The U.S. Federal Reserve kept interest rates unchanged at 5.25 to 5.50 percent. The decision was unanimous. The central bank reported that inflation remains too high, and the job market remains robust. The economy performed well in the third quarter, however there is an expectation that higher interest rates will dampen growth in the coming period. The markets showed little surprise in response to this decision.
The U.S. Department of the Treasury announced it would issue fewer government bonds than anticipated, easing investors’ concerns and causing both bond and stock prices to rise. Following the announcement, the yield on ten-year bonds briefly dropped to 4.83%. Next week, $112 billion worth of bonds will be auctioned, slightly less than the expected $114 billion, with the proceeds used to pay off existing debt and raise new capital. The yield on ten-year bonds had risen by approximately 75 basis points since August.
In Belgium, the construction sector is also facing problems, with a nearly 20% decrease in the production of construction materials in recent months. This is a result of a reduced new construction market and concerns within the renovation sector. Higher construction costs due to rising mortgage expenses and price increases of construction materials following the COVID-19 pandemic have resulted in less work for construction companies. Additionally, there is uncertainty about the continuation of the reduced 6% VAT rate for demolition and renovation, which has reduced demand.
The 6M Euribor decreased with 2 basis points to 4.09% compared to previous business day. The 10Y Swap decreased with 6 basis points to 3.29% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
Inflation in the eurozone declined further in October. Consumer prices rose by 2.9% year on year in October, while they rose by 4.3% in September. Core inflation, an important indicator for the ECB, was 4.2% in October. In September core inflation was 4.5%. Core inflation excludes the prices of food, alcohol, and tobacco.
The eurozone economy shrank unexpectedly in the third quarter of this year, according to Eurostat as reported on Tuesday. In the third quarter, the gross domestic product of the European economy decreased by 0.1% compared to the previous quarter. Economists anticipated no growth. In the second quarter of this year, the economy still grew by 0.2%. On an annual basis, the economy grew by 0.1% last month.
Standard & Poor’s Case-Shiller data on Tuesday showed that house prices in the largest metropolitan areas in the United States also rose in August. In the 20 largest urban regions, house prices rose by 0.4% month on month, while the increase was 2.2% on annual basis. Economists expected an increase of 0.8%. A month earlier, house prices in the 20 largest regions rose by 0.6%.
The 6M Euribor increased with 1 basis point to 4.11% compared to previous business day. The 10Y Swap decreased with 1 basis point to 3.35% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
Japan’s central bank loosened its grip on market interest rates following its interest rate decision this morning. Market rates on 10-year government bonds were capped below 0.5% for years and below 1.0% since July. In doing so, the bank suggests that the 10-year interest may now move around 1%. With this move, the Bank of Japan is cautiously moving toward a normal policy. The Bank of Japan still maintains a negative interest rate of 0.1% as the only major central bank in the world. As a result of the Bank of Japan’s intervention to keep capital market interest rates low, the Yen has fallen sharply since early 2021.
Inflation in Germany fell to its lowest level since August 2021. German inflation fell to 3.0% in October, according to the Federal Statistical Office. German consumer prices were down 4.3% in September from a year earlier. Core inflation, which excludes volatile food and energy prices, fell to 4.3% in October from 4.6% in September. Inflation is expected to decline further in the first few months of the coming year.
According to figures published by Statistics Netherlands, the Netherlands experienced deflation in October. Depending on the definition, the price level was 1% or 0.4% lower than the same month a year ago, consumers spent 40% more on energy prices. The 1% deflation is measured according to the European definition (HCIP). According to the Dutch definition (CPI), deflation was 0.4%. Both numbers are quick estimates that can be adjusted over time.
The 6M Euribor decreased with 1 basis point to 4.10% compared to previous business day. The 10Y Swap decreased with 1 basis point to 3.36% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
In October, consumer confidence in France unexpectedly increased, as indicated by data released on Friday by the French statistical agency Insee. The confidence index rose from 83 to 84, while it had previously been expected to remain at 83.
