U.S. Markets:

• On Friday, the Nasdaq Index closed the day with a daily decline of 1.23%, and the S&P 500 Index saw a 0.50% decrease, while the Dow Jones Index closed the day with a 0.12% increase.
• The Dollar Index ended the previous week with a 0.6% increase, reaching 106.7.
• Brent crude oil’s barrel price increased by 7.5% last week, closing at $90.9 USD, primarily due to geopolitical risks in the Middle East..
• The 10-year US Treasury bond yield, after a 19 basis point decrease, closed the week at 4.61%. Meanwhile, the 2-year Treasury bond yield, which is more sensitive to changes in monetary policy, closed the week at 5.05% after a 3 basis point decrease.

European Markets:

• European stocks finished lower Friday, with the Stoxx Europe 600 Index SXXP, falling 0.98% to 449.18 marking a decline from their recent positive trend. The German DAXdropped 1.55% to 15,186.66, the French CAC 40 Index dropped 1.42% to 7,003.53 and the FTSE 100 Index UKX dropped 0.59% to 7,599.60.
• The yield on the 10-year UK Treasury bond yield declined 3.11 basis points to 4.39%, and the yield on the German 10-year bond declined 5.1 basis points to 2.74%.

Asian Markets:

• Asia-Pacific stocks decreased on Friday. The Hang Seng Index weakened 2.3% to 17,813.45, while the Nikkei 225 Index dropped 0.5% to 32,315.99. The Shanghai Composite Index fell 0.64% to 3,088.10.
• The S&P/ASX 200 Benchmark Index dropped 0.6% to 7,051.00.

• Consumer Confidence Plummets in October

On Friday, the Michigan University Consumer Confidence Index for October fell from 68.1 to 63, below the expectations (67), and the details of the survey showed an increase in consumers’ annual inflation expectations for the coming year.

This increased the expectations that the Federal Reserve will maintain its tight monetary stance for an extended period, resulting in a bearish close for Wall Street indices.

When looking at the details, the current conditions sub-index dropped from 71.4 to 66.7 in October, while the expectations sub-index dropped from 66 to 60.7, marking a five-month low. Furthermore, consumers’ annual inflation expectations for one year ahead increased from 3.2% to 3.8%, reaching the highest level in the last five months, while long-term annual inflation expectations rose slightly from 2.8% to 3%.

• Federal Reserve Speeches and Beige Book

This week, various speeches by Federal Reserve officials, notably Federal Reserve Chairman Powell on Thursday, will be closely monitored for potential new signals regarding monetary policy. Additionally, on Wednesday, the Beige Book report will be published, which is based on economic data from the 12 Federal Reserve districts. The report will include updated assessments of the US economy and expectations for the future.

• Industrial Production and Capacity Utilization Trends

Industrial production and capacity utilization data for September will also be followed on Tuesday as indicators of production trends. In August, industrial production increased by 0.4%, exceeding expectations (0.1% increase), following a 0.7% increase in July.

The capacity utilization rate, despite expectations of stability at 79.5%, increased from 79.5% to 79.7% in August, marking the highest level in the last four months. However, it is expected that industrial production will slightly decrease by 0.1% on a monthly basis in September, and the capacity utilization rate will moderately decline from 79.7% to 79.5%.

• Manufacturing and Retail Sales

On Monday, the New York Fed Empire State Manufacturing Index for October, which provides signals about the state of manufacturing, will be observed. In September, the index dropped from -19 to 1.9, signaling a return to growth in the manufacturing sector, although expectations indicated a continued contraction. In October, it is expected to fall to -5, indicating a return to a contraction phase.

On Tuesday retail sales data for September, which provides signals about the trend in domestic demand, will be released. Retail sales increased from a monthly growth rate of 0.5% to 0.6% in August, reaching the highest level in the last three months and extending the growth for the fifth consecutive month, exceeding expectations of a 0.1% increase. Other than this, the data for core retail sales, excluding auto, gasoline, food, and construction materials, showed a slight increase of 0.1% in August after a 0.7% increase in July, and expectations were for a mild decrease of 0.1%.

These data, despite tightening financial conditions, indicated an acceleration in consumer spending and a positive trend in domestic demand. However, for September, it is expected that monthly retail sales will slow down from a 0.6% increase to a 0.3% increase, and core retail sales will also experience a slight decrease, aligning with the expectation of a 0.1% increase.

• Housing Market Data and Labor Market Insights

Housing market data, including housing starts for September and permits for future housing demand, will be followed on Wednesday.

