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[Quick Facts]

1. Possible successors to McCarthy have started to emerge.

2. Former Fed Vice Chair: Interest rate hikes are over.

3. The largest healthcare group in the U.S. goes on strike.

4. Canadian working classes are in financial emergency.

5. ADP was lower than expected.

6. Bailey: The job of fighting inflation is not done.

[News Details]

Possible successors to McCarthy have started to emerge

Possible successors to former House Speaker McCarthy after his removal have emerged on Wednesday, with Steve Scalise, the No. 2 Republican in the House of Representatives, and Jim Jordan, the main opponent of Democratic President Joe Biden, saying they would seek to serve in this position. Other candidates may join the competition, which is a long and messy battle.

Republicans hold a majority in the House of Representatives. Republicans are scheduled to vote on a successor on October 11th and will hold a meeting to hear candidate statements before it. The leadership battle is taking up precious time. Congress needs to extend the government spending appropriation before it expires on November 18th. It also faces tasks such as renewing agricultural subsidies and funding for nutrition projects.

Former Fed Vice Chair: Interest rate hikes are over

Former Fed Vice Chair Clarida said in an interview that he believed in September that the Fed might raise interest rates once during this cycle, but has now changed his view because the bond market can do some work for the Fed. He said the Fed is now highly dependent on data as its policy has entered restrictive territory. At the same time, he believes that the Fed's soft-landing prospect is feasible, but there are obvious risks: stubborn inflation, as well as resilient consumption and the headwinds of the economy, and expects the Fed's further rate hikes could be challenged in the future.

The largest healthcare group in the U.S. goes on strike

More than 75,000 employees of Kaiser Permanente, one of the largest medical groups in the United States, went on a three-day strike early on the 4th, affecting six states and nearly 13 million people, making it the largest healthcare strike ever and adding fuel to the nationwide strikes across industries that have lasted for several months.

The strike will cause Kaiser to suspend non-essential medical services, such as routine doctor visits, as radiologists, pharmacies, optometrists and hundreds of other support workers have joined the strike.

Since the epidemic, a large number of healthcare workers have resigned due to excessive work pressure, so labor relations in the medical field have been in tension. The union has demanded a comprehensive increase in wages to cope with the current rising cost of living and strengthened employment protection for subcontracted and outsourced employees, improved medical benefits for retired employees, as well as solving manpower shortages, and improved the working environment.

At present, the UAW has previously launched a strike, demanding a 40% salary increase and the elimination of job levels, and the strike continues to expand. The Writers Guild of America (WGA) reached an agreement with Hollywood’s major film studios last week, including an increase in royalties, TV "writers' rooms", mandatory staffing, and protections against the use of AI, ending a five-month strike. However, the American Federation of Television and Radio Artists (AFTRA) is still on strike. In Las Vegas, more than 50,000 service industry workers may soon go on strike to protest employer cutbacks and increased workloads. These demands are not much different from those in the healthcare industry.

So far, about 3.62 million workers have gone on strike across the U.S. this year, compared with only 36,600 in the same period two years ago.

Canadian working classes are in financial emergency

More and more working Canadians are facing financial stress as they struggle to make ends meet amid high inflation and interest rates. According to research conducted by the National Payroll Institute and the Canadian Financial Wellness Laboratory, the number of people facing financial stress has increased by 20% YoY, 37% have a job, 63% said they need to spend their entire salary, while 30% must spend more than they earn. This means many people are going into debt or using up any savings they already have to cover daily expenses.

ADP was lower than expected

ADP, known as the "small non-farm payrolls", increased by 89,000 people last night. The data was far below economists' expectations of 150,000. The data showed that the leisure and hospitality industry drove employment growth in September, offsetting declines in professional and business services, manufacturing, trade and transportation, and layoffs were widespread among large companies.

After the announcement of ADP, interest rate futures traders significantly reduced their bets on the Fed raising interest rates within the year, and it is expected that the Fed has ended its rate hike cycle. But traders bet highly on interest rate hikes in November and December after the job openings data was released on Tuesday. However, the market's expectations of "higher for longer" have not significantly cooled down.

Bailey: The job of fighting inflation is not done

Bank of England Governor Bailey said in a speech yesterday that the job was not done on fighting inflation, although he expected those pressures to dissipate quickly this year. Headline inflation is expected to fall to 5% or just below 5% by the end of 2023, but to back to the 2% target is "still a long way to go".

Officials are scrutinizing labor market data for signs of easing inflationary pressures. However, the record pay growth may be a lagging indicator. Wage growth has raised concerns about a wage-price spiral. If this is a lagging indicator, the lag is longer than it has been in the past.

[Focus of the Day]

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UTC+8 20:30 U.S. Weekly Initial Jobless Claims (SA)

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UTC+8 23:00 ECB Governing Council member Nagel Delivers a Speech

UTC+8 23:30 Richmond Fed President Barkin Delivers a Speech on the Economic Outlook

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UTC+8 00:15 Fed Governor Barr Delivers a Speech