Economy

The labor market has remained stronger than expected even as the Federal Reserve has tried to get inflation under control.The nation’s extreme shortage of job seekers worsened in September, the Labor Department reported Tuesday, after easing the previous month.Employers had 10.7 million positions open as summer ended, up from 10.3 million in August. That left roughly 1.9 posted jobs for every unemployed worker, a persistently high ratio even as the economy appears to be decelerating because the Federal Reserve is working to quell inflation.Pulling down job postings — or holding off on new ones — is usually the first step that employers take as the economy weakens, in hopes that hiring more conservatively could avoid the need to lay people off later. But the labor market has been slow to respond to rising interest rates, even as other indicators point toward an impending recession.The report is the last piece of significant economic data to land before policymakers at the Fed meet on Wednesday, and only reinforces the likely outcome. Most analysts expect the central bank to raise its benchmark interest rate by 0.75 percentage points, even if job openings tumbled in Tuesday’s Labor Department report.“What if all the JOLTS dropped to zero?” said Dana Peterson, chief economist at the Conference Board, using shorthand for the Job Openings and Labor Turnover Survey. “I don’t think that would cause them to not go 75 basis points, because they’re focused on inflation. They’ve already said there’s going to be some pain, and pain is code for the labor market.”The State of Jobs in the United StatesEconomists have been surprised by recent strength in the labor market, as the Federal Reserve tries to engineer a slowdown and tame inflation.September Jobs Report: Job growth eased slightly in September but remained robust, indicating that the economy was maintaining momentum despite higher interest rates.A Cooling Market?: Unemployment is low and hiring is strong, but there are signs that the red-hot labor market may be coming off its boiling point.Disabled Workers: With Covid prompting more employers to consider remote arrangements, employment has soared among adults with disabilities.A Feast or Famine Career: America’s port truck drivers are a nearly-invisible yet crucial part of the global supply chain. And they are sinking into desperation.The number of open jobs is consistent with surveys of businesses, which have continued to report difficulty hiring. The National Federation of Independent Business found in its September survey that 23 percent of its members planned to create new jobs in the next three months, and of those, 89 percent said they had few qualified applicants.The jump in job openings was largely due to huge increases at hotels and restaurants, which added 215,000 postings. And the health care and social assistance sector was looking for 115,000 more workers than the previous month, reaching 2.1 million openings total, the highest level on record.At the same time, the number of people hired declined to about 6.1 million, continuing a downward slide that began this spring. That could be a consequence of employers having a tougher time finding qualified applicants, or deciding to hold positions open longer as they wait for the economic dust to settle.The number of people quitting their jobs voluntarily, usually a sign that workers have confidence they’ll be able to find a better one, declined slightly to about 4.1 million. As a share of total employment, that was about level with recent months but down from record highs at the end of 2021.Inflation has forced some workers to find ways to increase their earnings — whether by asking for raises or finding other jobs. At the same time, fear of a looming recession has prompted some workers to stay put unless they have another offer in hand.Quitting fell most in industries that are facing the strongest headwinds from higher interest rates and weakening consumer spending, including construction, transportation and warehousing, and manufacturing.The number of layoffs also declined from recent months. That’s in line with the weekly reports of initial claims for unemployment insurance, which have remained near record lows. After hiring aggressively over the past year — and often at higher salaries — employers may be less eager to let people go, even as business wavers.In an August survey of hiring managers by the polling firm Morning Consult, about 57 percent of respondents said they were retaining more employees than they normally would because of how difficult it was to replace people. That may lead to a reversal of the typical “last-in, first-out” pattern that has been common in other downturns.“If you spent a lot of money attracting workers, you don’t want to let them go right away, because then all that money just goes down the drain,” Ms. Peterson said. “Six months later you have to find them again, and they might be asking for a different asking price. You want to keep all your talent, but if you think about it, it’s very expensive to let go of those workers you just hired and invested a lot in.” More

How might globalisation end? Some seem to imagine a relatively peaceful “decoupling” of economies until recently stitched so tightly together. But it is likely that the fracturing of economic ties will be both consequence and cause of deepening global discord. If so, a more destructive end to globalisation is likely.Humanity has, alas, done this before. Since the industrial revolution in the early 19th century, we have had two periods of deepening cross-border economic integration and one of the reverse. The first period of globalisation preceded 1914. The second began in the late 1940s, but accelerated and widened from the late 1970s, as ever more economies integrated with one another. In between came a lengthy period of deglobalisation, bounded by the two world wars and deepened by the Depression and the protectionism that both accompanied and worsened it. Finally, since the financial crisis of 2007-09, globalisation has been neither deepening nor reversing.

