Macro Matters – Weekly review, w/c October 30

Macro Matters – Weekly Review, w/c October 30

Macroeconomic / Geopolitical Developments

• Mixed Results from Big Tech

• Mixed Macro Data

• ECB Rates Unchanged

• Yields Continue Higher

Stocks Down, with Yields Up Again, after Mixed Data and Earnings

Mixed Results from Big Tech

US stock indices declined for the second consecutive week as mixed corporate earnings and rising interest rates dampened sentiment. Major tech firms, including Amazon, Alphabet, Meta Platforms, and Microsoft, reported strong growth but faced scrutiny over rising expenses. Amazon’s report was well-received, with shares rallying on Friday.

Mixed US Macro Data

GDP Hotter Than Expected

The US economy grew at an annualised rate of 4.9% in Q3, the fastest since late 2021, driven by robust consumer spending and exports. Despite this, economists forecast slower growth ahead, though recession risks remain low.

PMI Edges Higher

October’s S&P Global Composite PMI rose to 51, indicating modest private-sector growth. Both Manufacturing and Services PMI improved, suggesting resilience in the economy.

PCE Mixed

Core PCE inflation rose 0.3% in September, with consumer spending up 0.4%. However, year-over-year Core PCE dipped to 3.7%, remaining above the Fed’s 2% target.

ECB Rates Unchanged

The ECB paused rate hikes, leaving the deposit rate at 4%, after ten consecutive increases. Concerns about eurozone economic fragility and potential recession risks prompted this decision, though inflation remains above the ECB’s 2% target.

Yields Continue Higher

The 10-year US Treasury yield surpassed 5% last week, its highest in 16 years, amid expectations of prolonged high interest rates. However, yields fell midweek following market shifts and investor sentiment changes.

What’s Ahead

• General: UK and EU Daylight Saving Time ended, temporarily narrowing the time gap with the US.

• Central Bank Watch: Interest rate decisions from the Bank of Japan (Tuesday), FOMC (Wednesday), and Bank of England (Thursday).

• Macro Data Watch: Key releases include German and EU GDP and CPI (Monday/Tuesday), US ADP Employment Change (Wednesday), and US Employment Report (Friday).

• Earnings Watch: Major reports include Apple (Thursday) alongside McDonald’s, Pfizer, and others earlier in the week.

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