Dear Reader,

Today's overview of economic news and market action:

• Volatile conditions on bond markets have also impacted FX
• Dollar has tended to benefit from rising US yields
• And weakened when yields have fallen back 
• EUR/USD opens this morning at $1.06 
• EUR/GBP has held onto 87p level
• Busy macro diary this week
• Features Fed and BoE meetings
• Data-wise, includes US payrolls and EZ inflation

Markets expect rate cuts in 2024 as recession risks rise

The October meeting of the ECB’s Governing Council saw the Central Bank maintain its key deposit rate at 4%, which was very much in line with expectations.

 Strong Public Finances

Today’s budget contained a fresh package of cost of living support measures totalling €2.7bn that will be rolled out over the winter months. These are mainly taking the form of direct household payments and energy credits. The Government is also providing an additional €6.4bn in other spending increases and tax cuts for next year. 

PMI declined to 49.6 in Sep, indicating business conditions deteriorated slightly. New orders fell, including export orders. Output contracted for a seventh month running.

Back in the Pack

Fears that the UK could have entered recession by now have not come to pass, with the economy displaying unexpected resilience over the past year.