Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

November 13, 2023

Deflationary recession or soft landing?

Macro & Overnight

Reports of lower inflation will dominate the macroeconomic discussion this week, with US inflation data tomorrow and UK data on Wednesday. 

In both cases, headline YoY inflation is expected to decline. For the US, from 3.7% to 3.3%, and for the UK, 6.7% to 4.9%. 

This release allows the UK to demonstrate that its stubbornly high inflation is a lagging problem, not a structural one.

Gone are the days of the fear of inflation. Instead, media reports will likely highlight the fears of a deflationary recession. 

As we fear the Japanification threat of high debt deflationary recession, overnight, Japan reported that its producer prices fell last month, adding to China’s retail price deflation reported last week. 

As mentioned last week, the world feels deflationary all of a sudden.

We will also get US oil inventory data, US Housing starts, China manufacturing data, US retail sales numbers and UK unemployment figures. 

By the weekend, we should better understand the risk of deflation versus the required slowdown to achieve a soft landing, at least for the all-important US economy. 

The biennial Dubai Airshow also starts this week, where the world’s aviation market meets to announce deals, which should provide a barometer of the health of a genuinely global industry. 

Prognosticator  

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