Eurozone inflation cooled more than expected, putting 2% target in sight:
Headline CPI rose 2.4% YoY in November down from 2.9% in October. Core CPI, which excludes volatile components like fuel & food, moderated for a 4th month to 3.6% from 4.2% in October. Markets are now pricing 1st ECB rate cut to take place at the April meeting. Source: HolgerZ, Bloomberg
Buying a home is now 52% more expensive than renting, the highest premium on record (note: the premium peaked at 33% during the last housing bubble in 2006)
Source: Charlie Bilello
ECB QT continues. ECB balance sheet back <€7tn, shrank by €5.3bn to €6,996bn, lowest since Jan2021
Total assets now equal to 50% of Eurozone GDP vs Fed's 28% & BoJ's 128%. And Lagarde has warned that the timeline for ending PEPP reinvestments and so QT could be accelerated. Source: HolgerZ, Bloomberg
So the FED is expected to pivot next year, maybe as soon as March
Is a pivot good for equity markets? Well, history shows that the months that follow the pivot are not the best ones for stocks... maybe this time will be different... Source: Phoenix Capital
Futures are now showing a ~45% chance that FED rate CUTS begin as soon as March 2024
There's also a growing (but small) chance that rate cuts begin in January 2024, at 4%. Prior to the most recent CPI inflation data, the base case showed rate cuts beginning in June 2024. There was also a 50% chance of another rate HIKE in 2024. This has been a quick turnaround... Source: The Kobeissi Letter
Bond Market's Best Month Since 1980s Sparks Cross-Asset Rally
In a year in which little has gone right in the US bond market, November turned out to be a month for the record books. Investors frantically bid up the price of Treasuries, agency and mortgage debt, sparking the best month since the 1980s and igniting a powerful pan-markets rally in everything from stocks to credit to emerging markets. Source: Bloomberg
German inflation sinks more than expected as energy retreats & costs of fuels & travel fell sharply from prior mth
Headline CPI slows to 3.2% YoY in Nov from 3.8% in Oct & vs 3.5% exp. Food inflation slows to 5,5% from 6.1%, Core CPI dropped from 4.3% to 3.8%, so a long way to go to 2% goal. Source: Bloomberg, HolgerZ
Congrats to Saudi Arabia who wins bid for 2030 world fair, beating Italy, S. Korea.
The Saudi Arabian capital of Riyadh won the right to host the Expo 2030 world fair, vote results showed on Tuesday, in another diplomatic victory for a Gulf country after last year's soccer World Cup in Qatar. South Korea's port city of Busan and Rome in Italy were also in the running to host the five-yearly event that attracts millions of visitors and billions of dollars in investment. “Our goal in the Kingdom is to organize the first environmentally friendly exhibition that achieves a zero level of carbon emissions,” Expo blueprint team member Eng. Nouf Bint Majid al-Muneef said. “The Riyadh Expo 2030 site will be powered by clean resources that rely on solar energy, and we are developing high standards for resource efficiencies and detailed strategies to enhance biodiversity, eliminate food waste, and ensure green waste management and recycling.” Source: Reuters, Al Arabiyah