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This history hardly suggests that a period of deglobalisation is likely to be a happy one. On the contrary, 1914-45 was marked by the collapse of political and economic order, both domestic and global. The Bolshevik revolution of 1917, itself a consequence of the first world war, launched communism on the world. On some estimates, communism killed around 100mn people, even more than the two world wars.This period of chaos and calamity had some beneficial outcomes: it made European empires untenable; it brought forth modern welfare states; and it made humans a little more aware of their shared destiny. Yet, in all, it was an epoch of catastrophe.

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A controversial question is how and how far peace is linked to globalisation. As John Plender recently argued, trade does not necessarily secure peace. The onset of the first world war at a time of relatively buoyant trade surely demonstrates this. The causality goes rather in the opposite direction, from peace to commerce. In an era of co-operation among great powers, trade tends to grow. In one of mutual suspicion, especially one of open conflict, trade collapses, as we see now between Russia and the west.People sometimes point to the English liberal Norman Angell as a naive believer in the view that trade would bring peace. Yet, in The Great Illusion, written shortly before the first world war, he argued that countries would gain nothing of value from war. Subsequent experience entirely vindicated this view: the principal participants in the war all lost. Similarly, ordinary Russians will not benefit from the conquest of Ukraine or ordinary Chinese from the conquest of Taiwan. But this truth did not preclude conflict. Under the leadership of psychopaths and the influence of nationalism and other dangerous ideologies, we are capable of grotesque follies and horrific crimes.

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A possible response is that nothing similar to what happened during the “great deglobalisation” of the 20th century can happen this time. At worst, the outcome might be a bit like the cold war. This, however, is unduly optimistic. It is quite likely that the consequences of a rupture of great power relations will be even worse in our time than it was then.One obvious reason is that our capacity for mutual annihilation is far more than an order of magnitude greater today. A disturbing recent study from Rutgers University argues that a full-scale nuclear war between the US and Russia, especially given the probability of a “nuclear winter”, could kill over 5bn people. Is that unimaginable? Alas, no. Another reason why the outcome could be even worse this time is that we depend on a high level of enlightened co-operation to sustain an inhabitable planet. This is particularly true of China and the US, which together generate over 40 per cent of global CO₂ emissions. The climate is a collective action challenge par excellence. A breakdown of co-operative relations is likely to end whatever chance exists of avoiding a runaway process of climate change.

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One then has to fall back on the hope that today’s deepening global divisions can be contained, as they were, by and large, during the cold war. One rejoinder to this hope is that there were some close-run moments during the cold war. The second is that the Soviet economy was not integrated into the world’s, while China and the west are both competitors and integrated with one another and the rest of the world. There is no painless way of decoupling these economic links. It is folly to imagine there is. The effort seems sure to create conflict.Indeed, the recently announced controls on US exports of semiconductors and associated technologies to China looks a decisive step. Certainly, this is far more threatening to Beijing than anything Donald Trump did. The aim is clearly to slow China’s economic development. That is an act of economic warfare. One might agree with it. But it will have huge geopolitical consequences.