On Friday, the Russian central bank once again raised interest rates, increasing them by 2.0 percentage points to 15.0%. This decision was made to ensure price stability, as consumer prices are rising faster than expected, and government spending is expected to remain high for a longer duration. The central bank announced that interest rates would remain high for a considerable period, and monetary policy would remain restrictive to keep the economy in check. This measure aims to control inflation and maintain economic stability.
In September, the US core inflation showed no unexpected developments. On an annual basis, the PCE core inflation was 3.7%, compared to 3.8% in August. These figures matched economists’ expectations. The Federal Reserve uses the core inflation as a guideline for monetary policy.
The 6M Euribor increased with 2 basis points to 4.11% compared to previous business day. The 10Y Swap decreased with 3 basis points to 3.37% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The European Central Bank announced on Thursday afternoon that it will keep the interest rates unchanged. The base rate, the marginal lending facility, and the deposit facility will remain at 4.50%, 4.75%, and 4.00%, respectively.
In the third quarter, the U.S. economy showed significantly stronger growth, as reported by the U.S. Department of Commerce on Thursday. During the third quarter, the economy expanded by 4.9%, a substantial increase from the 2.1% growth seen in the second quarter. Leading economists had, on average, anticipated a growth rate of 4.7%. Additionally, the Personal Consumption Expenditures Price Index (PCE) demonstrated a rise of 2.9%, compared to the 2.5% figure in the second quarter.
On Thursday, the crude oil price experienced a significant drop, with a barrel of West Texas Intermediate settling at $83.21, 2.6% lower. Initially, reports of a potential brief Israeli incursion into Gaza kept oil prices stable. However, as the day progressed, the oil markets began to lose ground.
The 6M Euribor decreased with 1 basis point to 4.09% compared to previous business day. The 10Y Swap decreased with 4 basis points to 3.40% compared to previous business day.
Chinese President Xi Jinping has decided to support the world’s second-largest economy by increasing the budget deficit for 2023 to about 3.8 percent of the gross domestic product (GDP) and issuing additional government bonds worth 1 trillion yuan, approximately 130 billion euros. This extensive economic stimulus plan is a response to long-standing economic challenges, including a crisis in the real estate sector, low consumer spending, and growing concerns about financial stability. The rare mid-year budget adjustment reflects the Chinese government’s concerns and underscores their focus on supporting the economy and financial markets.
The oil price rose on Wednesday, despite an increase in U.S. crude oil inventories, due to concerns about the escalating conflict in the Middle East. A December future for a barrel of West Texas Intermediate crude oil closed 2 percent higher at $85.39 on the New York Mercantile Exchange. The increase is mainly driven by global factors, such as political developments in the Middle East, and seems to be less influenced by weekly inventory data. Oil continues to find support above the level of $75 to $80 per barrel, unless significant changes in supply, demand, or political factors occur.
In September, the sale of new single-family homes in the United States increased compared to the previous month, according to data from the U.S. Department of Commerce. The number of newly sold single-family homes rose by 12.3 percent on a monthly basis to 759,000 units, exceeding economists’ expectations of 680,000. The figure for August was also slightly upwardly revised from 675,000 to 676,000. On an annual basis, the number of homes sold in the U.S. increased by 33.9 percent in September.
The 6M Euribor is unchanged at 4.10% compared to previous business day. The 10Y Swap increased with 5 basis points to 3.44% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
Last Tuesday, the euro traded higher against the dollar than 24 hours earlier, caused by market expectation of the Fed not to raise official rates at their next meeting on Wednesday. The euro traded around $1.066 on Tuesday. ECB President Lagarde will give a speech on Wednesday, while Germany will present October business confidence figures on Thursday. Both events will be followed with great interest ahead of the next ECB meeting.
Figures published by the trade organization World Steel Association on Tuesday showed that global steel production decreased again in September. This decline followed an increase in production in July and August. In total, the 63 steel-producing countries produced some 149.3 million tons of steel, in line with an annual decline of 1.5%. In July and August, production increased by 6% and 2.2%. Chinese steel production fell 5.6% in September, while US production rose almost 3%. German steel production also rose by a figure equal to 2.9%.
