Weekly economic commentary: ECB delivers back-to-back rate cuts

Summary

United States: Fall data and it's the same

• Retail sales came in stronger than expected in September, industrial production was weaker than expected and residential construction softened. The fall data mix is a continuation of the underlying trends in economic growth—consumers are strong, while interest-rate-sensitive sectors are weak.

• Next week: LEI (Mon.), New Home Sales (Thu.), Durable Goods (Fri.)

International: European Central Bank delivers back-to-back rate cuts, hints at more to come

• The European Central Bank cut its policy rate 25 bps to 3.25% at this week's meeting and said the disinflationary process is well on track. Considering balanced comments from the ECB and a subdued economic backdrop, we expect the ECB to cut rates at every meeting through at least next March. China's Q3 GDP slowed a bit less than forecast to 4.6% year-over-year, while several countries reported slower inflation this week, including Canada, New Zealand, Japan and the United Kingdom.

• Next week: Bank of Canada Policy Rate (Wed.), Eurozone PMIs (Thu.)

Interest rate watch: US Dollar gains on re-think of Fed policy easing

• A run of stronger-than-expected data recently have led market participants to dial back their expectations of Fed policy easing in the coming months. This re-think has led to dollar appreciation in recent weeks.

Topic of the week: Hurricanes Milton and Helene challenge the Southeast economy

• Although Hurricane Helene and Hurricane Milton have now passed, the social, environmental, demographic and economic damages are still being tallied. The most acute economic impacts are likely to be felt in the near-term, as the repercussions of the storms weigh heavily on the localities most effected. Over the longer run, rebuilding efforts and an influx of government aid should help bring about a recovery.

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