The Chinese PMIs over the weekend were all in expansion with NBS PMIs beating expectations and Caixin ones missing them:

  • NBS Manufacturing PMI 50.2 vs. 50.0 expected and 49.7 prior.
  • NBS Services PMI 51.7 vs. 51.5 expected and 51.0 prior.
  • Caixin Manufacturing PMI 50.6 vs. 51.2 expected and 51.0 prior.
  • Caixin Services PMI 50.2 vs. 51.8 prior.
China Caixin Manufacturing PMI
China Caixin Manufacturing PMI

BoJ Governor Ueda spoke over the weekend and just reaffirmed that there’s still a long distance to go before exiting loose monetary policy:

  • The objective of the Bank's monetary policy is achieving price stability, which is its mission as stipulated by law. Considerations of the Bank's finances, etc. do not prevent it from implementing necessary policies.
  • A central bank's ability to conduct monetary policy is not impaired by a temporary decrease in its profits and capital, provided that it conducts appropriate monetary policy.
BoJ Governor Ueda
BoJ Governor Ueda

The BoJ released the Summary of Opinions of its latest September monetary policy meeting which doesn’t contain anything new:

  • One member said inflation likely to slow ahead.
  • One member said inflation exceeding 2% but this is largely due to firms passing on higher import costs.
  • Inflation likely to keep rising next fiscal year due to expected rises in transportation, public service fees.
  • One member said seeing signs that positive cycle rising wages and inflation may be kicking off.
  • One member said there is chance next year's wage growth may exceed that of this year.
  • One member said given recent FX, oil price moves, there is chance inflation may not slow much and overshoot expectations.
  • One member said no need to make additional tweaks to YCC as long-term rates moving fairly stably.
  • One member said end to YCC, negative rate must be tied to success of achieving 2% inflation target.
  • One member said to sustainably hit price goal, wage gains must become sustained and lead to inflation driven by service prices.
  • One member said there is still some distance but Japan nearing achievement of price target, so latter half of current fiscal year will be crucial phase in determining next year's price outlook, other factors.
  • One member said cannot determine now timing of policy tweak as that will depend largely on economic, price conditions at the time.
  • One member said BoJ's communication, guidance must be made in a way that does not constrain too much its freedom on timing, order of policy move.
  • One member said it is important to prepare for exit from risk-management perspective as we could have clarity around January - March next year on whether 2% inflation target can be met in sustained, stable fashion.
  • One member said side-effect of YCC remains even after steps in July to make it more flexible.
  • One member said even if BOJ ends negative rate policy, monetary conditions will remain accommodative as long as real interest rates are negative.

The Switzerland Manufacturing PMI beat expectations by a notable margin although it remains in contraction:

  • Manufacturing PMI 44.9 vs. 40.5 expected and 39.9 prior.
Switzerland Manufacturing PMI
Switzerland Manufacturing PMI

The Eurozone Unemployment Rate matched expectations as it remains at record low levels:

  • Unemployment Rate 6.4% vs. 6.4% expected and 6.5% prior (revised from 6.4%).
Eurozone Unemployment Rate
Eurozone Unemployment Rate

The Canadian S&P Global Manufacturing PMI fell further into contraction:

  • Manufacturing PMI 47.5 vs. 48.0 prior.
Canada Manufacturing PMI
Canada Manufacturing PMI

The US ISM Manufacturing PMI beat expectations by a notable margin:

  • Manufacturing PMI 49.0 vs. 47.8 expected and 47.6 prior.
  • Prices paid 43.8 vs. 48.6 expected and 48.4 prior.
  • Employment 51.2 vs. 48.3 expected and 48.5 prior.
  • New orders 49.2 vs. 46.8 prior.
  • Inventories 45.8 vs. 44.0 prior.
  • Production 52.5 vs. 50.0 prior.
US ISM Manufacturing PMI
US ISM Manufacturing PMI

Fed’s Bowman (hawk – voter) is calling for another rate hike before pausing, which is in line with the FOMC’s dot plot:

