Cooling US inflation likely ends Fed hikes

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news markets sense the US Fed is about to say it is done raising rates</p><p>In the US, their <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank"><strong>annual inflation rate slowed to 3.2%</strong></a> in October from 3.7% in both September and August, and below market forecasts of 3.3%. Core inflation retreated to 4.0%, also a touch less than expected. Even the month-on-month data came in lower than expected. These are all small moves, but they had a large impact on financial markets, who took them as a signal that the Fed is done raising rates in this cycle. Equities raced higher, bond yields fell sharply, and the USD weakened sharply.</p><p>The American <a href="https://www.redbookresearch.com/" target="_blank"><strong>Redbook index</strong></a> of retail sales rose just +3.0% last week over the same week a year ago, and hardly keeping pace with inflation.</p><p>Despite that, the <a href="https://www.nfib.com/surveys/small-business-economic-trends/" target="_blank"><strong>NFIB SME optimism index</strong></a> came in better than expected for October, even if it did edge marginally lower than in September.</p><p>In China, they are <a href="https://www.bloomberg.com/news/articles/2023-11-14/china-mulls-137-billion-of-new-funding-to-boost-housing-market?srnd=premium-asia" target="_blank"><strong>contemplating</strong></a> a release of ¥1 tln in low cost debt funding for urban village renovation and affordable housing programs, in its latest effort to bolster the struggling property market.</p><p>Markets are sensing something bigger is coming because <a href="https://tradingeconomics.com/commodity/iron-ore" target="_blank"><strong>iron ore prices</strong></a> are now rising and back near Mar 2023 highs.</p><p><a href="https://ec.europa.eu/eurostat/do