USD: GDP surges 4.9% in Q3, new Home Sales up by 12.3%, while jobless claims hit 210,000; EUR: Eurozone Manufacturing PMI drops to 43.0 in October, Services PMI falls to 47.8, and ECB keeps interest rates at 4%.; ZAR: South African Reserve Bank (SARB) data indicates that mortgage advances grew at 5.1% YoY in August 2023, surpassing the post-global financial crisis average of 3.3%; GBP: UK Manufacturing PMI rises to 45.2; Unemployment Rate unexpectedly drops to 4.2% in August.; JPY: Japan's National CPI: 3.3% YoY in October; USD/JPY down 0.02% to 150.37 on strong inflation data; AUS: Australia's Q3 CPI surprises with a 1.2% increase, exceeding market expectations of 1.1%. AUD climbs to a weekly high, up 0.5% in reaction.
USD: GDP SURGES 4.9% in 2023Q3, NEW HOME SALES UP BY 12.3%
In the third quarter, the US GDP surged by 4.9%, surpassing expectations after a 2% growth in the previous quarter. This marks the largest gain since Q4 2021.
New Home Sales also rose by 12.3% in September, reaching 759k, exceeding the projected 680k, following an 8.2% decline in August. On the downside, jobless claims increased by 10,000 for the week ending Oct 21, totaling 210,000, slightly above the Dow Jones Estimate of 207,000.
Additionally, durable goods orders in September increased by 4.7%, exceeding the 2% forecast and the 0.1% gain in August. These releases led to broad-based weakness in the US Dollar, which retreated from its previous highs, hovering around 106.65 for the day.
EUR: EUROZONE MANUFACTURING PMI DROPS TO 43.0 IN OCTOBER
The Eurozone Manufacturing Purchasing Managers' Index (PMI) continued its decline, dropping to 43.0 in October, falling below both the forecast of 43.7 and the previous month's figure of 43.4.
Simultaneously, the Services PMI also saw a decline, falling from 48.7 in September to 47.8 in October, approaching a 32-month low.
Additionally, the HCOB Eurozone PMI Composite reached a 35-month low, declining to 46.5 in October, which was lower than the forecast of 47.4 and the previous reading of 47.2 in September.
In response to these economic indicators, the European Central Bank (ECB) decided to maintain its key interest rate at 4%. This decision marked the end of a 10-consecutive increase streak in borrowing costs, a move driven by mounting concerns regarding Eurozone growth.
ZAR: MORTGAGE ADVANCES SURPASS POST-FINANCIAL CRISIS AVERAGE OF 3.3%
In the current cycle of rapid and aggressive interest rate hikes, mortgage advances in South Africa have displayed a surprising level of resilience.
According to data from the South African Reserve Bank (SARB), mortgage advances increased by 5.1% year-on-year in August 2023, although this was a drop from the peak of 7.4% observed in September 2021.
It's noteworthy that this latest figure still exceeds the post-global financial crisis average of 3.3% seen from January 2010 to March 2020, a period that coincided with the onset of Covid-19 lockdowns (as depicted in Figure 1).
What's even more intriguing is that mortgage advances have outpaced both house prices and headline inflation, which recorded growth rates of 0.8% YoY and 4.8% YoY, respectively, in August.
In this report, we delve into the factors contributing to this remarkable resilience in mortgage advances and analyze what it reveals about the state of the consumer.
GBP: UK MANUFACTURING PMI RISES TO 45.2, UNEMPLOYMENT UNEXPECTEDLY DROPS TO 4.2% IN AUGUST
In October, the UK's Manufacturing Purchasing Managers' Index (PMI) surpassed expectations, reaching 45.2, while the Services PMI saw an unexpected decline, falling to 49.2, below the estimated 49.5.
This marks the lowest reading for the services sector since January and the third consecutive month below the 50 no-change mark. Simultaneously, the UK's Unemployment Rate dipped to 4.2% in the quarter ending August, compared to the anticipated 4.3%.
Official data from the Office for National Statistics (ONS) showed a significant increase in claimant counts, rising by 20.4k, in stark contrast to the previous month's 0.9k increase and defying the 2.3k forecast.
JPY: JAPAN'S NATIONAL CPI IS 3.3% YoY IN OCTOBER
In October, Japan's National Consumer Price Index (CPI) took a positive turn, rising to 3.3% year-on-year (YoY), compared to the previous month's 2.8% in September.
The Core Tokyo CPI, which excludes volatile food prices and serves as a key measure of headline inflation, also showed growth from 2.5% in September to 2.7% YoY this October.
In response to these inflation figures, the USD/JPY currency pair pulled back slightly by 0.02% on the day, with the exchange rate at 150.37. With inflation surpassing expectations, there's speculation that the Bank of Japan (BoJ) might consider adjustments to its monetary policy framework, influenced by Tokyo's robust inflation performance.
AUS: 3Q CPIT SUPRISES WITH A 1.2% INCREASE
In a surprising turn of events, Australia's Consumer Price Index (CPI) for the third quarter surged by 1.2%, surpassing market expectations of 1.1% and marking a significant uptick from the previous quarter's 0.8% increase. Although the annual inflation rate dipped from 6.0% to 5.4%, it still exceeded the anticipated 5.3%.
This unexpected surge had immediate ramifications for financial institutions. The Commonwealth Bank of Australia and ANZ, both previously inclined toward a rate pause, have now shifted their outlook. They are now considering a quarter-point rate hike in November.
Key drivers behind this inflation surge were notable increases in automotive fuel (7.2%), rents (2.2%), new dwellings purchased by owner-occupiers (1.3%), and electricity costs (4.2%). The AUD/USD currency pair reacted swiftly, with the Australian dollar (AUD) gaining momentum, rising by 0.5% and trading at a weekly high of 0.6386.
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