Summary
United States: Inflation’s Downward Trend Remains in Place
- Inflation continues to cool. Although rising energy prices drove a hotter-than-expected change in the headline CPI, the core CPI was up 3.9% year-over-year in December, bringing the annual change below 4% for the first time in two and a half years. A soft PPI print in December provided additional evidence that price pressures are abating.
- Next week: Retail Sales (Wed.), Industrial Production (Wed.), Existing Home Sales (Fri.)
International: China’s December Activity Data Underwhelm
- Structural issues have taken a toll on China’s economy, and this sluggish economic momentum was on display this week when December activity data were released. Meanwhile, many large developing economies are still far from deflation.
- Next week: Taiwan Election (Sun.), China GDP (Wed.), Japan Inflation (Fri.)
Interest Rate Watch: A View from the Summit
- After an arduous ascent in interest rates over the past two years, a growing enthusiasm in financial markets is building in anticipation of the coming descent. Our soft-landing scenario is partly due to an expected policy environment that is less restrictive.
Credit Market Insights: Where Credit’s Due: Credit Card Spending Surges in November
- Household borrowing rose for the third straight month in November as consumers continued to reach for their credit cards. Total consumer credit outstanding rose $23.8 billion and surpassed $5 trillion for the first time. The main driver of this increase was revolving consumer credit, which accounted for $19.1 billion of the overall increase.
Topic of the Week: Taiwan Heads to the Polls
- The 2024 global election cycle is certainly not starting off quietly. As voters across Taiwan head to the polls this weekend, the future of some of the world’s most tense geopolitical relationships may hang in the balance. The world will be watching the Taiwan election outcome for signs of what 2024 and beyond may bring for relations between Taiwan, China and the United States.