  • It will likely be appropriate to raise rates further and hold them at restrictive level for some time.
  • Inflation remains too high.
  • Sees risk that high energy prices could reverse some of the recent progress on lowering inflation.
  • Frequency and scope of recent data revisions complicates task of projecting how economy will evolve.
  • Expects progress to be slow on inflation given the current level of monetary policy restraint.
  • Remains willing to support rate increase at a future meeting if data indicates progress on inflation has stalled or is too slow to return it to 2% in a timely way.
  • Regulators seem to be engaging in 'heavy-handed' supervision of banks.
Fed's Bowman
Fed's Bowman

BoE’s Mann (hawk -voter) sound like she’s in favour of further tightening:

  • I see more resilient domestic demand in the UK economy.
  • I'm a hawk.
  • Says her inflation forecast is at the upper end of estimates.
BoE's Mann
BoE's Mann

Fed’s Harker (neutral – voter) spoke alongside Fed Chair Powell (neutral – voter) in a roundtable discussion and they both just stated that they are working to achieve price stability and maximum employment (which is their mandate)

Fed's Harker
Fed's Harker

Fed’s Barr (neutral – voter) is on the “higher for longer” camp and expects growth and labour market to soften over the next year:

  • Fed is at a point where we can proceed carefully on monetary policy.
  • Most important question is not whether an additional rate hike is needed this year.
  • Most important question is how long we will need to hold rates at a sufficiently restrictive level. I expect it'll take some time.
  • Full effects of past tightening are yet to come in the months ahead.
  • There has been a lot of progress on inflation.
  • Economic activity has been considerably more resilient than expected.
  • Sees higher probability than previously for a soft landing.
  • Labor market is tight, but supply and demand are coming into better balance.
  • Baseline projections is for below potential GDP growth over next year and further softening of labour market.
  • Monetary policy is a blunt tool. Likely not appropriate to address specific financial stability threats.
  • Supervisors expect banks to be ready and willing to use discount window.
  • There seems to be the right kind of slowing in housing.
  • Goods and housing services inflation is on the right path, downward.
  • The amount of credit tightening we are seeing is less than what I feared in March.
Fed's Barr
Fed's Barr


Fed’s Mester (hawk – non voter) supports one more rate hike this year:

  • Monetary policy path depends on how economy performs.
  • Fed will likely need to hike rates one more time this year.
  • Economy on ‘good path’ amid ongoing rebalancing of supply and demand.
  • Job market strong but slowing, coming into better balance.
  • Inflation ‘too high’ but sees welcome signs of progress lowering price pressures.
  • Fed will need to keep rates high to ensure return to 2% inflation.
  • Economy has grown more strongly than expected.
  • Risks to inflation tilted toward upside.
  • Credit conditions have tightened in line with monetary policy.
  • Sees some signs wage pressures are easing.
  • Fed will keep rates restrictive to get inflation down.
  • Higher rates are needed to make sure the disinflation process continues.
  • A.I. technology will change a lot in the economy.
  • Student loan restart won't bring immediate change in consumer spending.
  • Doesn't see dollar getting dethroned, dollar is very strong currency.
  • Likely to favour hike at the next meeting if the current economic situation holds.
  • Long-term yield rise will affect monetary policy outlook.
  • Fed likely at or near peak for interest rate target.
  • Higher long-term rates will moderate growth.
  • Yields up on a number of factors, including changed outlook on growth.
  • Doesn't see a rate cut happening any time soon.
  • Expects to hit 2% inflation by end of 2025.
Fed's Mester
Fed's Mester

The RBA left the cash rate unchanged at 4.10% as expected:

  • Some further tightening of monetary policy may be required.
  • Board remains resolute in its determination to return inflation to the target.
  • Recent data are consistent with inflation returning to the target range over the forecast horizon.
  • Higher interest rates are working to establish a more sustainable balance between supply and demand in the economy.
  • Inflation in Australia has passed its peak but is still too high and will remain so for some time yet.
  • Timely indicators on inflation suggest that goods price inflation has eased further, but the prices of many services are continuing to rise briskly.
  • Central forecast is for CPI inflation to continue to decline and to be back within the 2–3 per cent target range in late 2025.
  • There are significant uncertainties around the outlook.
  • Returning inflation to target within a reasonable timeframe remains the Board’s priority.
  • Inflation is coming down, the labour market remains strong, and the economy is operating at a high level of capacity utilisation.

