- Despite the horror of events in the Middle East, the big issue for financial markets remains the prospects for interest rates, particularly US interest rates.
- Expect big cuts next year, much bigger than the market has priced in and much bigger than the Federal Reserve has been guiding.
- Progress will be data dependent. The Atlanta wage series, released on Friday, suggests the wage price spiral is no longer operating.
- US unemployment is continuing to edge higher in response to a revival in immigration and workers who exited the labour force during Covid, re-joining. Both trends have further to go.