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[Quick Facts]

1. New Zealand's Q3 CPI rises 5.6% YoY, a slower but still higher-than-target increase.

2. U.S. House Speaker candidate Jordan seeks a full House vote Tuesday.

3. Canadian business confidence slips to a record low on sales outlook and higher rates.

4. Fed's Harker suggests holding interest rates at the current level.

5. Iran warns expansion of the Israel-Hamas conflict becoming inevitable.

6. Lagarde says the ECB is watching oil for inflation risks.

[News Details]

New Zealand's Q3 CPI rises 5.6% YoY, a slower but still higher-than-target increase

Statistics New Zealand announced on Tuesday that the third quarter CPI rose 5.6% year-on-year, the lowest level in two years, lower than the second quarter's growth of 6.0% but still higher than the central bank's target of 1%-3%. The main driver of the YoY increase is the rise in construction and rental prices, while food is the biggest factor driving quarterly inflation.

Inflation is a big challenge for the Reserve Bank of New Zealand (RBNZ), which has raised interest rates to 5.5% from a record low of 0.25% in October 2021 to fight inflation. The EBNZ now sees the desired impact of higher rates on curbing inflation, but the official cash rate will have to remain at this restrictive level for some time to ensure inflation returns to its target range.

The two-year swap rate fell by seven basis points to 5.63% as the market lowered the likelihood of a rate rise in November to 20% from 33% before the data were released. The New Zealand dollar was down 0.5 % to $0.5895.

U.S. House Speaker candidate Jordan seeks a full House vote Tuesday

According to CNN, U.S. Republican House Speaker candidate Jim Jordan was trying to win the support of several key skeptics in the Republican conference Monday. In a vote of the full House, Jordan could lose up to four votes of support to gain a majority and be elected. One Republican lawmaker believed there were still about 40 "no" votes. But another source said Jordan had positive conversations with lawmakers and believed he would be elected speaker by Tuesday night, local time; a vote "could" be held on Tuesday, and Jordan may decide to take multiple votes if necessary to win a majority. However, if Jordan fails to garner enough support, Republicans will be back to square one, leaving the House paralyzed without a speaker two weeks after McCarthy stepped down.

Canadian business confidence slips to a record low on sales outlook and higher rates

Business confidence in Canada hit a record low in the third quarter, with companies reporting a worsening sales outlook and interest rate hikes putting pressure on companies to meet short-term financial commitments, according to the Bank of Canada's Business Outlook Survey and Canadian Survey of Consumer Expectations. Business confidence fell to -3.51, its lowest level in more than a decade (except the pandemic period). Inflation expectations have eased slightly but remain at historically high levels, with 53% of firms indicating that CPI will reach or exceed 3% over the next two years. More than 70% of goods and services firms surveyed said they had been negatively impacted by higher rates, and one-third said sales had declined over the past 12 months. The outlook for next year's sales deteriorated compared to the previous quarter, although 42% of firms still expected sales to rise over the next 12 months. One in three firms expect to reduce capital spending over the next 12 months, and hiring intentions are also below historical averages.

Fed's Harker suggests holding interest rates at the current level

Philadelphia Fed President Patrick Harker said yesterday that high interest rates pushed up costs and reduced inventory, thus hitting the real estate sector as many people no longer want to sell their homes while more potential buyers want to purchase new houses. "Absent a stark turn in what I see in the data and hear from contacts, and audiences like you, I believe that we are at the point where we can hold rates where they are," Harker said.

Iran warns expansion of Israel-Hamas conflict becoming inevitable

Iran said on Monday that an expansion of the conflict between Israel and Hamas is becoming increasingly inevitable. Iranian Foreign Minister Hossein Amirabdollahian wrote on social media that time was running out to reach a political solution to the Israel-Gaza conflict, warning of the "possibility of expanding the scope of war and conflict to other fronts."

Iran has repeatedly called on Israel to lift its siege of Gaza and halt air strikes that have killed more than 2,750 people so far, warning of an escalation of the conflict if Israel does not end its "war crimes." Hezbollah has exchanged fire with the Israeli army on the Lebanese border several times in the past week, raising fears of a possible second front in northern Israel. We are fully prepared to take any action once the time is right, said Sheikh Naim Qasem, Hezbollah's deputy secretary-general.

Lagarde says the ECB is watching oil for inflation risks

European Central Bank (ECB) President Christine Lagarde told a closed-door meeting of EU officials that the ECB is watching oil prices to examine the impact of the Palestinian-Israeli conflict on inflation. The risk of higher oil prices will hit both Europe and the United States. U.S. Treasury Secretary Janet Yellen also attended the meeting.

The ECB's September inflation forecast expects the consumer price index growth to slow to 2% in 2025, assuming that oil prices will fall to $77.9 per barrel by 2025 from the current $82.7.

[Focus of the Day]

UTC+8 14:00 U.K. ILO Unemployment Rate (Aug)

UTC+8 17:05 Bank of England monetary policy member Dingla delivers a speech

UTC+8 20:00 New York Fed President Williams delivers a speech

UTC+8 20:30 Canada CPI (Sept)

UTC+8 20:30 U.S. Retail Sales (Sept)

UTC+8 21:00 ECB Governing Council member Nott speaks

UTC+8 22:00 ECB Governing Councilor Centeno speaks

UTC+8 22:45 Richmond Fed President Barkin speaks

UTC+8 01:00 Next Day: ECB Vice President Guindos and Governing Council members Holzmann and Nagel speak

UTC+8 05:00 Next Day: Minneapolis Fed President Kashkari speaks