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Deglobalisation is most unlikely to be the outcome of carefully calibrated and intelligent decoupling. This is not how we humans work. People might pretend deglobalisation has something to do with reducing inequality. That is nonsense, too: the more open economies are frequently relatively equal.It is conflicts over power that most threaten globalisation. By seeking to enhance their security, great powers make their rivals more insecure, creating a vicious downward spiral of distrust. We are already a long way down this spiral. That reality will shape the fate of the world economy. We are not headed towards a benign localism, but towards negative-sum rivalry. Our world may not survive a virulent bout of that [email protected] Martin Wolf with myFT and on Twitter More

Elias Fares, who runs a bakery in a Beirut neighbourhood, is worried. He has secured enough flour to keep his shelves stocked for the next few weeks. But he is concerned the collapse of the Black Sea grain deal after Russia’s withdrawal from the agreement will worsen the country’s food security.“What happens after that?” he said. “Most Lebanese people are surviving on just bread these days, we can’t have shortages again.” Ukraine accounts for about 10 per cent of the world’s wheat and corn exports, and food security experts warn any interruption in supplies will lead to further price rises, with “catastrophic consequences” for poorer nations already facing acute food shortages.In Lebanon, bread shortages and skyrocketing prices were common even before the Ukraine war. The country went into economic meltdown in October 2019 and its currency has since lost more than 95 per cent of its value against the dollar, leaving it struggling to afford wheat imports. Reliant on Ukraine for up to 60 per cent of its wheat, Lebanon acutely felt the impact of Russia’s Black Sea blockade, which halted grain exports from Ukrainian ports following Moscow’s full-blown invasion of its neighbour in February. Long queues formed daily at bakeries and supermarkets this summer as people waited to buy a single bag of bread.Shortages were eased after a UN-backed initiative unblocked grain shipments from Ukraine’s southern ports from July. Lebanon’s current supplies of wheat are sufficient to last two months, “with ships on their way”, according to Ahmed Hoteit, head of Lebanon’s association of mills. But last week Russia suspended its participation in the deal. Vessels are still sailing through the Black Sea — the UN said 15 had departed Ukrainian ports on Monday and Tuesday carrying wheat, corn and soyabean meal. Vessels are believed to insured under existing cover until the end of this week, but insurers are not offering new quotes until an agreement can be made with Russia, according to a Lloyd’s of London consortium.The UN said on Tuesday that talks were continuing between Russia, Ukraine and Turkey in Istanbul on resuming Moscow’s full participation in the Black Sea initiative. It said it had agreed with the Turkish and Ukrainian delegates that there would be no movement of vessels under the agreement on Wednesday.Moscow’s decision could not have come at a worse time for Ukraine and its grain customers. The country’s crop sales normally accelerate around the harvest in September and October, with many nations in the Middle East and Africa building up their inventories at that time.Grain prices, which initially jumped after Russia’s move, eased on Tuesday, with wheat trading on the Chicago Board of Trade at $8.73 a bushel. However this is still 50 per cent higher than the 2019-21 average.David Laborde, senior research fellow at the International Food Policy Research Institute think-tank, said any decline in grain flows would be painful for countries such as Turkey, Lebanon, Sudan and Yemen. “This will exacerbate food insecurity and political tensions in these countries,” he said.Even before Russia’s invasion of Ukraine, the Covid-19 pandemic and crop failures caused by climate change had damaged global food security. The war has hit the poorest countries hardest, with acute food insecurity now affecting 345mn people, said economists.“Poor countries with high debt which are net importers of food, fertiliser and fuel are in serious trouble,” said Arif Husain, chief economist at the UN World Food Programme. Unless food and fertiliser flows were freed up, hunger would be caused not only by high prices, but also availability as farmers struggled to produce food, he warned. Instead of suspending the Black Sea grain deal, participants needed to discuss extending it when it ended in mid-November, he added.

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The economic damage wrought by the war has been significant, especially for those relying on grains and vegetable oils from Ukraine and Russia. Food price inflation has soared to 93 per cent in Turkey, while multilateral organisations have announced emergency measures to help poor countries. This month, Lebanon’s parliament approved a World Bank loan worth $150mn to help finance its wheat imports. The World Bank has also announced emergency packages for Egypt and Tunisia. Meanwhile, the IMF launched a “food shock window” — a facility for countries hit by the crisis, akin to an emergency import facility for food purchases proposed by the UN Food and Agricultural Organization this year. Malawi last month became the first country to sign up, with a $88.3mn agreement under the facility.

