COT FOREX

📉 Eurozone Business Activity Sinks to 10-Month Low as Recession Risks Rise 🇪🇺💼 The eurozone’s economic landscape took a significant downturn in November, with business activity across the bloc contracting sharply. The latest HCOB composite Purchasing Managers’ Index (PMI) fell to 48.1, a 10-month low, signaling contraction in both the manufacturing and services sectors. This surprising dip, which missed predictions of stability at October’s neutral 50.0, underscores the growing economic fragility in the eurozone. 🔑 Key Highlights: - Services Sector Weakens: The PMI for services, which had been propping up the economy, fell to 49.2, its lowest in nearly a year. - Manufacturing Woes Deepen: The manufacturing PMI slid further into contraction territory at 45.2, with output dropping to 45.1, reflecting continued struggles for factories. - Demand Challenges: New business orders fell to 46.6, their lowest point this year, with export orders plunging amid weak global demand. ⚠️ What’s Driving the Decline? - Weak Global Demand: Export orders have significantly declined as the bloc battles softening international markets. - Political Instability: Germany faces snap elections after its coalition collapsed, while France’s government is grappling with threats of collapse, adding uncertainty to the region’s two largest economies. - Lackluster Economic Growth: Germany is expected to be the worst-performing G7 nation in 2024, with industrial production forecasted to drop 3%, marking a third consecutive year of decline. - Rate Cut Expectations: With growth stalling, markets are pricing in further cuts from the European Central Bank, predicting a main rate of 1.75% by the end of 2025. Germany and France, the eurozone’s economic engines, are bearing the brunt of the slowdown. Germany’s revised Q3 data showed weaker-than-expected growth, while its industrial sector braces for prolonged contraction. In France, political turmoil is adding to economic uncertainty, with the PMI indicating the fastest drop in business activity since early 2023. The outlook is further clouded by external factors like President-elect Donald Trump’s proposed trade tariffs, which could dampen eurozone exports in the coming years. Meanwhile, Britain, which remains outside the EU, faces its own economic struggles, with shrinking business output and falling retail sales, adding to regional pressures. #EurozoneEconomy #PMI #BusinessActivity #EconomicOutlook #Germany #France #RecessionRisk #ECB #GlobalTrade #PoliticalUncertainty https://lnkd.in/diZME5b6

📉⚠️ Germany’s Economic Slide Deepens in November: A Warning Signal for Europe’s Largest Economy 📉⚠️ Germany's economic struggles intensified in November as business activity contracted for the fifth consecutive month, marking the steepest decline since February, according to the HCOB German flash composite PMI by S&P Global. The index dropped to 47.3, falling well below the neutral 50 mark and further than analysts’ forecasts of an unchanged reading of 48.6. 🔍 Key Highlights of the Data: - Services Sector Woes: Germany’s services sector, which had previously offset manufacturing declines, fell into contraction territory with a PMI of 49.4, down from 51.6 in October. - Manufacturing Still Struggling: The manufacturing index inched up slightly to 43.2 from 43.0 but remained deep in contraction territory, highlighting persistent weakness in industrial activity. - Economic Outlook: The German government forecasts a 0.2% contraction for 2024, cementing its status as a laggard among major global economies. Germany faces a confluence of challenges: - Global Competition: Intensifying international competition has eroded the competitiveness of Germany’s export-driven economy. - Weak Domestic Demand: Lower consumer and business spending has exacerbated the slowdown. - Industrial Downturn: The manufacturing sector, historically a backbone of Germany’s economy, continues to suffer from declining global demand and structural inefficiencies. - Political Uncertainty: The collapse of Germany’s three-way coalition over a budget dispute has left the country in political limbo until snap elections in February 2025. 📊 What’s Next for Germany? Germany’s economic stagnation is a cautionary tale for the broader Eurozone, which could see spillover effects as Europe’s largest economy grapples with structural and cyclical challenges. While marginal improvements in manufacturing might signal a bottoming out, the lack of growth in key sectors like services raises concerns about the sustainability of any recovery. #GermanyEconomy #PMI #EconomicOutlook #Eurozone #Manufacturing #ServicesSector #PoliticalUncertainty #Recession #GlobalCompetition #EconomicTrends https://lnkd.in/d6uVwd9g

