Investment Institute
Weekly Market Update

Take Two: US core inflation hits 40-year high, IMF downgrades 2023 global growth

  • 17 October 2022 (3 min read)

What do you need to know?

US annual inflation eased slightly to 8.2% in September from 8.3% the month before, though the figure was ahead of consensus expectations as high prices remain entrenched. The core Consumer Price Index, excluding food and energy, rose to a 40-year high of 6.6% on an annual basis. Minutes from the Federal Reserve’s September meeting revealed officials acknowledged US inflation was reducing “more slowly than they had previously been anticipating.” Some noted that if prices remained higher for longer, there was an increased risk of inflation expectations becoming unanchored, “making it much more costly to bring inflation down”. Elsewhere, China’s consumer prices rose in September at their fastest pace since April 2020, driven by higher food costs.

Around the world

The International Monetary Fund (IMF) cut its 2023 global economic growth forecast to 2.7% from 2.9% predicted in July. It warned that chronic inflation, rising interest rates and the war in Ukraine are driving the chances of a global recession, but maintained its 3.2% growth forecast for 2022. The IMF predicted countries accounting for around a third of the global economy were “poised to contract this year or next” while the US, China and Eurozone will see growth continue to stall. While central banks continue tightening monetary policy, the IMF cautioned against causing an “unnecessarily severe recession”.

Figure in focus: 3x

Investments in renewable energy must triple to reach net zero by 2050, according to the World Meteorological Organization. To combat rising global temperatures, the United Nations agency suggests electricity generated from clean energy must double in the next eight years. Its State of Climate Services annual report focuses on the global energy transition as the key to meeting net zero targets, averting further extreme weather events, preventing water scarcity and addressing threats to energy security. Taking input from 26 organisations, the report calls for improved climate information as well as more investment in energy decarbonisation within emerging markets.

Words of wisdom:

Capital Goods: Goods used to manufacture other products and services. Capital goods include buildings, equipment and machinery and can be distinguished from consumer goods, which are the final products bought by consumers. The sector can be a useful economic indicator – if businesses order more capital goods then they may expect production, and demand, to increase. Eurozone industrial production expanded 1.5% in August from the month before, above market forecasts and following a 2.3% contraction in July. The swing was driven by a strong output of capital goods, which rose 2.8%.

What’s coming up

On Tuesday, September industrial production data will be published for China and the US, alongside Chinese GDP growth figures for the third quarter. The UK, Eurozone, and Canada each report their latest inflation figures for September on Wednesday. On Thursday, Japan publishes its trade balance for September, followed by inflation figures on Friday, when the UK publishes September retail sales numbers. The 20th National Congress of the Chinese Communist Party takes place through the week, with leader Xi Jinping expected to secure a third five-year term.

Related Articles

Weekly Market Update

Take Two: OECD raises 2022 global growth forecast, Fed minutes confirm hikes may slow

  • by AXA IM Investment Institute
  • 28 November 2022 (5 min read)
Weekly Market Update

Take Two: G20 countries to calibrate pace of rate hikes; Japan GDP unexpectedly contracts

  • by AXA IM Investment Institute
  • 21 November 2022 (5 min read)
Weekly Market Update

Take Two: Fed and Bank of England hike rates; Eurozone inflation hits fresh high

  • by AXA IM Investment Institute
  • 07 November 2022 (5 min read)

    Disclaimer

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ.

    Are you a Professional Investor ?

    This website is available in English only and directed at professional, institutional or qualified investors. It is not suitable for retail investors. As such, some of the funds, products and services described on this website are not available for retail investors under the MiFID II (Directive 2014/65/UE). By pressing accept you confirm that you are a professional investor and agree to AXA Investment Managers' Legal Information and Terms of Use.