US September core CPI exceeds expectations, inflation peaks; China’s September exports surpass expectations with balanced structure; China’s September bill financing and government bond issuance increase — 1015 Macroeconomic Highlights
- Oil prices pushed up the U.S. September CPI year-on-year, with both the core CPI month-on-month and year-on-year readings above expectations. After the data was released, the probability of a Federal Reserve rate hike in October slightly increased, putting pressure on risk assets. Both core goods and core services heated up, with used cars and rents as the main drivers, but sustainability may be weak. U.S. inflation may enter a plateau period this year, with a December rate hike still being the baseline scenario.
- In September, China's dollar-denominated exports rose 36.3% year-on-year, and imports were up 31.0% year-on-year, lifting the trade surplus to $133.5 billion. Exports showed three marginal changes: synchronous growth of high-tech and non-high-tech products, simultaneous acceleration to the U.S. and non-U.S. regions, and convergence in price-volume divergence. The global manufacturing sector is still in an upward cycle, and export enterprise competitiveness as well as low real exchange rates provide support.
- China's new credit addition in September saw a narrower year-on-year decline, mainly supported by a surge in bill financing rather than improvement in real sector credit demand. Household credit remains at low levels, and a significant increase in government bond net financing reflects accelerated fiscal funding. Enhanced fiscal-monetary policy coordination at the end of September may see policy effects gradually appear in the fourth quarter.
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U.S. commercial crude oil inventories fell more than expected, with distillate inventories also declining and gasoline unexpectedly rising.
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