💔 British Retail Sales Slump in October as Economic Momentum Weakens Ahead of Starmer’s First Budget 🇬🇧📉 British retail sales experienced an unexpected decline in October, with volumes dropping by 0.7% from September—more than double the predicted 0.3% decline. This marked the sharpest monthly drop since June, underscoring the fragile state of the UK economy as it approached Prime Minister Keir Starmer’s first tax and spending budget. The Office for National Statistics (ONS) attributed the fall to consumers tightening their wallets amid uncertainty surrounding the new government’s fiscal plans. A revised September sales growth figure of just 0.1% further reflects waning consumer activity. Additionally, the absence of October’s typical school half-term holidays in England and Wales likely contributed to softer retail performance, with clothing sales particularly weak, plunging by 3.1%. This decline aligns with a broader economic slowdown, as GDP growth for Q3 edged up by only 0.1%. Retail sales volumes for the 12 months to October rose by 2.4%, a notable deceleration from September’s 3.2%. Compared to pre-pandemic levels, sales remain 1.5% lower, reflecting diminished household spending power due to inflationary pressures stemming from COVID-19 and the Ukraine crisis. Despite the challenging environment, there are glimmers of optimism. Recent reports from major British retailers, including Marks & Spencer and Primark, project strong performances during the festive season. Consumer confidence indices have also improved post-budget, with interest rates easing and geopolitical tensions calming after the U.S. presidential election. 📈 Looking Ahead The upcoming months will test the resilience of Britain’s retail landscape. The combination of improving consumer confidence, seasonal spending, and easing inflation could provide a much-needed boost, but economic headwinds and cautious consumer behavior remain significant hurdles. #UKEconomy #RetailSales #ConsumerSpending #EconomicTrends #ChristmasShopping #Inflation #StarmerBudget #RetailOutlook #EconomicRecovery #BritishRetail https://lnkd.in/dgzFxNFq

📈 Tokyo Inflation Surges Above BOJ’s Target Amid Rising Food Costs and Reduced Fuel Subsidies 🇯🇵💹 Tokyo’s core consumer inflation likely exceeded the Bank of Japan’s (BOJ) 2% target in November, driven by rising rice prices and the fading effects of government subsidies on fuel. Analysts anticipate the core Consumer Price Index (CPI) will hit 2.1%, up from 1.8% in October, marking a renewed uptick in inflation after a five-month respite below the BOJ target. 🌾 Food Prices Lead the Charge Rising food costs, particularly a surge in rice prices, have been a major contributor to this inflationary pressure. These increases come as Japan grapples with balancing its efforts to support households while mitigating long-term fiscal strain. The upward trend in prices has prompted questions about the necessity and size of the government's recently proposed 13.9 trillion yen ($89.7 billion) stimulus package aimed at easing the financial burden on low-income households. 🏭 Industrial Output and Retail Sales Show Promise While inflation dominates headlines, Japan’s industrial output is expected to grow by a healthy 3.9% in October, supported by a boost in chip-related manufacturing machinery and transport equipment production. Retail sales are also forecast to climb 2.2% year-on-year, suggesting a rebound in consumer spending as wage growth trends positively. 💰 Balancing Stimulus and Debt The proposed stimulus, which includes cash payouts to low-income households and families, aims to offset rising costs but raises concerns over Japan’s ballooning debt, now twice the size of its economy. The International Monetary Fund (IMF) has urged Japan to fund this spending within its budget to avoid further reliance on debt. 🔮 What Lies Ahead? As inflation picks up and industrial activity shows strength, the BOJ faces mounting pressure to carefully manage its policy stance. While households grapple with rising costs, policymakers must navigate a delicate balance between supporting the economy and ensuring fiscal sustainability. #JapanEconomy #Inflation #TokyoCPI #IndustrialOutput #RetailSales #EconomicStimulus #BOJPolicy #ConsumerSpending #DebtCrisis #FiscalResponsibility #EconomicTrends https://lnkd.in/dvfdzT5s