ECB’s Simkus (hawk – voter) leans towards keeping rates higher for longer:

  • Inflation is on its way down.
  • Rates need to stay restrictive to tame prices.
  • Prompt monetary policy response has been effective.
ECB's Simkus
ECB's Simkus

ECB’s Lane (dove – voter) acknowledges that the progress towards the 2% target will be harder from now on and that the central bank will need to keep rates at restrictive level for as long as needed:

  • Progress to 2% inflation won't be as quick as to 4%.
  • Food inflation is still quite high now.
  • The key is to maintain rates at this level for as long as needed.
  • It is still a substantial issue.
  • Services inflation now a big contributor.
ECB's Lane
ECB's Lane

The Switzerland CPI missed expectations with inflation being comfortably withing the SNB’s 0-2% target range on both the headline and core measure:

  • CPI Y/Y 1.7% vs. 1.8% expected and 1.6% prior.
  • Core CPI Y/Y 1.3% vs. 1.5% prior.
Switzerland Core CPI YoY
Switzerland Core CPI YoY

BoC’s Vincent leans on the hawkish side as core inflation in Canada has proved to be stickier than expected:

  • Firms continue to expect price changes to remain larger and more frequent.
  • Still have a ways to go before pricing behaviour returns to normal.
  • If firms' recent pricing behaviour settles into a new normal, it could complicate return to low, stable and predictable inflation.
  • More frequent and large price increases by firms are intimately linked to stronger than expected inflation.
  • Downward path of inflation has been slower than anticipated, inflation proved to be stickier than many expected.
  • It is clear we are not out of the woods yet on inflation and unusual amount of uncertainty continues to cloud our view.
BoC's Vincent
BoC's Vincent

Fed’s Bostic (dove – non voter) is on the “higher for longer” camp:

  • Fed still has a way to go to get inflation back to target.
  • Fed is in restrictive territory and that is helping inflation fall.
  • I would be open to a robust review of 2% after it has been reached.
  • Higher long-end rates matter if they slow growth too much, no sign yet.
  • Higher long-term rates not impacting business beyond what would happen in a normal tightening cycle.
  • Says he sees the next move as a single quarter-point rate cut late next year.
  • Sees inflation approaching 2% target by end of 2025.
  • Still 'work to do' but confident underlying price trends are slowing.
  • Share of goods with faster price increases has declined; businesses agree slowing trend likely to continue.
  • 'Signs of balance' also coming to labour market, with slower jobs growth.
  • Businesses say it's getting easier to hire and wage growth likely to slow.
  • Energy prices and geopolitics pose upside risks to inflation.
  • Assessing need for below-trend GDP growth to cure inflation depends on other trends like productivity.
Fed's Bostic
Fed's Bostic

The US Job Openings beat expectations by a big margin in another sign that the labour market might be softening but it remains pretty tight:

  • Job Openings 9.610M vs. 8.800M expected and 8.827M prior.
  • Hires 5.8% vs. 3.7% prior.
  • Separations rate 3.6% vs. 3.6% prior.
  • Quits 2.3% vs. 2.3% prior.
US Job Openings
US Job Openings

Japan has likely intervened in the FX market as the USD/JPY exchange rate crossed the key 150.00 level. Senior Japan officials had no comment when asked about it, but it’s pretty evident by just looking at the price chart.

USDJPY 1 hour chart
USDJPY 1 hour chart


The RBNZ left the cash rate unchanged at 5.50% as expected:

  • Demand growth in the economy continues to ease.
  • Committee agreed that the OCR needs to stay at a restrictive level.
  • Interest rates are constraining economic activity and reducing inflationary pressure as required.
  • While GDP growth in the June quarter was stronger than anticipated, the growth outlook remains subdued.
  • With monetary conditions remaining restrictive, spending growth is expected to decline further.
  • Near-term risk that activity and inflation do not slow as much as needed.
  • Prolonged period of subdued activity is required to reduce inflationary pressure.