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Russia, the world’s largest wheat producer and exporter, is expecting a record crop this year. But it is unclear how much will flow on to world markets because while Russian food and fertilisers are exempt from western sanctions, some buyers and financing banks have steered clear of them.Russia has said it is ready to supply 500,000 tonnes of grain directly to poor countries. On Monday night Lebanon’s public works minister Ali Hamieh tweeted that Russia would donate 25,000 tonnes of wheat to the country. Losing the safety net of Ukraine’s exports is worrying, said Laborde: “We are in a very complicated situation. We need a buffer and to get that [we need] to get Ukraine back into the market. We don’t have a safety margin.”

Even under the Black Sea deal, Ukraine’s grain exports were still about half their prewar level. Before Russia’s full-scale invasion, most of the country’s exports were shipped through the waterway, and while it has tried to increase the amount of grain transported through canals to Romania’s Black Sea coast and onward, and by train to the rest of Europe, the capacity increases have been limited.Failure to resurrect the deal will hit Ukraine’s farmers and their revenues, hampering their ability to produce next year’s crops. This means “we will be carrying the problem into 2023 and 2024”, warned Josef Schmidhuber, deputy director at the FAO’s trade and markets division.Back in Beirut, Fares has started preparing for the worst: “I’m worried we’re going to go back to those long lines we saw this summer,” the baker said, recalling that he had to set up metal barriers to control agitated crowds. “It was awful having to turn so many hungry people away.” More

Employment openings for the month totaled 10.72 million, well above the FactSet estimate for 9.85 million, according to September’s Job Openings and Labor Turnover Survey.
The data indicates that there are 1.9 job openings for every available worker.
The ISM Manufacturing Index posted a 50.2 reading, slightly better than the Dow Jones estimate for 50.0 but 0.9 percentage point lower than September.

The Go! Go! Curry restaurant has a sign in the window reading “We Are Hiring” in Cambridge, Massachusetts, July 8, 2022.
Brian Snyder | Reuters

Job openings surged in September despite Federal Reserve efforts aimed at loosening up a historically tight labor market that has helped feed the highest inflation readings in four decades.
Employment openings for the month totaled 10.72 million, well above the FactSet estimate for 9.85 million, according to data Tuesday from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey.

The total eclipsed August’s upwardly revised level by nearly half a million.
Fed policymakers watch the JOLTS report closely for clues about the labor market. The latest numbers are unlikely to sway central bank officials from approving what likely will be a fourth consecutive 0.75 percentage point interest rate increase this week.
September’s data indicates that there are 1.9 job openings for every available worker. The disparity in supply and demand has helped fuel a wage increase in which the employment cost index, another closely watched data point for the Fed, is growing at about a 5% annual pace.
In other economic news Tuesday, the ISM manufacturing index posted a 50.2 reading, representing the percent of companies reporting expansion for October. That was slightly better than the Dow Jones estimate for 50.0 but 0.9 percentage point lower than September.
One good piece of news from the ISM data: The prices index fell another 5.1 points to a 46.6 reading, indicating a lessening of inflation pressures. Order backlogs also declined, dropping 5.6 points to a 45.3 reading, while supplier deliveries fell 5.6 points to 46.8 and employment edged higher to 50.

Hiring numbers have stayed solid, though they are slowing.
Friday’s nonfarm payrolls report for October is expected to show growth of another 205,000, which while strong by historical levels would represent a further deceleration after averaging gains of 444,000 for the first half of 2022 but 372,000 over the past three months.
Hiring declined by 252,000 in September, while quits edged lower. Total separations showed a sharp decline, falling by nearly 400,000 to a rate of 3.7% as a share of the labor force, down from 4% in August.
Respondents to the ISM survey indicated various pressures continuing, while abating in other areas.
“Challenges with labor and parts delivery are easing. Order levels are slowing down after pent-up demand in the previous month,” said one respondent in the transportation equipment industry.
Another, in the food, beverage and tobacco sector, noted that the “growing threat of recession is making many customers slow orders substantially. Additionally, global uncertainty about the Russia-Ukraine (war) is influencing global commodity markets.”
The Fed releases its rate decision Wednesday at 2 p.m. ET. Markets are pricing in a nearly 90% chance of a 0.75 percentage point increase, while narrowly expecting another 0.5 percentage point move in December, according to CME Group data.

