China’s economic indicators continue to deteriorate. Inflation in European countries is declining

The Conference Board consumer confidence indicator rose to 100.2 in November from 100.0 in September, beating economists’ forecast of 100.0. The confidence data suggest that the Fed needs to continue to be aggressive. The Fed Chair will set the tone for US monetary policy for the rest of the year today, clarifying whether US rate hikes will slow down. While minutes from the November meeting showed that policymakers support a slower pace of interest rate hikes in the coming months, several Fed members warned that this would depend on the dynamics of US inflation, which remains well above the Central Bank’s annual target.

Germany’s Consumer Price Index fell from 10.4% to 10% annually. The main criterion for lower inflation is lower energy prices. Food prices have not slowed down: they rose from 20.3% to 21%. Thus, it is too early to say that this decline in inflation is due to a rate hike by the ECB. Spanish inflation fell sharply in November from 7.3% to 6.8% year-on-year and is now four percentage points below its peak in July. Eurozone’s inflation data will also be released today. Analysts expect consumer prices to remain flat. If the data coincide with the facts, it will increase the likelihood that the ECB will raise interest rates by 0.5% at the next ECB meeting. On the other hand, European Central Bank President Christine Lagarde said Monday that inflation in the Eurozone has not reached its peak and risks being even higher than currently expected, hinting at an impending series of interest rate hikes.

The oil price rose to $85-86 on news that OPEC+ countries are willing to cut OPEC production even further. The talks are about an additional 2 million BPD of production cuts.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) declined 0.48% over the day, Hong Kong’s Hang Seng (HK50) gained 5.24%, while Australian S&P/ASX 200 (AU200) gained 0.33%.

The head of the IMF said yesterday that the anti-covid constraints and problems in the real estate sector strongly weigh on the Chinese economy, so economists will have to lower the growth forecast for the Chinese economy. China’s manufacturing PMI for October came in at 48.0 versus the expected 49.0, and the non-manufacturing index was 46.7, lower than the 48.0 forecasts. Construction permits in October were down 6.0% month-over-month, well below the 2.0% expected. High-ranking Chinese health officials have promised to adjust coronavirus measures to reduce their impact on people’s lives.

Australia’s consumer price index fell from 7.3% to 6.9% year-over-year. This increases the likelihood that the Reserve Bank of Australia (RBA) will decrease the pace of interest rate hikes.