The Day at a Glance | October 11 2023

*Producer inflation in the US recorded its largest year-on-year change in five months.

*There is a possibility that Republicans in the House of Representatives will choose their candidate for the position of Speaker of the House today. Democrats have officially nominated their candidate, Congressman Hakeem Jeffries.

*Mortgage applications in the United States rebounded in the week ending on October 6th with a 0.6% increase after two weeks of contractions. Furthermore, the average 30-year fixed interest rate for loans under $726,000 reached a nearly 23-year high at 7.67% (+14 basis points).

*Vehicle sales in China posted a 9.5% y/y expansion in September, marking the second consecutive month of growth. This pushed the cumulative figures for the first three quarters of the year to an 8.2% increase (compared to the 4.4% logged in the same period in 2022). 

Economic environment

Producer inflation in the United States accelerated to 2.2% y/y in September, its highest reading since last April and higher than the 1.6% expected by the market. On a monthly basis, there was a 0.5% increase, which, although it shows a moderation to a three-month low, it remained relatively high, also surprising to the upside (0.3% m/m e.). This performance can be attributed to a 0.9% m/m increase in the prices of goods, which were further pressured by a 3.3% m/m increase in energy costs (mainly due to a 5.4% m/m increase in gasoline prices) and a 0.9% m/m increase in food prices. On the other hand, in the services sector, there was a 0.3% m/m hike, with a -0.4% m/m contraction in transportation and storage costs mitigating the acceleration to 0.5% m/m in the trade category. Excluding the more volatile elements – energy, food, and trade – demand for goods maintained a 0.2% m/m reading for the second consecutive month, contrasting with the annual reading that continued to be elevated at 2.8% (-0.1 percentage points). Overall, this morning´s figures serve as a reminder that the Federal Reserve still has some ground to cover, and the journey may not necessarily be gradual. However, it´s important to consider that the primary pressures observed in September´s data came from energy and food, sectors in which monetary policy has a reduced impact.