Weekly Insights

Reality check

• Robust US labour data forced markets to temper their pricing of rate cuts for 2024.

• We expect the FOMC to reinforce this message next week, retaining its tightening bias and penciling in just two cuts in 2024.

• Everything is transitory and so was the inflation shock in Europe. The ECB is likely to acknowledge this in its new forecasts, but likely err on the side of caution in its communication.

• Slowly but steadily, labour market slack is emerging as real GDP growth remains anaemic in the UK, with survey data continuing to point to stagnation.

• We expect the BoJ to stand pat at this month's MPM, but to continue setting the stage for normalization, starting with a YCC exit next April.

• The big miss in imports, the deepened housing slump, and rising borrower defaults confirm softer domestic demand in Q4 in China.

• Headline inflation for November, particularly core, eased across most economies in Emerging Asia.

• Stronger signs of disinflation were apparent in November in Turkiye. In contrast, inflation remains elevated in Russia, raising the risk of a 100 basis point hike.

• A flurry of CPI prints across Latin America suggests an ongoing, gradual improvement in inflation, despite some differences in timing.