In August, housing starts increased by 0.3%, exceeding expectations of 0.1% growth. Permit data showed a slight increase of 0.1% in August after a 0.7% increase in July, while expectations were for a 0.3% decline in core permits. These data indicated that despite the tightening of financial conditions, consumer spending continued to accelerate and domestic demand remained positive. However, for September, it is expected that monthly housing starts will decrease by 0.1%, and permit data will experience a slight decline from 0.1% growth to a 0.1% decline in core permits.

Additionally, on Thursday, the existing home sales data for September will be monitored, which provides signals about the state of the housing market.

The weekly initial jobless claims to also be announced on Thursday. The recently announced weekly initial jobless claims remained at 209,000, flat compared to expectations, marking the lowest level in the past seven months, and staying below historical averages, indicating continued tightness in the labor market.

• Industrial Production in the Eurozone: Signs of Rebound with Focus on Consumer and Investment Goods

Industrial production in the Eurozone showed signs of a partial rebound with a 0.6% increase in August. This increase followed a 1.3% decline in July on a monthly basis. However, the annual decline rate remained at 5.1%, indicating ongoing decreases in industrial production over the past six months.

The increase in industrial production in August was primarily driven by a 1.2% rise in the production of durable consumer goods. This positive development marked the end of a four-month contraction period in this sector. Durable consumer goods production also saw a 0.5% increase, indicating an improvement in the manufacturing of longer-lasting consumer products.

Additionally, capital goods production, which serves as a signal for investment spending, increased by 0.3%. This suggests potential optimism in terms of investments in the Eurozone.

In contrast, energy production experienced a decline of 0.9%, and intermediate goods production decreased by 0.3%.

• Central Bank Statements

ECB member Kazaks stated that there may not be a need for a new interest rate hike as long as there is no significant development. However, given the high uncertainty, he emphasized that they should always keep the door open for further interest rate hikes. He also noted that current interest rates are quite likely to bring them back to 2% inflation by the second half of 2025, as many key indicators have decreased, and he is satisfied with the relatively sharp decrease in the latest inflation data.

Bank of England (BoE) Governor Bailey mentioned that progress has been made in reducing inflation, but there is still work to be done. He emphasized that the current monetary policy is tight and has to be so, and tight monetary policy decisions will continue.

• Germany’s ZEW Current Conditions and Expectations Indexes for October

Germany’s ZEW current conditions and expectations indexes for October, which will shed light on the economy’s performance and outlook, will be announced on Tuesday.

In September, the ZEW current conditions index decreased from -71.3 to -79.4, reaching the lowest level since August 2020, although the expectations index slightly recovered from -12.3 to -11.4, marking the lowest level since December 2022 and continuing the contraction for the last five months. Especially in the assessment of the participants in the survey, the slight recovery in the expectations index was influenced by increased expectations that interest rates in the Eurozone and the US, as well as pauses in interest rate hikes by the ECB and the Fed, would remain stable, alongside increased expectations that China would further ease its monetary policy.

In October, it is expected that the ZEW current conditions index will slightly decrease from -79.4 to -80, and the ZEW expectations index will slightly increase from -14.4 to -10.5.

• Eurozone August Foreign Trade Data

Furthermore, data for Eurozone August foreign trade, which will provide signals about the outlook of global trade, will be released. In the Eurozone, the trade balance surplus reached 6.5 billion euros in July after having a surplus of 18.5 billion euros in June due to the ongoing decline in imports. However, expectations for August foreign trade balance is positive and might be higher than that of July.

• Final HICP Inflation Data for September in the Eurozone and September CPI Inflation Data in the UK

Final HICP inflation data for September in the Eurozone and September CPI inflation data in the UK will be followed on Wednesday.

According to preliminary data, the monthly inflation rate of the HICP in the Eurozone is expected to slow down from 0.5% to 0.3% in September, falling below expectations of 0.5% growth, while the annual inflation rate is expected to decrease from 5.2% to 4.3%. Core HICP inflation, in particular, is expected to slow down from 0.3% to 0.2% in September on a monthly basis, and decrease from 5.3% to 4.5% on an annual basis, which is the lowest level since February 2022.

Core HICP inflation reached a record high of 5.7% in March. In the UK, monthly CPI inflation for September increased by 0.3% in August after falling by 0.4% in July for the first time since January, and exceeded expectations of 0.7% growth. It is also worth noting that core CPI inflation, excluding energy and food prices, increased by 0.1% in August, in line with expectations. This data indicated that inflation remained a challenge for the economies of the Eurozone and the UK, but it has been easing recently.

• German Producer Price Index

On Friday, the Producer Price Index (PPI) for Germany in September will be released. The PPI in Germany increased by 0.3% in August, surpassing the expectation of a 0.1% increase. The PPI, which has been affected by the increase in energy and food prices, is expected to continue to increase by 0.3% in September, while the annual increase rate is expected to slow down from 12.6% to 12.2%.

