes in utilities and public service fees will spike inflation from time to time.
We don’t think today’s lower-than-expected inflation will prompt the Bank of Korea to cut interest rates at its November meeting. Although inflation is clearly trending slower, we believe that the Bank of Korea’s interest rate cuts will be limited given the imbalances in financial markets. The BoK would like to monitor the impact of its earlier cut on the housing market. However, the three-month forward guidance could change in a dovish direction. At the last meeting, one board member expressed that further easing should be considered in three months. Our baseline scenario is for an April cut, which is quite hawkish compared to the market consensus, but we acknowledge that the probability of an earlier cut than our current forecast is increasing.
South Korea inflation slowed more than expected but is expected to rebound by the end of this year
What to look out for: Australia RBA target cash rate, South Korea CPI, Indonesia 3Q24 GDP, US election!
November 5thAustralia: November RBA target cash rateChina: October Caixin China composite PMIIndonesia: 3Q GDPJapan: October monetary basePhilippines: October CPISingapore: September retail salesS Korea: October CPI, foreign reservesTaiwan: October foreign reservesUS: September trade balance, October ISM servicesNovember 6th Philippines: September imports, exports, trade balance, unemployment rateTaiwan: October CPINovember 7thAustralia: September imports, exports, trade balance, October foreign reservesChina: October imports, exports, trade balance, foreign reservesIndonesia: October foreign reservesJapan: September labour cash earnings, real cash earningsPhilippines:3Q GDP, October foreign reservesSingapore: October foreign reservesS Korea: September BoP current account balance, goods balanceNovember 8thChina: 3Q BoP current account balanceIndia: November foreign exchange reservesJapan: September leading index CITaiwan: October imports, exports, trade balanceUS: November FOMC rate decision, U. of Mich sentimentChina: October PPI, CPI (November 9th)More By This Author:Bank Of England: Five Things To Watch This Week Turkey Sees An Improvement In The Underlying Services Inflation Trend FX Daily: Let US Election Volatility Begin
