The market got what it wanted: a third rate cut by the US central bank in 2019. A long-awaited decision that satisfies investors. The proof? Wall Street improved its closing records without really suffering from the Fed's parallel message: rates are at an adequate level and there should be no further adjustments. No one really believed, except perhaps in the White House, that there would be four rate cuts in 2019. Nevertheless, the game of fools continues because everyone also knows that the Fed will resume its downward cycle if US macroeconomic indicators really deteriorate.

Canada keeps its rates unchanged. The Canadian central bank kept its key interest rate at 1.75%. The institution has expressed concerns about the outlook for the global economy but highlights wage growth and strong employment, as well as the strong performance of the real estate and services sector in the country. For the year 2019, it has raised its growth forecast to 1.5% (compared to 1.3% in July) but revised down from 2020 to 1.7%.

The BoJ is keeping its rates unchanged for the time being. The institution believes that under current market conditions, a reduction in rates is not necessary to stimulate the economy. The key rate is currently set at -0.1% and Haruhiko Kuroda pointed out that this negative rate is not the lowest level, which could give way to possible cuts if necessary. The fight against deflation continues.

The Chinese authorities doubt that an agreement with the US will be reached. Even as both sides are about to sign a "Phase One" agreement, Chinese policy makers reportedly have said they would not change their position on the thorny issues if the United States did not make additional efforts on tariffs, Bloomberg reports. The information has yet to be confirmed and is currently relatively unclear.

Chile forced to cancel APEC and COP25. Chilean President Sebastian Pinera said the country would not host the APEC (Asia-Pacific Economic Cooperation) summit scheduled for 16-17 November and COP25 in December. Tensions, which began following the 30 pesos (4 cents) increase in the metro ticket, continue within the country. The demonstrators are calling for changes in health care, education, pensions and the constitution. To date, 19 people have been killed and the violence is worsening. 

Steven Mnuchin is open to more flexible rules in terms of liquidity. In order to avoid the liquidity problems encountered in recent weeks in the repo market, the US Treasury Secretary said he was open to loosening the rules. After talking to the current CEO of the JPMorgan Chase & Co group, Jamie Dimon, there would be a way to bypass existing regulations in order to create more liquidity in the interbank market without increasing risks. To be continued…

Today's economic highlights:

  • Many indicators today, especially Chinese SMIs (which remain in a contracting zone and are below expectations), In Europe, German retail sales, French inflation in October, and the first estimate of Q2 GDP in the euro zone.
  • In the United States, the Challenger study on employment, household income & expenditure, weekly unemployment claims, core inflation and labour costs and the Chicago PMI index.