On today’s agenda, pay attention to the inflation numbers. First in Europe, where the preliminary in September comes with a sharp reduction in the base (from 5.3% to 4.7% YoY, last aid to transport in Germany) and also in the general rate (from 5.4% % up 4.5% YoY, due to the year-on-year evolution of crude oil). Transfer may be greater than expected after preliminary data from Germany, Belgium, Holland and Spain. Then, in the United States, with the PCE core deflator.
Strong oil of the week, which reached the 2023 high recently driven by the figure for crude oil inventories in the United States (decrease higher than expected, -2.2 thousand barrels against -320,000 est.) . Low levels of inventories that raise doubts about a possible reduction in exports from the United States. It added discipline to OPEC+, with Russia confirming it will continue with the supply cut deal. The raw material pushed by tactical issues (tensioned supply) and where we do not reject the level of 100 dollars/barrel (target band: 75-100 dollars).
After the central bank meetings, we look for nuances in the statements of their members.
FED: several pointed to the uncertainty derived from the potential shutdown of the federal government, which could slow the economy and affect the decisions of the FED. Wisdom in expressing the need to raise rates or not: Kashkari believes that rates should probably go up a bit; For Barkin “there is time to evaluate the next steps”, with the labor market as the key and it is early to anticipate if new increases are needed.
ECB: Holzmann says it is not clear that the peak of rate hikes has been reached and that the ECB may consider cutting PEPP earlier than planned. Others like Kazaks consider the most likely scenario that rates remain unchanged. PEPP on the table in the next meetings, with the greatest impact on the periphery.
Faced with a possible impending shutdown of the American federal government
What is this? Why does this happen? The suspension of the activity of the federal agencies (which oversees the implementation of spending in the United States) is due to the lack of approval of the annual financial laws necessary to spend the Government.
When will it happen?
Can it be avoided? This is from October 1. Due to the impossibility of an agreement in the chambers, a temporary resolution of the expenditure is required, a common practice, which does not usually cause interruptions in terms of financing, except in certain periods (eg, 2018), which forces closure in the absence of agreement.
And the markets?
Traditionally temporary and limited to variable income. In fixed income, this is a new factor that reflects the fiscal uncertainty in the United States that recently led to a worsening of the sovereign debt rating (Fitch).