The balancing act
Today's news headlines:
'Hunt pitches tax rises, spending cuts into UK's economic "storm"'. Jeremy Hunt faces a tough test in his Autumn Budget today as he looks to reassure markets that he's the man to stabilise the UK's finances without dealing a devastating blow to public spending. Yet, the Chancellor will need to implement both tax rises and spending cuts to raise the £55bn needed to reduce Britain's deficit. New OBR forecasts will also be released and are largely expected to track those of the Bank of England, which predicts recession throughout 2023. Hunt will reference the global headwinds of energy and inflation crises but is unlikely to comment on Brexit as a headwind facing the UK. (Bloomberg)
'ECB officials weigh slower rate-hike tempo with half-point move'. With recession risks mounting and the possibility of price pressures weakening, officials are likely to move interest rates just 50bps next month. The next inflation reading, due November 30th, will be relevant for the December decision, with the Bank of France Chief commenting that the ECB will probably raise to around 2% next month – remarks that point to a 50bps hike. The Governing Council will meet, also November 30th, before their pre-decision quiet period, which should offer markets more insight into December's decision. (Bloomberg)
Yesterday's larger-than-expected US Retail Sales print caused markets to reassess the path of Fed tightening, as the central bank looks to stymie inflation. The US Treasury yield curve further inverted, which is a decent indication of an impending recession. Equity futures markets are relatively flat ahead of the UK's Autumn Budget this morning, while the Pound has moved higher in early trading.
Aussie Unemployment Rate: 3.4% vs 3.5% previously
UK Autumn Forecast Statement: Expected before midday
MPC member Pill speaks: 12.30PM
FOMC member Bullard speaks: 1.00PM
Philly Fed Manufacturing Index: 1.30PM
FOMC member Mester speaks: 2.40PM
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*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.