📉 U.S. Jobless Claims Hit Seven-Month Low, Pointing to November Job Growth Rebound 🇺🇸💼 The U.S. labor market offered signs of resilience last week, with new unemployment claims falling to a seven-month low at 213,000—a significant drop that suggests job growth may recover in November after a hurricane- and strike-induced slowdown in October. While layoffs remain historically low, the labor market is facing challenges as laid-off workers take longer to secure new jobs, raising concerns about upward pressure on the unemployment rate. 💡 Labor Market Highlights: - Jobless Claims Decline: Initial claims for unemployment benefits fell by 6,000 for the week ending November 16, beating expectations and signaling fewer layoffs. - Continuing Claims Rise: Unemployment rolls increased to 1.908 million, the highest since late 2021, reflecting slower rehiring trends amid a low hiring environment. - Weather and Strikes: The October slowdown was attributed to disruptions caused by Hurricanes Helene and Milton and prolonged strikes, including at Boeing, which have now ended, potentially setting the stage for recovery. Despite these mixed signals, the Fed remains vigilant about labor market slack and its implications for future interest rate decisions. With inflation progress stalling and unemployment rolls swelling, the central bank may proceed cautiously on further rate cuts, as evidenced by Fed Chair Jerome Powell’s recent remarks. 📊 A Closer Look at October’s Impact: October’s job growth slowed dramatically, with nonfarm payrolls increasing by only 12,000, the lowest since December 2020. Economists estimate that hurricanes and strikes cost the labor market between 100,000 and 125,000 jobs. However, rebuilding efforts and a resolution to labor strikes are expected to boost November’s job figures, potentially adding 100,000 jobs or more. 💡 What’s Next? The November jobs report will be a critical factor in shaping the Federal Reserve’s December rate decision. While the labor market shows resilience, rising unemployment rolls and slowing re-hiring pose challenges to sustained economic momentum. With ongoing geopolitical and fiscal uncertainties, the U.S. economy faces a balancing act between labor market recovery and inflation control. #USEconomy #UnemploymentClaims #JobMarket #FederalReserve #InterestRates #HousingMarket #EconomicTrends #LaborForce #MonetaryPolicy #LinkedInAnalysis https://lnkd.in/gUyYwHPk

🏦 British Inflation Rises Above Target as Policymakers Face Renewed Challenges 🇬🇧📈 Britain’s inflation rate surged back above the Bank of England’s 2% target in October, climbing to an annualized 2.3% from 1.7% in September. This unexpected jump, driven primarily by higher domestic energy tariffs, underscores the persistent challenges facing policymakers in managing price stability and guiding the economy through turbulent times. The October reading represents the largest month-to-month rise in the annual CPI since inflation peaked in October 2022, signaling that inflationary pressures remain embedded despite recent easing. Compounding concerns, services inflation—a critical measure of domestic price pressure—rose to 5.0%, while core inflation ticked up unexpectedly to 3.3%. 📊 Key Economic Impacts: - Energy Costs: Regulated domestic energy tariffs were the primary driver of October’s inflation spike, reflecting increased pressures on household budgets. - Services Inflation: At 5.0%, the BoE’s closely watched indicator of price pressures from the services sector highlights persistent cost growth in core areas. - Core Inflation: Defying market expectations for a decline, core inflation rose, signaling that underlying price pressures remain stubbornly high. The inflationary outlook is further complicated by global headwinds, including U.S. President-elect Donald Trump’s proposed import tariffs, which could disrupt trade and supply chains. Domestically, Prime Minister Keir Starmer’s new government has pledged to accelerate economic growth but faces criticism over higher employment taxes, which could lead to increased business costs, job losses, and heightened price pressures. Despite slowing wage growth—reported at its weakest pace in two years—the labor market remains tight, with employers still grappling with candidate shortages. This dynamic risks fueling a wage-price spiral that policymakers at the Bank of England are keen to avoid. 💡 What Lies Ahead for Monetary Policy? Governor Andrew Bailey and the Bank of England have reiterated their cautious approach to rate cuts, emphasizing that borrowing costs are likely to decline only gradually. Investors have scaled back expectations for future rate reductions, now pricing in 60 basis points of cuts by the end of 2025, compared to 65 basis points prior to the inflation data release. Factory gate prices offer a glimmer of hope, with prices charged by manufacturers dropping 0.8% year-on-year—the steepest decline since the pandemic. However, with inflation likely to hover near 3% into 2025, the road ahead for achieving sustained price stability and robust economic growth remains fraught with challenges. #Inflation #UKEconomy #BankOfEngland #EconomicPolicy #CPI #InterestRates #GlobalEconomy #FinancialMarkets #BritishEconomy https://lnkd.in/gYEG2NYq

