US October deficit hits $404 billion record
The US budget deficit set a record in October at $404 billion, as spending rose and revenue fell. Separately, an attack in southern Iran weighed on risk assets.
Germany's October CPI slowed to 2.8% y/y, but winter gas risks support a likely ECB rate hike in December.
The final data largely confirm the preliminary figures released earlier. The slowdown in inflation in Germany was driven mainly by a more moderate rise in energy costs in October and the reintroduction of a temporary fuel tax cut from 1 October, which is set to last until year-end. However, core inflation measures also declined, with both services and goods prices falling month-on-month.
Destatis commented:
"The main reason for the continued high inflation rate remained the development of energy prices, even though the fuel discount, which was reintroduced at the beginning of October, likely dampened inflation somewhat."
Core annual inflation was confirmed at 2.1% in October, down from 2.4% in September. This should reassure the ECB that price pressures are not accelerating across the eurozone as the year draws to a close.
However, the onset of winter is approaching. Together with low gas storage levels, this is expected to drive up gas prices in the near term, which could eventually feed through to higher consumer prices early next year.
For the time being, the inflation figures provide additional comfort to ECB doves, indicating no second-round effects are yet visible. However, although the data might imply that a December rate hike is not certain, stronger inflation in other regions probably tilts the balance toward another increase before the end of the year. Market pricing reflects this, with around a 79% probability of a 25 basis point rate hike in December.
Share to
Disclaimer: this article comes from third-party media and is provided for reference only. It does not constitute investment advice. Crypto and other financial products carry significant price volatility risk, so please make your own decisions carefully.
The US budget deficit set a record in October at $404 billion, as spending rose and revenue fell. Separately, an attack in southern Iran weighed on risk assets.
Thursday's US 30-year bond auction disappointed with a 0.4 basis point tail, the second straight day of weak demand.
Fed's Daly warns services inflation is sticky and signals bias for further tightening, challenging dovish views.
The euro fell to its weakest since April 2025 as US Treasury yields rose and the market priced in more Fed tightening.