Key US economic data this week such as Oct’24 NFP as well consumer confidence might show that job growth is again slowing. Though the Q3CY24 GDP data might be strong at 3.0%, political uncertainty as well as a patient corporate balance sheet might again show a weakening employment trend. In US inflation data, we expect core PCE inflation accelerated to 0.269% m-o-m in September from the August reading, which we expect will be revised up to 0.150% from 0.130%. We do not think that incoming inflation data will be strong enough to sway the Fed toward skipping a November cut. We maintain our Fed call for two additional 25bp rate cuts this CY. In Eurozone data, we expect Eurozone GDP for Q3 to come at 0.1% QoQ from previous quarter's 0.2% QoQ no. We continue to believe that ECB might cut by 50 bps in it’s 12th Dec meeting due to a recession in Germany & weaker activity surveys. The highlight of the European data this week might be UK budget on 30th Oct. We expect deficits to be raised and policy effectively loosened, with gilt issuance of £315bn this year (vs. £277.7bn previously expected). Government sources (cited in the FT) have suggested recently that the fiscal gap may be larger (£40bn) than the £22bn originally cited in the Treasury’s July audit. If the government does indeed loosen the fiscal stance in the near-term, that would, at the margin, support our view of the Bank of England easing more gradually.
