The UK awaits Chancellor Hunt’s Autumn Statement

USD

Yesterday saw the release of Retail Sales in the US and the Department of Commerce (DoC) reported that sales grew the most in eight months, with readings hitting 1.3% month-on-month against the projected 1%. Retail Sales in the control group, used to calculate GDP, expanded by 0.7% month-on-month against 0.3% foreseen.

Although inflation data in the US showed signs that a period of elevated prices could end, consumer resilience proves otherwise. Instead, Federal Reserve officials could be forced to continue their aggressive policy tightening, even after expressing they may begin to slow the pace of tightening.

Two Fed policymakers went in the opposite directions as New York Fed President John Williams said that price stability is essential for the US economy to function well. Later, the San Francisco Fed President Mary Daly stated the central bank wants to see the economy to slow down, so they can get inflation down. She added that “pausing is not part of the discussion” and foresees the federal fund rate to peak at around 4.75% – 5.25%.

GBP

After yesterday’s inflation data, Governor Andrew Baily stated that inflation is reflecting a series of supply shocks. However, he added that those shocks are beginning to fade and noted that the Bank of England would raise rates further. At the same time, the BoE’s newest member Swati Dhingra believes the UK could get into a much deeper recession if rates continue to rise.

The main focus for today is the Autumn Budget. The country is awaiting Jeremy hunt to deliver the government’s Autumn Statement. Some experts believe the public finances have a so-called “black hole” of around £55bn. According to the Treasury department, this could be filled through tax rises and spending cuts.

However, some economists argue the black hole could actually disappear if government debts were calculated differently and suggest there is a risk that the government could deepen the recession by going too far and too fast.

Key announcements

10:00 – EUR – CPI YoY

10:00 – EUR – Core CPI YoY

10:00 – EUR – CPI MoM

12:30 – GBP – Autumn Statement

12:30 – GBP – BoE MPC member Pill speaks

13:00 – USD – FOMC member Bullard speaks