🏡 U.S. Single-Family Homebuilding Slumps in October Amid Hurricanes and High Mortgage Rates 🌪️📉 The U.S. housing market took another hit in October as single-family homebuilding plunged 6.9%, reflecting the impact of Hurricanes Helene and Milton in the South and persistently high borrowing costs. The Commerce Department’s report underscores the challenges facing the residential construction sector, which remains in a recessionary state after contracting in the last two quarters. Despite these setbacks, permits for future single-family construction rose slightly, suggesting cautious optimism tempered by the realities of elevated mortgage rates and supply constraints. 🏠 Key Highlights from October’s Housing Data: - Single-Family Housing Starts: Dropped to an annualized rate of 970,000 units, down 10.2% in the South and 28.7% in the Northeast, though gains were seen in the Midwest and West. - Multi-Family Housing Starts: Increased 9.8%, offering some relief to overall housing starts, which fell 3.1%. - Building Permits: Edged up 0.5% for single-family units, reaching their highest level since April. Higher borrowing costs, driven by a 10-year U.S. Treasury yield at a 5.5-month high, continue to weigh heavily on new home construction. Mortgage rates, which briefly dipped following the Federal Reserve’s September rate cuts, have since rebounded, stalling potential momentum in the housing market. Meanwhile, the inventory of previously owned homes remains scarce, as many homeowners are locked into sub-4% mortgage rates, limiting their incentive to sell. This persistent shortage supports demand for new housing, yet builders face challenges due to supply chain bottlenecks, elevated costs, and regional disruptions like hurricanes. While homebuilder sentiment rose to a seven-month high in November, largely driven by optimism over potential regulatory relief under President-elect Donald Trump’s administration, the outlook remains bleak. Builders are focusing on clearing backlogs rather than starting new projects, a trend likely to persist unless mortgage rates ease significantly. The road to recovery for U.S. housing construction will depend on whether the anticipated fiscal stimulus and regulatory changes can offset the drag from high borrowing costs and supply challenges. #HousingMarket #RealEstate #USEconomy #Homebuilding #Construction #EconomicTrends #MortgageRates #HousingStarts https://lnkd.in/gEd-Juji

CANADA'S INFLATION CLIMBS TO 2.0% IN OCTOBER: WHAT IT MEANS FOR RATE CUTS AND THE ECONOMY 🍁📈 Canada's annual inflation rate surged to 2.0% in October, beating expectations and sparking a recalibration in market bets on an aggressive rate cut by the Bank of Canada (BoC) next month. This marked the first uptick in the inflation rate since May, fueled largely by a smaller decline in gas prices and rising grocery costs. Statistics Canada reported a 0.4% month-over-month increase in the Consumer Price Index (CPI), surpassing the anticipated 0.3%. While gasoline prices fell 4% annually, the drop was less pronounced than September's 10.7% decrease, contributing to the inflationary momentum. Excluding gasoline, core inflation remained steady at 2.2% for the third straight month. This data arrives just weeks before the BoC's December 11 interest rate decision, leaving policymakers in a delicate balancing act as inflation pressures complicate the case for deeper monetary easing. Key Takeaways from the Inflation Data - Rising Grocery Prices: Food price inflation accelerated to 2.7%, marking the third consecutive month of outpacing headline inflation. - Core Inflation Metrics Edge Higher: CPI-median rose to 2.5%, and CPI-trim climbed to 2.6%, reinforcing underlying price pressures. - Service Inflation Slows: Services prices grew at an annual rate of 3.6%, the slowest since January 2022, while goods prices edged up 0.1% after a September decline. The Canadian dollar firmed slightly against the U.S. dollar following the release, reflecting tempered expectations for a sharp rate cut. Yields on two-year government bonds fell modestly as investors digested the inflationary signals. Economists, however, remain divided on the BoC’s next move. While the bank has already slashed its policy rate by 125 basis points over the last four meetings, including a 50-point cut in October, further decisions hinge on upcoming GDP and employment data. Doug Porter, chief economist at BMO Capital Markets, said, "The prudent course of action would be a 25-basis-point cut, and this report somewhat strengthens that view." #CanadaEconomy #Inflation #MonetaryPolicy #BankOfCanada #InterestRates #CPI #EconomicTrends #FinancialMarkets https://lnkd.in/dkW_abGq

