U.S. consumers expect higher inflation in the long term as their expectations of a tight credit market rose to their highest level since April 2020, the Federal Reserve Bank of New York said in a report on Tuesday.
The latest survey of consumer expectations says that while inflation is expected to remain at 3% a year from now, it is forecast to rise to 2.7% in 3 years, up from 2.5% in August, and 5 years from now. after 2.9%, compared to 2.8% predicted in August.
Meanwhile, while perceptions and expectations about credit availability have improved, the report found that expected loan delinquency rates continued to rise and hit a four-year high. The report noted that the average expected probability of defaulting on debt in the next three months rose for the fourth consecutive month to 14.2% from 13.6% in August, suggesting that some Americans are having trouble managing their debt.
While this likelihood is highest among families with annual incomes up to $50,000, the largest increase among respondents was among families with annual incomes over $100,000, which are the most likely to default on loans in the past 10 years.
Wall Street’s biggest banks posted a broad recovery in the third quarter as corporate clients took on more confident loans and mergers, and some traders posted their best quarter in years.
Goldman Sachs announced on Tuesday that its payments to investment banks increased by 20% compared to last year. Bank of America reported its biggest-ever trading profit in the third quarter, while Citibank’s profit reached its highest level in a decade. Investment banking payments also increased by 44%.
Bank executives are optimistic that a series of refinancing rate cuts by the Federal Reserve promises new deals in the near future.
Shares of NVIDIA fell 5% a day after hitting a record high on Tuesday. The drop came after reports that the US may restrict the sale of artificial intelligence chips in some countries. Biden administration officials have been discussing in recent weeks the possibility of introducing a cap on export licenses for advanced chips, including those made by NVIDIA and AMD, to Middle Eastern countries, citing security concerns.
Apple shares rose a record 2.7%, cementing the company’s position as the world’s largest company with a market value of $3.6 trillion.
This growth is largely due to the positive expectation that the company will benefit from the release of iPhones powered by artificial intelligence.
Despite the growth trend seen in tech companies in general, Apple’s growth rate is particularly high; In the last 6 months, the company’s shares have increased by 37%, which is more than twice the growth of the Nasdaq 100.
US producer prices remained unchanged in September, as slight inflation in services was offset by a decline in goods prices.
This figure speaks in favor of forecasts of manageable inflation and reinforces the view that the Federal Reserve System will cut the refinancing rate again next month.
On Friday, the US Department of Labor unexpectedly announced that there were no changes in the wholesale prices of exporters. According to data reported a day earlier, consumer prices rose slightly more than expected last month. But some components that make up the individual consumer price index showed a slight increase, indicating a fairly strong inflation trend in September. The US central bank monitors consumer price indices to assess whether inflation is close to its 2% target.
The Eurozone economy is showing weak but positive signs of growth for the union, which has barely avoided recession over the past year.
The volume of industrial production has increased, as well as the demand for credit. At the same time, expectations rose more than expected in Germany’s main survey of public sentiment, giving some hope amid a weaker-than-expected reading of key indicators last month.
From these indicators, it can be assumed that the Eurozone is experiencing weak growth, but this growth is not large enough to change the expectations of a further reduction of the refinancing rate by the European Central Bank.
Industrial production in August registered an increase of 1.8% compared to the previous month, and only 0.1% compared to the same period last year. . This growth is due to the increase in demand for capital goods and consumer durables.
The production volume of Germany, the largest economy of the union, registered a 3 percent increase compared to the previous month, which is the largest increase among the countries of the zone, although the indicator is still significantly negative compared to the previous year.