China and Japan Data, Latest Developments from Europe and the US: What's Happening in Global Markets?
Global economic data and statements are bringing notable developments. Production and consumption figures in major economies like China, Japan, and the United States, trade policies, and central banks' strategies regarding interest rates are shaping economic dynamics worldwide. Developments in economic circles, ranging from China's industrial and retail sales data to Japan's economic growth, the U.S. trade policies, and Mexico's interest rate decisions, are having significant impacts on global markets.
China's October industrial production and retail sales were announced In October, China recorded lower-than-expected growth in industrial production, while retail sales surprised positively by exceeding forecasts. According to data from the National Bureau of Statistics of China, industrial production increased by 5.3% in October, falling below the 5.4% rise of the previous month and the 5.6% expectation from analysts. However, retail sales grew by 4.8% in October, surpassing the 3.8% expansion expectation. It is believed that a week-long holiday in the same period and the Singles’ Day shopping festival that started on October 14 contributed to these sales results. According to the data provider Syntun, such seasonal events increased sales on major e-commerce platforms by 26.6%, reaching 1.44 trillion yuan. Fixed asset investments also rose by 3.4% year-on-year in the first ten months of the year, slightly below the expected 3.5% increase.
U.S. trade negotiator defended targeted tariffs on China Katherine Tai, the chief trade negotiator for President Joe Biden, defended the use of targeted tariffs aimed at preventing China from strengthening its position in sectors such as automotive, clean energy, and semiconductors within the U.S. Tai highlighted previous experiences where imports from China led to widespread economic and social disruption in the U.S. Her statements implied the need for a cautious strategy to avoid a "China Shock" in these areas. Tai also warned about the potential widespread effects of imposing general tariffs, particularly as discussed during Donald Trump’s administration.
Japan grew above expectations The Japanese economy grew by 0.9% year-on-year in the July-September quarter, showing a slowdown compared to the previous period due to stagnation in capital spending, but an unexpected recovery in consumption was observed. Private consumption exhibited strong performance, rising by 0.9% compared to the previous quarter, making up more than half of the economy. Japan's Finance Minister Katsunobu Kato noted that there have been increases in one-sided and sharp movements in currency markets recently, emphasizing their determination to take appropriate measures against excessive fluctuations.
The dollar reached peak levels against the Japanese yen after U.S. Federal Reserve Chairman Jerome Powell expressed that there was no urgent need to lower borrowing costs.
Anticipated speech from the Bank of Japan Governor Kazuo Ueda, Governor of the Bank of Japan (BOJ), is expected to provide insights on the timing of interest rate hikes during a speech at an event in Nagoya next Monday. This will be Ueda's first public speech following the announcement of Japan's third-quarter gross domestic product (GDP) data. BOJ governors continue to maintain dialogues with the business community regarding policy and explain the rationale behind central bank policies through speeches held in economic centers like Osaka and Nagoya.
ECB board member comments on bond purchases Isabel Schnabel, a member of the European Central Bank (ECB) Board, stated that interest rates should remain the primary policy tool for the ECB, while suggesting a more cautious approach to bond purchases and forward guidance. Schnabel mentioned that the ECB's purchase of trillions of euros in debt securities over the last decade to stimulate inflation has led to distortions in market prices. Hence, she emphasized the importance of prioritizing flexible and agile policy instruments.
Mexico's central bank cuts interest rates The Bank of Mexico lowered its interest rate by 25 basis points to 10.25% during its third consecutive meeting. The bank announced that it is considering the possibility of further rate cuts in the future, anticipating continued improvement in core inflation and price trends. This rate cut occurred shortly after the U.S. Federal Reserve reduced borrowing costs, highlighting a notable parallel between regional economic strategies.
Moody's changes Mexico's rating outlook to negative Moody's has downgraded Mexico's credit rating outlook from stable to negative, citing the country's institutional and political weaknesses along with increased government spending. There are concerns that the risk of erosion in balances resulting from constitutional changes, as well as expanding fiscal deficits, could pressure economic sustainability.
BoE Governor warns against protectionism in the UK Andrew Bailey, the Governor of the Bank of England, stated that there should be no increase in tariffs in light of the likelihood of U.S. President-elect Donald Trump turning towards protectionist policies in global trade after taking office. He urged Finance Minister Rachel Reeves not to consider such policies, emphasizing the need to avoid international trade tensions.
JPMorgan CEO Dimon announced to not take a position in Trump administration U.S. President Donald Trump announced that he would not appoint Jamie Dimon, CEO of JPMorgan Chase (JPM), to his second-term administration. Trump thanked Dimon for his services, while Dimon emphasized his independent stance and approach to leadership in response.
Citigroup under investigation over relationships with Russian billionaire Citigroup (C) is being investigated by federal agencies due to its ties with sanctioned Russian billionaire Suleiman Abusaidovich Kerimov. The investigation, carried out by the Department of Justice, FBI, and IRS, is focusing on Citigroup's operations connected to the Heritage Trust, which manages assets owned by Kerimov, as well as its anti-money laundering procedures.