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Demand for US workers rebounded in September in a sign of a tight labour market despite the Federal Reserve’s attempts to cool the economy down with a string of rate rises. Employers added 437,000 job vacancies in September, bringing the total number of vacancies to 10.7mn at the end of the month, according to the labour department’s Job Openings and Labor Turnover Survey, commonly known as Jolts, which was released on Tuesday.“The huge increase in job openings was expected to slow, but the numbers show a job market that is speeding up, not slowing down,” said Layla O’Kane, an economist for analytics company Lightcast.The rise partly offsets a plunge in job vacancies recorded in August. Because job listings are seen as a proxy for labour demand, investors had interpreted the prior report as an early sign that the Fed’s plan to slow the labour market and cool inflation was working. Officials had reported that vacancies in August fell more than 1mn to 10.05mn, but on Tuesday revised the total up to 10.3mn.“Today’s Jolts release is not good: job openings up 437,000, the labour market remains very tight — a little tighter than we thought,” Jason Furman, a former economic adviser to Barack Obama who now works at Harvard, wrote on Twitter. Furman added: “Most importantly this is a useful lesson in how not to read macro data — after last month’s premature hyperventilation.”In September, healthcare employers posted a record high number of vacancies. The food service and transportation and warehousing sectors also helped fuel a jump in openings.Released as the Fed gathered for its latest policy meeting, the data underscore just how tight the labour market remains despite efforts undertaken by the central bank since March to remove the stimulus it put in place at the onset of the coronavirus pandemic.The data suggest the Fed will need to continue pressing ahead with plans to tighten monetary policy and keep interest rates at a level that restrains activity for an extended period in order to bring labour demand back into balance with the limited supply of workers.Fed officials on Wednesday are set to raise the benchmark policy rate by 0.75 percentage points for the fourth time in a row, lifting the target range to between 3.75 per cent and 4 per cent. At the last policy meeting in September, chair Jay Powell said rates were just at the “very lowest level of what might be restrictive”, indicating that the next move is expected to have a larger effect on growth. Economists broadly think the Fed will need to raise rates to 5 per cent early next year if it is to return inflation to its 2 per cent target, a level that many predict will result in a recession and substantial job losses. Prominent Democrats including Elizabeth Warren and Bernie Sanders have pressed the Fed to slow down before the economy reaches that point.In a letter this week, Warren, Sanders and nine other lawmakers said the Fed’s actions showed “an apparent disregard for the livelihoods of millions of working Americans”.“We are deeply concerned that your interest rate hikes risk slowing the economy to a crawl while failing to slow rising prices that continue to harm families,” they wrote on Monday.

In September, the last time projections were published, most Fed officials saw the unemployment rate peaking at 4.4 per cent. Economists warn that is far too optimistic and many believe it will eventually surpass 5 per cent. Despite the jump in vacancies, the number of workers voluntarily leaving their jobs continued to edge lower, which economists view as a sign that jobseekers are losing confidence in the labour market. Some 4.1mn quit in September, down from 4.2mn the month before, according to labour department data.“It’s still trending down overall, but not the consistent cooling the Fed was looking for,” said Nick Bunker, an economist for jobs site Indeed.The labour department is scheduled to release its official payroll report on Friday. More