Britain’s Economy Stumbles Amid Slow Growth and Political Ambitions 📉💼 Britain's economic challenges deepened in September, with GDP contracting by 0.1% and third-quarter growth slowing to just 0.1%, official data revealed on Friday. This unexpected stagnation presents an early hurdle for Finance Minister Rachel Reeves’ ambitious plans to reignite sustained economic expansion. The decline, driven by a flatlining services sector and downturns in manufacturing and construction, underscores the fragility of the UK's post-pandemic recovery. Reeves, who promised to reboot growth through investment and reform, now faces mounting pressure to deliver tangible results amidst mixed economic signals. 💡 Key Highlights: - Quarterly GDP Growth: The economy slowed to 0.1% growth in Q3, down from 0.5% in Q2, disappointing forecasts of 0.2%. - Sectoral Challenges: Services stagnated, while manufacturing and construction contracted, reflecting broader economic vulnerabilities. - Business Investment Bright Spot: A 1.2% rise in business investment marked four consecutive quarters of growth, offering a glimmer of hope. 📊 Mixed Signals for the UK Economy The Bank of England recently cut its annual growth forecast for 2024 to 1%, citing geopolitical uncertainties and higher taxes on businesses as potential headwinds. Despite these challenges, Reeves' "big-spending" budget is expected to provide a short-term boost, but the ambition of making Britain the fastest-growing G7 economy remains a distant goal. Global pressures, including the specter of a trade war and energy market disruptions, add layers of complexity to the UK's outlook. Comparisons with other advanced economies further highlight Britain's struggles—only Germany has performed worse among G7 nations since late 2019. 🔮 The Path Ahead As Prime Minister Keir Starmer sets his sights on achieving 2.5% annual growth, the current data paints a sobering picture. With GDP per capita declining by 0.1% in Q3 and showing no annual growth since 2022, the road to sustained economic recovery appears steep. Reeves' focus on financial industry reform and increased investment may provide a foundation, but overcoming structural challenges will require bold and sustained action. #UKEconomy #GDPGrowth #EconomicPolicy #RachelReeves #Finance #EconomicRecovery #GlobalMarkets #Investments #BusinessOutlook #EconomicChallenges https://lnkd.in/gaA9_cZT

🚀 U.S. Retail Sales Show Resilience Amid Rate Cut Speculations 🇺🇸🛍️ October brought encouraging signs for the U.S. economy as retail sales rose by 0.4%, outpacing expectations and reflecting robust consumer spending despite economic headwinds. This growth was fueled by increased purchases in motor vehicles, electronics, and dining out, signaling that households are still driving economic momentum. A sharp upward revision to September’s retail sales data further highlights the resilience of consumer demand, offering a promising start to the fourth quarter. 💡 Key Drivers of Retail Growth Motor vehicle sales accelerated by 1.6%, while electronics and appliance stores saw a significant 2.3% rebound. Dining out, a critical barometer of household financial health, posted a 0.7% rise. Even rebuilding efforts after recent hurricanes boosted spending at building material and garden equipment stores, which climbed 0.5%. This steady growth underscores the broader economic stability despite ongoing inflationary pressures. 📊 Market Reactions and Monetary Policy Implications The retail sales report, coupled with rebounding import prices, has cast doubt on the likelihood of a Federal Reserve rate cut in December. Fed Chair Jerome Powell’s recent comments emphasized a cautious approach, noting that the economy "is not sending signals" for urgent rate reductions. Financial markets responded by lowering the odds of a December rate cut to 58.4% while U.S. Treasury yields climbed, reflecting heightened investor caution. 🌐 Broader Economic Context While robust consumer spending has propped up economic growth—estimated at 3% for early Q4—the effects are unevenly distributed. Higher-income households continue to dominate spending in discretionary sectors like travel and entertainment, raising concerns about the inclusiveness of this recovery. Meanwhile, the Fed remains vigilant about inflation, which has been slow to recede to the 2% target despite recent rate cuts. 🔮 Looking Ahead The resilience of U.S. consumers points to a promising holiday shopping season, expected to further support retail sectors. However, rising Treasury yields and uncertainties surrounding trade policies under the incoming administration could temper this optimism. Economists are closely monitoring inflation and consumption trends, as they will play a pivotal role in shaping monetary policy in 2025. The October retail sales data reaffirms the strength of the U.S. economy but highlights the delicate balancing act required to sustain growth without reigniting inflationary pressures. As fiscal and monetary strategies evolve, consumer spending will remain a cornerstone of economic stability. #USRetailSales #ConsumerSpending #FederalReserve #MonetaryPolicy #EconomicGrowth #InflationTrends #USEconomy #FinancialMarkets #EconomicOutlook https://lnkd.in/dmmsHZ7P