Cases are on the rise in Europe and the US. As a result, several European governments are taking stricter measures to tackle the spread such as Germany restricting access to leisure activities to unvaccinated, the Netherlands re-imposing three weeks of partial lockdown as well as Austria which on top will make vaccinations mandatory from February 2022. In terms of double vaccination rate, Spain (79%) and Italy (74%) lead the table, followed by UK (69%), Germany (68%) and finally Austria (64%). In the US, 58% of the population received both doses. The Occupational Safety and Health Administration (OSHA) suspended enforcement of the Biden administration's vaccine mandate for private businesses with 100 or more employees (it required the creation of a roster of vaccinated and unvaccinated with weekly testing for the latter).
UK headline CPI came out at +4.2% y-o-y in October, above expectations and above the Bank of England’s projections. The core figure was also strong at +3.4%. October German PPI came in at +3.8% well above expectations at +1.9% and +2.3% the prior month. Canada CPI came in at +4.7% in October, the strongest in more than 15 years. In Japan, October headline CPI came at +0.1% y-o-y versus estimates of +0.2% and core CPI was in line with expectations at +0.1% y-o-y.
With the announcement of the next Fed chair expected before Thanksgiving, we had several Fed officials’ comments last week. St. Louis President James Bullard said Tuesday that the Fed should be more aggressive in managing risks from price pressures (member of the Federal Open Market Committee and voting member next year). San Francisco President Daly said that she became more bullish on the economy over the past year, noting that it is still too early to take action on interest rates. Fed's Evans said that rate liftoff could happen "after taper" (i.e. in 2022), a notable development for typically dovish Evans. In Turkey where inflation levels almost reached 20% in October, the central bank lowered interest rates, yet again, by 100bps to 15%, putting even more pressure on an already weakened Turkish Lira. In fact, the Lira has lost around one third of its value against the greenback since a year ago. South Africa raised its benchmark to 3.75% as expected.
The fiscal stimulus package might be significantly larger than the previously expected JPY 30trn to reach 55.7trn (~10% of GDP). The package is expected to feature financial aid for businesses and people hit hard by the pandemic, including cash payouts worth JPY 100k ($884) for students, temporary workers and low-income households; cash and vouchers worth JPY 100k to people aged 18 or younger (excluding high-income families); aid to agriculture and fishery industries hurt by the recent spike in gasoline prices; and the resumption of the "Go To Travel" program to prop up the domestic tourism industry.
US and China, the world's two biggest CO2 emitters, unexpectedly issued a joint statement at the COP26 climate summit in Glasgow. The two countries pledged close co-operation on cutting emissions, acknowledging that “there is more agreement between China and the US than divergence (on climate change)”. President Biden and Xi Jinping seemed to agree on vital global issues, including climate change, during the virtual meeting on Tuesday. The meeting yielded no major breakthroughs as expected but pledged to improve cooperation.