The eurozone economy decreased more than expected in October, according to preliminary estimates from S&P Global on Tuesday. The purchasing managers index for the services sector stood at 47.8 in October, compared to 48.7 in September. This brings the index to a 32-month low. An index of 48.9 was expected. The services sector declined for the third month in a row, while industry production has been shrinking for 16 months.
The 6M Euribor decreased with 1 basis point to 4.10% compared to previous business day. The 10Y Swap decreased with 5 basis points to 3.39% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
US stock markets ended mostly lower yesterday after a volatile day. The S&P 500 fell 0.2%, the Dow Jones dropped 0.6% and the Nasdaq rose 0.3%. At the root of this sentiment are geopolitical risks combined with rising interest rates. Yesterday, the ten-year rate briefly rose above 5%, but then fell back to 4.85%.
Oil prices fell sharply on Monday. A barrel of West Texas Intermediate became almost 3% cheaper. Crude oil prices fell on fears that the war will prove a drag on the global economy. A weaker global economy is detrimental to oil demand. Expectations are that oil markets will remain volatile due to doubts about whether Iran will become involved in the war.
Mortgage rates in the Dutch housing market fell slightly. The average interest rate on an NHG mortgage with a 10-year fixed-rate period fell from 4.53% to 4.49%. The mortgage rate for homebuyers who want to fix the mortgage rate for thirty years fell from 4.84% to 4.8%.
The 6M Euribor decreased with 2 basis points to 4.11% compared to previous business day. The 10Y Swap decreased with 3 basis points to 3.44% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
In September passenger cars sales significantly increased in Europe, albeit at a slower growth rate than the previous month. The European automotive industry organization ACEA reported that the number of new cars sold in Europe increased by 9.2% last month, which is considerably lower than the 21% growth in August on a year-on-year basis. In the Netherlands, sales rose by 16.6% in September.
In September, producer prices in Germany saw a substantial decline, according to data from the German Federal Statistical Office, Destatis. On an annual basis, there was a decrease of 14.7%, marking the sharpest decline since Destatis began recording data in 1949. The lower prices were expected, given the significant increase of 45.8% in September 2022, attributed to the Ukraine conflict. Energy prices have since dropped by 35.3% annually, with only a modest 0.2% decline compared to the previous month.
According to government data, consumer prices in Japan increased less in September than in the previous month. The annual inflation rate, including the influence of fresh food and energy, stood at 3.0%, compared to 3.2% the month before. This marks the seventeenth consecutive month where inflation has exceeded the Bank of Japan’s desired level of 2%.
The 6M Euribor decreased with 1 basis point to 4.13% compared to previous business day. The 10Y Swap decreased with 1 basis point to 3.47% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The leading indicators for the U.S. economy declined again in September, falling by 0.7%, as reported by The Conference Board. In August, the index also decreased by 0.5%, despite an initial report of a 0.4% decline for that month. This suggests an ongoing downward trend that has persisted for the past year and a half, potentially indicating future economic weakness. The Leading Economic Index now stands at 104.6. The index predicts economic developments for the next six months and includes various components such as consumer confidence and stock prices.
Existing home sales in the United States declined in September, but the drop was less severe than expected, according to data from the NAR (National Association of Realtors). On a monthly basis, sales decreased by 2.0% to an annualized rate of 3.96 million homes, surpassing economists’ expectations of 3.90 million homes. However, on a year-over-year basis, there was a significant decline of 15.4% in September’s home sales. Notably, the median sale price increased by 2.8% to $394,300 last month.
In October, business confidence in France declined, as reported by the French statistical agency, Insee. The confidence index dropped from 100 to 98. This decrease in confidence also extended to the manufacturing sector, with the sub-index falling from 99 to 98.
The 6M Euribor increased with 2 basis points to 4.14% compared to previous business day. The 10Y Swap increased with 1 basis point to 3.48% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
