13 November 2023
- Federal Reserve Chairman Jerome Powell stated that the Fed was not confident it had achieved a sufficiently restrictive level of monetary policy to bring inflation down to the 2 percent target. While U.S. inflation has decreased over the past year, it remains “well above” the target, and Powell emphasized that the Fed is not ready to assume inflation is on a sustainable downward path. Powell mentioned the possibility of further rate hikes if needed, denting recent optimism about the end of the Fed’s tightening cycle. However, he also emphasized a careful approach to future policy decisions to avoid being misled by short-term data and the risk of overtightening. This reminder led traders to adjust expectations, delaying anticipated rate cuts, with the first cut now expected in June instead of May. Following Powell’s remarks, U.S. stocks dipped, and Treasury yields held onto their gains.
- The legal adviser to Europe’s top court has pointed out that the EU tribunal made legal errors in its 2020 ruling in favour of Apple in a 13-billion-euro ($14 billion) tax order case. The adviser recommended a review of the case, potentially posing a setback for Apple. The European Union’s General Court had upheld Apple’s challenge, stating that regulators failed to demonstrate an unfair advantage. However, the Advocate General at the EU Court of Justice disagreed, suggesting that the case be referred back to the lower tribunal. The CJEU is expected to rule in the next few months, and such recommendations are typically followed, potentially impacting Apple’s stance in the tax dispute, which is part of EU antitrust chief Margrethe Vestager’s efforts to address perceived unfair state aid between multinationals and EU countries.
- Two major hospitals in Gaza have closed new admissions to patients due to the Israeli bombing, lack of fuel, and medicine shortages, raising concerns about the well-being of patients, particularly infants. Al Shifa and Al-Quds hospitals cited the blockade by Israeli forces and difficulties in providing patient care. The closure comes as a significant number of hospitals in Gaza are out of service and places for the injured are limited. The World Health Organization (WHO) described the situation as “dire and perilous,” with an increased number of patient deaths. Israel contends it is targeting Hamas militants but offers to evacuate newborns have reportedly been blocked by Hamas. The ongoing conflict has prompted evacuations and aid deliveries, but the humanitarian situation in Gaza is worsening.
What to watch out for this week
- United States: The focus of upcoming releases will be the October Consumer Price Index (CPI). It is expected to rise 0.1% from September, the lowest reading in four months, mainly due to a decline in gasoline prices. Excluding fuel and energy, the core CPI is expected to have increased by 0.3%, mirroring September’s figure and maintaining the annual rate at 4.1%. In contrast, retail sales are expected to fall 0.1%, marking the first decline in seven months.
- Euro Area: In Germany, the ZEW Indicator of Economic Sentiment is expected to reach an eight-month high, while industrial output in the Euro Area is likely to have declined in September. Second estimates of Q3 GDP for the Euro Area will be published, alongside flash estimates from the Netherlands, Poland, and Russia. Updates on inflation for the Euro Area, France, and Italy will also be released. Other notable data include Euro Area foreign trade, Germany’s wholesale prices, France’s jobless data, and Switzerland’s industrial output.
- United Kingdom: The economic calendar features crucial reports on inflation, unemployment, and retail sales. The UK’s annual inflation rate is projected to decline to a two-year low of 4.8% from September’s 6.7%. Retail sales are expected to rebound, while the jobless rate is expected to continue its upward trend in Q3.
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