Mizrahi Tefahot Bank Releases Weekly Economic Review on Global Markets
Mizrahi Tefahot Bank chief strategist Yoni Panning outlines US labor trends, PCE index downward revisions, robust post-war credit card spending in Israel, and European inflation developments.
Yoni Panning, chief strategist at Mizrahi Tefahot Bank, released a weekly economic review analyzing US labor market data, the PCE price index, credit card spending by Israelis, Bank of Israel policies, and preliminary September inflation figures in Europe.
US Market and PCE Index Adjustments
US labor market data pointed to a certain cooling in September, differing notably from pre-midterm trends seen in August and from recent purchasing managers' index (PMI) readings. The PCE price index brought significant methodological updates, with prices over the past year revised downward significantly.
"The expected peak in both indices next month will clearly stand below the 4% consumer attention threshold, and aside from transportation, energy price increases are not translating into other categories." - Yoni Panning
Although consumer strain is expected, the Bureau of Economic Analysis (BEA) concluded that the savings rate is actually nearly 2% higher than previously estimated. However, with September fuel price increases and rising yields, consumer price sensitivity remains high at this stage.
Israeli Credit Card Spending and Treasury Operations
In Israel, local credit card usage data continues to indicate strong post-war demand, especially as the volume of outbound flights decreases slightly.
Despite ongoing growth in defense expenditures, the Treasury's borrowing needs remained moderate in October, coinciding with a significant redemption of the 1026 shekel bond at the end of the month. Contrary to expansive monetary policies, the Bank of Israel is slightly neutralizing this with excess Makam (short-term Treasury bills) issuances.
European Inflation Trends
In Europe, preliminary September consumer price index data indicates an energy contribution of close to 2% to overall inflation. This suggests a decline very close to the European Central Bank (ECB) target once energy components stabilize, although market expectations continue to price in further interest rate hikes later this year.
