NEWS / Foreign Exchange

US: Consumer sentiment continues to deteriorate

Consumer sentiment fell unexpectedly in October, according to the Michigan University survey. The headline index dropped to 80.9 in October, from 82 in early October and 83.4 in September, the lowest since May 2006. Housing concerns and higher energy prices are the main culprit. Consensus was for a small decline to 82. The current assessment sub-index at 97.6 was marginally below September??™s 97.9, but the expectation sub-index fell four points to 70.1. The inflation outlook was little changed with the 1-year outlook at 3.1%, the lowest since March.

EMU: M3 money supply and credit growth ease

M3 money supply growth slowed in September to 11.3% Y/Y from 11.6% Y/Y previously, which compares to expectations for an 11.4% Y/Y increase. The less volatile 3-month average still rose marginally to 11.5% Y/Y. Credit to the private sector eased to 11.6% Y/Y from 11.8% Y/Y previously. Within this category, credit for home purchases slowed further to 7.8% from 8.1% in August, while also consumer credit slowed. Credit growth to non-financial corporations was little changed at 14.1% Y/Y. Overall, one could have expected a rise in M3, following the credit turmoil as a result of portfolio adjustment, like we have seen in the past. This didn??™t happen, while even signs of a slowdown are visible. So, we might see a further slowing in the next months that would give the ECB some more comfort and signal that growth is over its peak and moderating to below trend.