LONDON (Reuters) – The Bank of England will pass a major milestone on Tuesday when it holds a first auction to sell some of the 875 billion pounds ($1.01 trillion) of government bonds it bought during successive quantitative easing (QE) programmes from 2009-2021.Britain’s central bank will be the first in the Group of Seven rich nations to actively sell QE bonds to investors.It has been reducing its holdings of British government bonds, known as gilts, bought under QE since February, when the BoE said it would no longer buy new gilts to replace those which matured. Total holdings have since fallen to 838 billion pounds.The U.S. Federal Reserve and Bank of Canada have adopted similar policies, sometimes known as passive quantitative tightening (QT), to help shed bonds accumulated during years of stimulus to support crisis-hit economies. WHAT IS THE BOE DOING NOW?The BoE aims to sell 750 million pounds of British government bonds with a remaining maturity of three to seven years at its first gilt auction on Tuesday, with results published shortly after 1445 GMT.In August, the BoE said it wanted to reduce its total gilt holdings by 80 billion pounds over a 12-month period starting in late September. To achieve this, it said it would need to sell around 10 billion pounds of gilts every three months, in addition to not reinvesting the proceeds of maturing bonds.A start to sales was delayed first by the postponement of September’s Monetary Policy Committee meeting after the death of Queen Elizabeth, and then by a chaotic sell-off in gilts triggered by former Prime Minister Liz Truss’s plan for unfunded tax cuts. The market turmoil forced the BoE to intervene and buy 19 billion pounds of long-dated and inflation-linked gilts in an emergency programme that ran until Oct. 14.The BoE will now hold eight gilt auctions this year, totalling 6 billion pounds of sales and including gilts with a maturity of up to 20 years. It had originally aimed to sell 8.7 billion pounds of gilts this year, including some with a maturity of over 20 years – the type hit hardest by a fire sale of assets by pension funds following the Truss government’s Sept. 23 “mini-budget”.The BoE says it still intends to reduce total gilt holdings by the 80 billion pounds announced in August. Policymakers will review the pace of sales annually.WHY IS THE BOE SELLING GILTS?British government bonds have a longer average maturity than those issued by other countries, so the BoE has to sell gilts to achieve the same pace of balance sheet reduction that other central banks would get by simply allowing their bonds to mature.More broadly, QE was always intended to be temporary and Governor Andrew Bailey has been keen to reverse some of the purchases, especially after BoE gilt holdings doubled during the wave of QE purchases in the COVID-19 pandemic.At its peak in December 2021, the BoE owned roughly half of all conventional British government bonds in issue.The BoE does not intend to fully reverse QE, because regulatory changes since the 2008 financial crisis mean banks need to hold more cash than before. It has not set a long-term target for gilt holdings.Reversing QE may help fight inflation, to the extent it pushes up borrowing costs and gives the government, business and the public less money to spend on other things.However, the BoE says raising interest rates is its main tool for controlling inflation, because the impact is better understood than that of QT.WHAT EFFECT WILL SELLING GILTS HAVE?The BoE aims for QT to have relatively little impact on gilt prices and borrowing costs.It sees the impact of QE and QT as depending heavily on financial market conditions – pushing borrowing costs up or down significantly if carried out at scale during times of market turmoil, but having little impact if done gradually while markets are calm.The BoE’s upcoming 6 billion pounds of sales come alongside 37 billion pounds of gilt issuance by the government over the same period. Bond strategists have questioned how strong demand will be, as gilt prices have slumped this year, and some investors suggested the central bank would be wiser to postpone sales until 2023.Strategists at Citi noted that long-dated gilts prices rallied relative to those for shorter-dated gilts after the BoE announced on Oct. 18 that it would exclude them from its purchases this year.The overall past effect of QE on the economy has been difficult to measure, and it is especially hard to separate the effect of actions by the BoE from spillovers from bond purchases by the Fed and the European Central Bank.In broad terms, QE pushed down borrowing costs for medium or longer-term periods, slightly raised inflation and probably led to somewhat lower unemployment and faster growth than otherwise.The BoE also emphasised the need for QE to stabilise markets at the start of the COVID-19 pandemic.Critics say QE played a major role in pushing up house prices and stock markets for more than a decade, worsening inequality. The BoE has said that without QE, consumer price inflation would have undershot its 2% target during the 2010s, and that unemployment would have been much higher at points. ($1 = 0.8671 pounds) More

