US To Borrow $1.5 Trillion In Debt This & Next Quarter, After Borrowing A Massive $1 Trillion Last Quarter
During the October – December 2023 quarter, Treasury expects to borrow $776 billion in privately-held net marketable debt, assuming an end-of-December cash balance of $750 billion. The borrowing estimate is $76 billion lower than announced in July 2023, largely due to projections of higher receipts somewhat offset by higher outlays. During the January – March 2024 quarter, Treasury expects to borrow $816 billion in privately-held net marketable debt, assuming an end-of-March cash balance of $750 billion. Source: www.zerohedge.com
Visual Capitalist's Marcus Lu created the following chart, visualizing GDP growth forecasts from the IMF’s October 2023 World Economic Outlook
Unsurprisingly, many of these countries are located in Asia and Sub-Saharan Africa—two of the world’s fastest growing regions.
Germany's inflation slowed to 3.8% YoY in Oct from 4.5% in Sep vs 4% expected and lowest since Aug 2021 as energy prices dropped 3.2% YoY and food inflation slowed to 6.1% YoY
German October Core CPI dropped to 3.8% from 4.6% in September. Source: HolgerZ, Bloomberg
US Q3 GDP numbers summarized in one cartoon
Source: Elizabeth Oliveira Fonseca
For now, the monetary policy transmission route of tightening US financial conditions are NOT reaching the economy...
Indeed, an avalanche of US macro data on Thursday presented a positive blend of updates across growth (better), inflation (lower), and labor markets (looser/worse). - Economic Growth: Real GDP rose 4.9% in 3Q (consensus 4.5%) driven by strong demand across consumer and federal/state government, and inventories. However, a major contribution from inventories could in turn weigh significantly on growth in 4Q - Manufacturing: Orders for Durable and core capital goods also grew by more than expected... thanks to a massive surge in non-defense aircraft orders (so don't expect it to last). - Housing: Pending home sales rose 1.1% month over month in September, above expectations for a decline... but brace for October to be a bloodbath as mortgage rates re-accelerated. - Inflation: Core PCE prices component of the GDP report rose less than expected. - Labor: Initial and continuing jobless claims both increased by more than expected -- a positive for markets which are focused on labor market re-balancing (i.e., could benefit from less wage inflation).
US GDP grew 4.9% in Q3 QoQ annualized, way faster than +4.3% expected
However, bond yields dropped in the afternoon session. This Bloomberg US GDP chart shows why. Indeed, US GDP growth in Q3 was mainly driven by private consumption & inventories. This may not last. Source: Bloomberg, HolgerZ
G7 vs. BRICS GDP
Source: Visual Capitalist, Barchart
German business outlook is improving, feeding rebound hopes
Ifo expectations index rose to 84.7 in Oct, up from 83.1 in Sep and way better than BBG consensus of 83.5. "What we see here does suggest that we see a certain stabilization,” Ifo President Clemens Fuest told BBG. “The German economy will be shrinking this year, but for the final quarter we do expect a stabilization, slight growth.” Source: HolgerZ, Bloomberg
