Downside surprises for G10 economic data

Wells Fargo Research Team Wells Fargo

Summary

United States: Slew of data to binge on

This week brought fresh reads on an array of macro data, and the underlying details continue to paint a picture of an economy that is gradually losing momentum in Q4. While retail and industrial activity were stronger than the headline data suggest, there are also some signs of weakening.
Next week: LEI (Mon.), Existing Home Sales (Tue.), Durable Goods Orders (Wed.)

International: Downside surprises for G10 economic data

This week's reports pointed to slowing growth and slowing inflation among the economies. After solid growth during the first half of the year, Japan's Q3 GDP shrank by 2.1% quarter-over-quarter annualized, a larger than expected decline. U.K. October inflation slowed sharply to 4.6% year-over-year.
Next week: Canada CPI (Tue.), Eurozone PMIs (Thu.), Japan CPI (Fri.)

Interest rate watch: Yields fall on slowing inflation

U.S. Treasury yields fell this week as markets digested slower-than-expected inflation data for October. As we go to print, the yield on the 10-year Treasury note is 4.45%, down from 4.65% one week ago. This week's inflation reports reinforced our view that the FOMC is done hiking rates.

Credit market insights: Credit card delinquencies creep up in Q3

The Federal Reserve Bank of New York released its quarterly Household Debt and Credit Report last week. Not only did each major category of household debt rise during the quarter, but delinquency rates also moved higher. Credit card debt delinquency rates, in particular, have climbed above their pre-pandemic average.

Topic of the week: Not-so-free bird: Thanksgiving related inflation decelerates, though still elevated

Consumers have faced price pressures over the past few years that have continued to gobble up their wallets, and this Thanksgiving will be no different. Though price hikes for most items on the Thanksgiving menu have eased considerably from a year ago, the cost of Thanksgiving staples are still broadly elevated relative to a few years ago.

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Wells Fargo Research Team

Wells Fargo

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.