November 16th Financial News

Daily News

Summary:

The U.S. Senate may vote on a temporary spending bill to avert a government shutdown; Fed's Daly refuses to rule out another interest rate increase; Saudi Arabia will extend production cuts until at least January next year...

[Quick Facts]

1. The U.S. Senate may vote on a temporary spending bill to avert a government shutdown.

2. Fed's Daly refuses to rule out another interest rate increase.

3. Saudi Arabia will extend production cuts until at least January next year.

4. U.S. crude inventories rise sharply, along with record output.

5. The U.S. economy shows signs of cooling.

[News Details]

The U.S. Senate may vote on a temporary spending bill to avert a government shutdown

The U.S. Senate may vote Wednesday on a temporary government funding package to avoid a government shutdown.

Leaders of the Republican Party and the Democratic Party have expressed support for the temporary spending bill, which passed the House of Representatives on Tuesday, local time, with broad support from lawmakers from both parties.

Current appropriations are set to expire at midnight this Friday, local time, and both chambers of Congress need to pass the spending bill before then and send it to Democratic President Joe Biden to sign into law to avoid a government shutdown.

Fed's Daly refuses to rule out another interest rate increase

It's too early to declare victory in the fight against inflation, because if the Fed has to raise interest rates again, that will jeopardize the Fed's credibility, San Francisco Fed President Mary Daly said on November 15. The latest inflation report shows further deceleration of inflation, indicating that the Fed's policy is effective.

Another rate hike cannot be ruled out, as it is uncertain whether the central bank has taken enough measures to bring CPI growth down to its 2% target. The Fed should be "thoughtful and not rush to judgment." The risk of tightening monetary policy too much is roughly balanced against the risk of doing too little and allowing inflation to stay high.

Saudi Arabia will extend production cuts until at least January next year

With global oil demand growth slowing and supply increasing, Saudi Arabia may keep the production cuts (by 1 million barrels a day) it began this summer in place until next January. Several delegates from OPEC+ privately made the same prediction. They also expect OPEC+ to restate its production quota for 2024 when it meets in Vienna on November 26.

At current prices and considering the lukewarm investor sentiment, any hint of tapering - even if it is gradual - would embolden hesitant sellers and frighten potential bulls.

U.S. crude inventories rise sharply, along with record output

According to the U.S. Energy Information Administration (EIA), U.S. crude oil inventories rose by 3.6 million barrels last week to 421.9 million barrels. The data also showed that U.S. crude oil production remained at a record high of 13.2 million barrels per day. Meanwhile, growing concerns over Asian demand sent oil prices tumbling on Wednesday.

For now, U.S. supply activity is a headwind for the oil market and also a problem for OPEC+.

The U.S. economy shows signs of cooling

Data released by the U.S. Bureau of Statistics showed that retail sales posted a 0.1% decline in October, the first decline in seven months, suggesting that consumer demand is starting to slow, which could further reinforce expectations that the Federal Reserve is done raising interest rates. Meanwhile, September's figure was revised upwards to 0.9%, compared with the previous 0.7%.

In addition, with lower gasoline prices, the PPI saw its biggest drop in three-and-a-half years in October, and it's the first time in more than a year that it was flat on a month-on-month basis.

However, the U.S. economy does not show signs of falling into recession. Retail sales fell, but not as much as expected, and they had risen for three consecutive months before the decline. Although the United States is about to usher in the holiday shopping season led by Black Friday, consumer spending and retail sales outlook are still unclear considering rising credit interest rates, decreasing savings, and student loan recovery.

[Focus of the Day]

UTC+8 17:30 European Central Bank Governing Council Member Centeno Speaks

UTC+8 19:30 ECB President Lagarde Speaks

UTC+8 19:45 European Central Bank Governing Council Member Knot Speaks

UTC+8 20:10 European Central Bank Governing Council Member Pablo Hernández de Cos Speaks

UTC+8 21:30 U.S. Weekly Initial Jobless Claims (SA)

UTC+8 22:15 ECB Vice President Guindos Speaks

UTC+8 22:25 NY Fed President Williams Speaks at U.S. Treasury Market Conference

UTC+8 23:45 Bank of England Deputy Governor Ramsden Speaks

UTC+8 01:00 Next Day: Fed Governor Cook Speaks

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