Yesterday the ECB cut 25bps to 3.25% on their main deposit facility. Lagarde commented that they haven't yet reached 2% medium term inflation target, further stating "We're in the process of "breaking the neck on inflation"". Of course she also said they are going to be data dependent, specifying they are not data point dependent and of course they'll be flexible. The over emphasis from central bankers on phrases such as data dependent always leave me wondering if that means previously they weren't making decisions based on the data? Perhaps Stanley Druckenmiller (and others) have been correct in stating that central banks were "trapped" by their forward guidance.
Stateside, headline retail sales increased 0.4% MoM, up from August and above the consensus estimates. When you strip out the volatile components like gas sales, it was 0.7% on the "core retail sales", the highest in three months. That doesn't sound like an indication that monetary policy is restrictive. Jobless claims fell as hurricane related distortions fell out. Speaking of hurricanes they seemed to have impacted the industrial production data and as did the Boeing strike.
Yields rose and stocks rose as TMSC restored optimism in the chips sector and NVIDIA hit new all time highs. The 10Y is back around 4.10% and the 2Y remains a touch under 4 at 3.98%. The Atlanta Fed GDP Now rose again and is now at 3.4% for 3Q.
On the day ahead it's building permits and housing starts and of course fedspeak.
XTOD: Peter Lynch: "Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves."
XTOD: Economists who map the CPI and PPI into the PCE think core inflation for the Fed's preferred gauge will be around 0.26% in September, a touch below the Sept CPI (which was 0.31%) but the highest m/m reading since March
XTOD: "Money buys happiness in the same way drugs bring pleasure: Incredible if done right, dangerous if used to mask a weakness, and disastrous when no amount is enough." — Morgan Housel
XTOD: The year is 2027. Blackstone has raised a $1 trillion fund to invest in Private Government Credit. They promptly sign a deal with the US Treasury at a 6% yield.
https://x.com/kejca/status/1846922435410432400
https://x.com/NickTimiraos/status/1846915069835112755
https://x.com/InvestingCanons/status/1846400382337011826
https://x.com/agnostoxxx/status/1846992427174998329
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