LONDON – One of Labour’s main pledges when campaigning ahead of the May general election was to oversee a fiscally responsible government. If Wednesday’s Autumn Budget fails to convince markets of its competency, Liz Truss’s tenure could look like a cakewalk.

Rachel Reeves, Britain’s first-ever female Chancellor of the Exchequer (aka finance minister), is set to present her first budget this week. She will lay out plans for taxes, spending, and borrowing alongside a new set of fiscal rules. The market has already been primed to expect ~GBP 40bn worth of tax hikes and spending cuts. 

Over the weekend, the Sunday Times wrote of “rumblings in the City” concerned that Reeves’ statement could meet a similar fate to that of the now infamous Kwasi Kwarteng mini-budget, which collapsed the economy just two years ago.  (LS - Continue Reading) 

Euro area economic growth in the third quarter is expected to have held at the level of the previous three months, with data from individual countries painting a disparate picture of business activity in the region.

An economists’ poll predicts the EU will announce a quarterly Eurozone GDP expansion rate of 0.2% for the last quarter to match the mark reported for the second three months of the year. The annual growth rate for Q2 is expected to increase to 0.9% from 0.6% in the previous period.  

Once again, Germany remains the Eurozone’s problem child, according to estimates. Economists are expecting a second straight report of economic contraction, which translates to the currency area’s biggest economy being in recession in the second and third quarters. (LS - Continue Reading) 

According to experts, the prospect of a US recession has diminished somewhat. The investment bank Goldman Sachs estimates it at just 15%, effectively relieving any pressure on the Federal Reserve to push through additional near-term interest rate cuts.

An economists’ poll estimated that GDP growth matched Q2’s pace of 3.0% in the three months to June, with personal consumption forecast to have risen to 3.3% from 2.8%. The Fed’s preferred inflation gauge is expected to have eased to 2.0% over the quarter, down from a previous 2.8%. 

Analysts note that domestic demand likely remained strong during the quarter, supported by household consumption. Non-residential investment was also forecast to have contributed positively to the headline growth. (LS - Continue Reading) 

Australia’s core inflation remained elevated last quarter, reinforcing the Reserve Bank’s view that price pressures will take time to dissipate and that monetary policy needs to stay restrictive for the time being.

The trimmed mean measure of consumer prices, which smooths out volatile items, rose 0.8% in the three months through September, matching estimates, data from the Australian Bureau of Statistics showed Wednesday. On an annual basis, the trimmed mean climbed 3.5%, also in line with forecasts. The RBA is focused on core CPI as government subsidies are suppressing headline prices. (BBG – Continue Reading)