LONDON (Reuters) -European stocks rose on Tuesday and the positive market sentiment was set to continue on Wall Street, supported by speculation among investors that central banks could come to the end of their rate-hiking cycles.Following mild losses on Wall Street on Monday, Asian shares strengthened on Tuesday and European shares opened higher, as investor focus shifted to the U.S. Federal Reserve’s rate decision on Wednesday and the Bank of England meeting on Thursday.At 1153 GMT, the MSCI world equity index, which tracks shares in 47 countries, was up 0.7% on the day, holding close to last week’s high.Europe’s STOXX 600 rose to its highest in more than six weeks, up 1.2% on the day.London’s FTSE 100 was up 1.4%, while Germany’s DAX was up 1.3% .British energy giant BP (NYSE:BP) made $8.15 billion in third quarter profit, more than double what it made in the same period last year. Rivals Shell (LON:RDSa), Exxon Mobil (NYSE:XOM) and TotalEnergies also reported bumper profits last week.U.S. stock futures rose, with Nasdaq e-minis up 1.2% and S&P 500 e-minis up 0.9%.Norman Villamin, chief investment officer of Wealth Management at UBP, said the rise in European stocks could be due to “effectively dovish” guidance from the European Central Bank last week.”While that’s positive I would caution people. To us that just means that the recession is a little less deep than it may otherwise have been, but we do think that a recession is coming in Europe,” he said.Although last week’s ECB meeting was perceived by markets as containing dovish signals, ECB President Christine Lagarde said in an interview on Tuesday that the central bank must keep raising interest rates to fight off inflation, even if the probability of a euro zone recession has increased.Data on Monday showed that euro zone inflation surged by more than expected in October, hitting 10.7%.RATE HIKESThe Fed is expected to raise interest rates by 75 basis points on Wednesday, but investors will look for any signals the Fed may be considering a deceleration in interest rate hikes in the future.Villamin said that central banks are caught in a “tug of war” between the slowing economy and high inflation.”In the U.S., because the economy is still doing pretty well, there’s not very many shocks, we think ongoing rate hikes make a lot of sense in the first half of next year,” he said.Euro zone government bond yields fell. The German 10-year yield was down 11 basis points on the day at 2.048%. U.S. Treasury yields also fell, with the 10-year yield down 13 bps at 3.9468%, and the two-year yield down 7 bps at 4.4266%.The U.S. dollar index was down 0.7% at 110.8, while the euro was up 0.6% at $0.99405.The Australian dollar was up 0.8% at $0.6451. The Reserve Bank of Australia raised rates by 25 bps for a second month running, but revised up its inflation outlook and said more rate hikes would be needed.The Japanese yen was a touch stronger versus the dollar, with the pair at 147.28.China’s yuan hit a near 15-year low against the dollar, after the central bank fixed the official guidance rate at its lowest level since the global financial crisis of 2008.Oil prices rose by more than 1%, paring losses from the previous session, helped by the weaker dollar.Gold also rose, up 1.2% $1,652.38 per ounce. More

With the message, the central bank indicates that with interest rates unchanged at a cycle high, it continues to see no comfort in mentioning monetary easing.In the minutes of the meeting held Oct 25-26, when the rate-setting committee known as Copom kept the benchmark rate at 13.75%, policymakers said that their slight upward revisions for inflation reflect higher inflation of market prices in the short term and a small increase for administered prices.”The Committee assesses that the projections remain at values consistent with the strategy of reaching a level around the target over the relevant horizon,” which includes 2023 and 2024, said the central bank. But after acknowledging that market projections for inflation remain stable – and worse – for extended periods, policymakers stressed that “risks remain high, requiring continuous monitoring and serenity.”In last week’s policy decision, the central bank had already held its inflation outlook for this year unchanged at 5.8%, raising its forecast for next year to 4.8% from 4.6% last month, compared to a 3.25% target.For 2024, the inflation forecast increased to 2.9%, from 2.8% last month, compared to a 3% target.According to the latest Focus weekly survey, private economists project inflation at 5.6% this year, 4.9% in 2023 and 3.5% in 2024. In the minutes, policymakers also said they are paying “special attention” to services inflation, which depends on inflationary inertia and the output gap and will become clearer over time. More