BARCLAYS | In our view, achieving the FOMC’s target of 2% PCE inflation may require a substantial undershoot on the unemployment rate ( to 4% if not below ). Should the unemployment rate remain near current levels or should inflation expectations drift lower, the FOMC would be unlikely to hit its inflation target over the foreseeable future.
The main global central bankers have conveyed reassuring market-friendly messages following their last meetings. The Fed pictured a rosy outlook of home growth and employment paving the way for a moderate rate rise in December. The ECB on its side signalled its firm commitment to conduct a more flexible and accommodative policy by strengthening its QE stance. Yet good news is failing to stiffen market sentiment.
BARCLAYS | The Conference of the Parties (COP-21), the annual meeting of all countries which want to take action for the climate, will take place in Paris from 30 November to 11 December. There are reasons to think the summit can deliver a strong outcome and also reasons to be sceptical.
Craig Moran | Territorial spats between China and its Southeast Asian neighbors over Beijing’s infamous “nine-dash line” dotted across the South China Sea have substantially soured the mood of its allies.
Harry W.S. Lee via Caixin| There is a widening gap between Chinese investments in the U.S. financial sector and those heading the other direction, mainly caused by the Chinese government’s restrictions on market access against foreign investors, an expert from the U.S. research firm Rhodium Group says.
Z. Yuzhe, W. Liwei and W. Hongyuran via Caixin | Strengthening the People’s Bank of China’s regulatory clout is high on a list of suggestions for improving financial market oversight following last summer’s stock market crash.
UBS | With 66% of cast votes officially counted, Mauricio Macri has defeated the officialist party’s candidate Daniel Scioli with 53.46% of votes vs 46.54% in the second round of Argentina’s presidential election. At the time of writing, Scioli had already conceded defeat.
BARCLAYS | Brazil is confronting a toxic combination of a primary budg et deficit, high public debt (relative to EM countries), very high real interest rates (the Selic stands at 14.25%), sluggish trend growth, a negative commodity price shock and potential contingent liabilities for the sovereign, which together spell trouble for public debt dynamics.
The decline in world trade, particularly in Asia, highlights an important contradiction in the markets: asset prices are rising, but growth estimates and earnings forecasts for 2016 are being revised downwards.
Fernando Barciela | The Federal Reserve’s minutes which were released last Wednesday show that a rate hike is firmly on the cards for this December. But almost everybody seems to think that – if it happens – the rate increase probably will be small, a quarter of a percentage point at most. And, also very importantly, the pace of rate increases after that hike will be gradual. Before any further decision about future hikes the Fed will want to study the consequences.