The Eurozone August retail sales missed expectations by a big margin:

  • Retail Sales M/M -1.2% vs. -0.3% expected and -0.1% prior (revised from -0.2%).
  • Retail Sales Y/Y -2.1% vs. -1.2% expected and -1.0% prior.
Eurozone Retail Sales YoY
Eurozone Retail Sales YoY

ECB’s Centeno (dove – voter) calls for the end of the tightening cycle given the current economic conditions:

  • Inflation is falling faster than when it was rising.
  • We can expect that the interest rate cycle has been completed by now and with present conditions.
ECB's Centeno
ECB's Centeno

ECB’s de Guindos (dove – voter) maintains a more cautious outlook:

  • We will continue to follow a data-dependent approach.
  • Economic activity likely to remain subdued in the coming months.
  • Labour market remains resilient.
  • Underlying price pressures remain strong.
ECB's de Guindos
ECB's de Guindos

The US ADP for September missed expectations by a big margin coming in at 89K vs. 153K expected and 180K prior (revised from 177K):

  • small (less than 50 employees) 95K vs. 18K prior.
  • medium firms (500 – 499) 72K vs. 79K prior.
  • large (greater than 499 employees) -83K vs. 83K prior.

Changes in pay:

  • Job stayers 5.9% vs. 5.9% prior.
  • Job changers 9.0% vs. 9.5% prior.

The US ISM Services PMI came in line with expectations at 53.6 vs. 54.5 prior:

  • employment index 53.4 vs. 54.7 prior.
  • new orders index 51.8 vs. 57.5 prior.
  • prices paid index 58.9 vs. 58.9 prior.
  • new export orders 63.7 vs. 62.1 prior.
  • imports 50.6 vs. 52.3 prior.
  • backlog of orders 48.6 vs. 41.8 prior.
  • inventories 54.2 vs. 57.7 prior.
  • supplier deliveries 50.4 vs. 48.5 prior.
  • inventory sentiment 54.8 vs. 61.5 prior.
US ISM Services PMI
US ISM Services PMI


ECB’s Kazimir (hawk – voter) joins the higher for longer camp:

  • I believe that the last rate hike was the final one.
  • A December rate hike is not a scenario I'd like.
  • We are on the trajectory of declining inflation.
ECB's Kazimir
ECB's Kazimir

BoE’s Broadbent (neutral – voter) didn’t offer much as he’s uncertain on the future rates trajectory:

  • It is an open question on whether there will be more rate hikes.
  • There are clear signs that rate hikes are having an impact.
  • But perhaps it may be that the effect is weaker than in the past or still delayed.
  • Sees UK inflation reaching target in 2 years' time.
BoE's Broadbent
BoE's Broadbent

ECB’s Lane (dove – voter) acknowledged that credit dynamics have been weak, which should weigh on economic growth and inflation:

  • Credit dynamic really has been quite weak.
  • It is below what we would have expected last year.
ECB's Lane
ECB's Lane

The US September Challenger Job Cuts came in at 47.46K vs. 75.15K prior.

US Challenger Job Cuts
US Challenger Job Cuts

The US Jobless Claims beat expectations once again:

  • Initial Claims 207K vs. 210K expected and 205K prior (revised from 204K).
  • Continuing Claims 1664K vs. 1675K expected and 1665K prior (revised from 1670K).
US Initial Claims
US Initial Claims

ECB’s Villeroy (neutral – voter) is just another member in the higher for longer camp as the ECB has probably ended its tightening cycle:

  • Increase in bond yields may be excessive but it is helping to tighten financial conditions.
  • I don't think an additional rate hike is justified now.
ECB's Villeroy
ECB's Villeroy

Fed’s Daly (neutral – non voter) is comfortable with the recent rise in Treasury yields as it tightens financial conditions on the Fed’s behalf:

