It was a big week for inflation data. A hotter-than-expected US CPI print revived talk of a 50bps Fed hike in December. Then a softer PPI report cooled things down. Below is a US CPI and PPI review, plus the other key events from 9-13 November, from Newsquawk. The full numbers are on the BLS CPI page. For what markets expected going in, see our Week Ahead preview for 9-13 November.
WEEK IN REVIEW
NEW ZEALAND ELECTION (SAT): New Zealand’s general election produced no outright majority for either major party, with incumbent PM Luxon’s centre-right National Party securing 42 seats against Labour’s 36, both short of the 61 seats required for a parliamentary majority. However, National’s existing coalition partners, ACT (13 seats) and NZ First (12 seats), would give the governing bloc a combined 67 seats, potentially allowing Luxon to remain in power, subject to final results and coalition agreements. Meanwhile, The Opportunity Party entered parliament for the first time with seven seats and could play a role in coalition negotiations after signalling its willingness to engage with either bloc. Labour leader Hipkins has yet to concede, while Luxon will remain caretaker PM until the official results are announced on November 27th.
CHINESE INFLATION (MON): Chinese headline inflation eased in October, with the Y/Y rate falling to 0.7% (prev. 0.9%), below the market consensus of 0.8%, while core inflation dipped to 0.8%. Food prices remained the main drag, with deflation deepening to a 13-month low of -2.9% Y/Y. Meanwhile, non-food inflation held steady at 1.5% Y/Y, supported by transportation and communication fuels. PPI inflation continued to accelerate, rising to 5.7%, above expectations of 5.3% and the prior 5.0%. ING forecasts that, if elevated producer prices persist, higher costs should be passed on to consumers, keeping inflation positive heading into 2027, albeit at low levels.
BOJ SUMMARY OF OPINIONS (TUE): The BoJ’s Summary of Opinions from the October meeting highlighted growing support for further monetary tightening, with some members advocating a faster pace of rate hikes as underlying inflation approaches the 2% target. Several policymakers argued that rates should move towards neutral sooner, with one suggesting Japan’s neutral rate is considerably above 1%, while another urged the Bank to avoid excessive caution when raising rates. However, others favoured a more gradual approach, citing weak consumption, uncertainty surrounding AI demand and the risk that further tightening could weigh on growth and inflation. Some also stressed the importance of assessing financial conditions over several months following each hike. Overall, the discussions reinforced the BoJ’s tightening bias, although policymakers remained divided over the appropriate pace. A December hike remains firmly in focus, with money markets pricing around an 84% probability of an increase at next month’s meeting.
BOC MINUTES (TUE): The BoC minutes revealed that policymakers debated holding rates at 2.25% or hiking by 25bps to 2.50%. The argument for holding was that the recent rise in inflation had largely been concentrated in energy prices and energy-sensitive services, such as airfares. However, the case for hiking centred on the substantial increase in gasoline, diesel and heating oil prices since July, which were expected to remain elevated for longer. Looking ahead, Governing Council acknowledged considerable uncertainty surrounding external developments and their impact on Canada, although stressed that uncertainty did not necessarily warrant inaction. Members agreed that further rate hikes may be necessary but emphasised the need to proceed cautiously, assessing incoming information and making policy decisions on a meeting-by-meeting basis.
CHINESE BALANCE OF TRADE (TUE): China’s trade surplus narrowed to USD 105.28bln in October (exp. USD 125.8bln, prev. USD 133.53bln), marking a six-month low as stronger-than-expected import growth outpaced exports. Exports rose 35.2% Y/Y (exp. 33.5%, prev. 36.3%), supported by robust global demand for AI-related products, particularly semiconductors and data-processing equipment. Meanwhile, imports accelerated to 41.6% Y/Y (exp. 32.0%, prev. 31.0%), driven by technology-related purchases and higher crude oil import values. Despite the narrower monthly surplus, China’s cumulative trade surplus reached USD 1.04tln in the first ten months of 2026, surpassing the USD 1tln threshold earlier than last year and remaining on course for a record annual surplus. Looking ahead, ING expects AI-related trade to remain resilient, although potential European trade restrictions and uncertainty surrounding the US-China trade truce pose risks to the outlook.
NORWEGIAN CPI (TUE): October’s series was cooler than expected for both the headline and ATE Y/Y prints. ATE came in at 2.7% Y/Y, vs the market’s view of 2.8% and the 3.0% prior. For comparison, the Norges Bank expected 2.7%, and the convergence to their forecast will be welcome, and means the policy path outlined in November remains intact.
US CPI (TUE): US CPI was hotter than expected in October, with headline prices rising 0.4% M/M (0.350% to three decimal places), above the 0.3% forecast but cooling from the prior 0.649%. Shelter prices rose 0.3%, accounting for over 30% of the headline increase, while food prices increased 0.5% and energy prices rose 0.7%, slowing substantially from September’s 5.2% increase. Core CPI rose 0.3% M/M, above the 0.2% forecast and in line with the prior 0.3%. Within the core components, increases were seen in recreation, medical care, motor vehicle insurance, household furnishings and operations, and education, while used cars and trucks and communication were among the few major categories to decline. The hotter core print followed hawkish remarks from Fed Governor Waller earlier in the session, where the Governor said further policy tightening will be needed and that a 50bps hike in December may be warranted if October core CPI came in around 0.3% or higher. The combination of Waller’s comments and the inflation data has reignited discussion around the possibility of a larger December hike. Money markets now fully price a 25bps increase, with around a 10% probability of a 50bps move. This is the final CPI report ahead of the December 9th FOMC meeting, with November CPI not due until December 10th. However, policymakers will still receive October PPI on Friday and PCE data on November 25th. Pantheon Macroeconomics said the October CPI report appears consistent with a 0.35-0.40% M/M increase in core PCE and an acceleration in the annual core PCE rate to 3.3% from 3.1% in September.
UK GDP (THU): Q3 preliminary GDP printed as expected Q/Q at 0.7%. September’s series was stronger than forecast, however, the priors were subject to a downward revision. The series continued the narrative of services offsetting weak activity elsewhere, and it remains to be seen how this dynamic will fare into the winter, and through the global AI/tech woes of recent days/weeks. Overall, for the BoE the series keeps the tightening path in-play, and while it is unlikely to be a significant factor in the deliberations around the timing of the next move, it works marginally in favour of December over February.
US PPI (FRI): The October PPI report leaned soft, with headline prices rising 0.3% M/M, cooling from September’s 1.4% increase and below the 0.4% forecast. The Y/Y rate accelerated to 6.5% from 6.3%, although it remained below the 6.6% consensus. Core PPI was in line with expectations at 0.3% M/M, slowing from the prior 0.8%, while the Y/Y rate held steady at 5.0%. The softer-than-expected report offered some relief from inflation concerns following Tuesday’s hot CPI print, which reignited debate around a potential 50bps Fed hike in December after Governor Waller suggested such a move may be warranted if October core CPI came in around 0.3% or higher, a threshold subsequently met. The softer PPI data could strengthen the case for a more measured 25bps hike rather than a 50bps move. Within the report, PCE-relevant components showed slower increases in air passenger transport and portfolio management prices, while healthcare prices were mixed. The data prompted a dovish reaction, with equities, Treasuries and gold rising, and the Dollar coming under pressure, before the moves pared somewhat.
Source: Newsquawk.com
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