• China’s Q3 GDP Growth and Economic Activity

In Asia, third-quarter GDP growth data for China will be monitored on Wednesday.

In the second quarter of this year, China’s GDP growth rate decreased from a quarterly rate of 2.2% to 0.8%, which exceeded expectations due to the slowdown in the global economy, the weakening of domestic demand, and the problems in the real estate sector, while the annual growth rate was lower than expectations, remaining below the 6.3% level at 6.1%.

The Chinese government set a growth target of around 5% for this year while market players evaluated that the Chinese economy needed further stimulus. In the third quarter, the quarterly growth rate of the Chinese economy is expected to slightly increase from 0.8% to 1%, and the annual growth rate is expected to slow down from 6.1% to 4.5%. This data will provide valuable insights into the state of the Chinese economy and its resilience amid global economic challenges.

In addition, data for industrial production, retail sales, and fixed capital investments in September will be announced, which will provide information on the course of economic activity.

The Chinese government has implemented stimulus packages to boost domestic consumption and support private sector companies, which have had a positive impact on the Chinese economy.

In August, the annual growth rate of industrial production in China increased to 4.5%, surpassing expectations and reaching its highest level since April.

The annual growth rate of retail sales, a key indicator of domestic demand, also rose to 4.6% in August, exceeding expectations and continuing its fifth consecutive month of growth.

Fixed capital investments saw an increase of 3.2% in August, surpassing the 3.3% expectation.

In September, it is expected that the annual growth rate of industrial production will slow down from 4.5% to 4.3%. Retail sales are projected to experience a slight increase from a 4.6% annual growth rate to 4.9%, and fixed capital investments are expected to increase at the same rate of 3.2% as in the previous month.

Additionally, the unemployment rate is expected to remain at 5.2%, similar to the previous month, providing further insights into the labor market’s stability and the overall economic health.

• South Korea’s Central Bank Meeting

On Thursday, South Korea’s central bank’s meeting will be monitored. In August, the bank’s last meeting decided to keep the policy rate at 3.50%, a level maintained since the beginning of the year.

It is expected that the central bank will maintain the policy rate at the current level during this week’s meeting as well. This decision will play a crucial role in shaping the country’s monetary policy and economic outlook.

U.S. Economic Events:

• Federal Reserve Speeches and Beige Book: This week features speeches by Federal Reserve officials, including Chairman Powell, with a focus on potential monetary policy signals. The Beige Book report will provide updated assessments of the US economy and expectations.
• Industrial Production and Capacity Utilization Trends: Industrial production, which exceeded expectations with a 0.4% increase in August, will be closely monitored. The capacity utilization rate is expected to moderately decline.
• Manufacturing and Retail Sales: The New York Fed Empire State Manufacturing Index for October will be observed, with expectations of a return to contraction. Retail sales data for September, indicating trends in domestic demand, is also expected to show a slowdown.
• Housing Market Data and Labor Market Insights: Data on housing starts and permits for housing demand in September will be watched. On Thursday, existing home sales data and weekly initial jobless claims will be crucial for insights into the housing market and labor market stability.

European Economic Events:

• Industrial Production in the Eurozone: Signs of Rebound with Focus on Consumer and Investment Goods: Eurozone’s industrial production showed signs of recovery in August, driven by durable consumer goods and capital goods production, signaling potential optimism for consumer spending and investment.
• Central Bank Statements: ECB member Kazaks emphasizes the need to keep the door open for further interest rate hikes, while Bank of England (BoE) Governor Bailey maintains that tight monetary policy decisions will continue.
• Germany’s ZEW Current Conditions and Expectations Indexes for October: Expected to slightly decrease in current conditions and slightly increase in expectations.
• Eurozone August Foreign Trade Data: Trade balance expected to show positive signs for global trade.

• Final HICP Inflation Data for September in the Eurozone and September CPI Inflation Data in the UK: Inflation rates are expected to decrease, with the Eurozone’s HICP slowing from 0.5% to 0.3%.
• German Producer Price Index: The PPI is expected to continue increasing in September, influenced by energy and food prices.

Asian Economic Events:

• China’s Q3 GDP Growth and Economic Activity: The Chinese economy is expected to show a slight quarterly growth increase in the third quarter. Annual growth is anticipated to slow down. Data on industrial production, retail sales, fixed capital investments, and unemployment rate will provide insights into the Chinese economic health.
• South Korea’s Central Bank Meeting: The Bank of Korea is expected to maintain its policy rate at the current level, shaping South Korea’s monetary policy and economic outlook.