  • Monetary policy is restrictive.
  • Progress isn't victory, must remain resolute.
  • To ensure we fully achieve goals, we need to finish the work.
  • We need vigilance and agility.
  • The economy still has considerable momentum.
  • We are a long way from 2% inflation and a long way from sustainable employment.
  • Even with recent slowing in the labour market, job growth remains well above what needed to keep pace with growth.
  • It's possible the slowing so far it will translate into steady march towards goal.
  • There are real risks in inflation projection.
  • Will need to see progress on a super – core inflation to be confident we are on path to 2%.
  • If we continue to see labour market and inflation falling, we can hold rates steady.
  • If financial conditions remain tight, that reduces need for more action from Fed.
  • But if falling inflation stalls or financial conditions loosen, will need to raise rates further.
  • Need to keep an open mind, have optionality on rates.
  • With rising bond yields, the need to do additional tightening by Fed is not there.
Fed's Daly
Fed's Daly

Fed’s Barkin (neutral – non voter) is comfortable with the recent rise in Treasury yields as well:

  • Yields have come up amid fiscal issuance and strong data.
  • A 2% is a very reasonable inflation target.
  • Does not see the logic of throwing out target before hitting it.
  • Rates feel high now, but they are not over the long term.
Fed's Barkin
Fed's Barkin


The Japanese wage growth missed expectations which is not what the BoJ wants to see in order to scale back its easing measures:

  • Average Cash Earnings Y/Y 1.1% vs. 1.5% expected and 1.1% prior.
  • Inflation-adjusted Real Wages Y/Y -2.7% vs. -2.5% prior. This is the 17th consecutive decline.
Japan Average Cash Earnings YoY
Japan Average Cash Earnings YoY

ECB’s Schnabel (hawk – voter) acknowledged the risks to the inflation outlook and the need to be cautious:

  • Overall, the recent news on inflation is encouraging.
  • Core inflation has proven more stubborn.
  • We cannot take it for granted that inflation will only move downwards from now on, because we could have new supply side shocks.
  • We cannot say that we are at the peak or for how long rates will need to be kept at restrictive levels.
  • I still see upside risks to inflation.
  • Cites wages as upside risk.
ECB's Schnabel
ECB's Schnabel

The US NFP report beat expectations by a big margin:

  • Nonfarm Payrolls 336K vs. 170K expected and 227K prior (revised from 187K).
  • Unemployment rate 3.8% vs. 3.7% expected and 3.8% prior.
  • Participation rate 62.8% vs. 62.8% prior.
  • Private payrolls 263K vs. 160K expected and 177K prior (revised from 179K).
  • Manufacturing payrolls 17K vs. 5K expected and 11K prior (revised from 16K).
  • Government payrolls 73K vs. 50K prior (revised from 8K).
  • U6 Unemployment rate 7.0% vs. 7.1% prior.
  • Average weekly hours 34.4 vs. 34.4 expected and 34.4 prior.
  • Average hourly earnings M/M 0.2% vs. 0.3% expected and 0.2% prior.
  • Average hourly earnings Y/Y 4.2% vs. 4.3% expected and 4.3% prior.
US Unemployment Rate
US Unemployment Rate

The Canadian Jobs report beat expectations as well:

  • Employment change 63.8K vs. 20.0K expected and 39.9K prior.
  • Unemployment rate 5.5% vs. 5.6% expected and 5.5% prior.
  • Full-time employment 15.8K vs. 32.2K prior.
  • Part-time employment 47.9K vs. 7.8k prior.
  • Participation rate 65.6% vs. 65.5% prior.
  • Average hourly wages permanent employees 5.3% vs. 5.2% prior.
Canada Unemployment Rate
Canada Unemployment Rate

The highlights for next week will be:

  • Tuesday: US NFIB Small Business Optimism Index.
  • Wednesday: US PPI, FOMC Minutes.
  • Thursday: Japan PPI, UK GDP, US CPI, US Jobless Claims, NZ Manufacturing PMI.
  • Friday: China CPI, China Trade data, Eurozone Industrial Production, US University of Michigan Consumer Sentiment.

That’s all folks. Have a great weekend!