US President Donald Trump announced that there is no deadline for reaching an agreement regarding the ongoing conflict, emphasizing he will meet with fellow leaders only when the “deal to end this War is FINAL or, in its final stages.” We know that international negotiations are never easy and always difficult. Today, several key economic indicators predict a more rosy future for the United States.
In September, retail sales growth was due for a correction, with sales rising by a paltry 0.2% month-over-month. Consumer confidence suffered a major blow. The Conference Board’s index tumbled from 95.5 in October to 88.7 in November. This steep drop indicates how worried consumers are about their economic futures.
Economic Performance Indicators
Last week’s producer price index (PPI) for final demand—essentially, the wholesale inflation reading—came in at a 0.3% month-over-month increase. On a year-over-year basis, it increased by 2.7%, meeting the consensus low expectations. The so-called core measure, which leaves out food and energy prices, was even lower at 0.1% year-over-year.
The high growth rate will not be matched in employment figures, which saw only moderate growth of about 0.1% in the third quarter. Even with these discouraging signs there was plenty to be encouraged about in the equities markets. Second, the VIX, a widely watched measure of market volatility, dropped below 20, a sign that investor anxiety is starting to let up. The small-cap standard bearer Russell 2000 index ripped higher—up as much as 3%. This momentum was led by sectors such as healthcare, consumer discretionary, and materials, each rising around 2%.
Currency Fluctuations and International Economic Growth
Currency markets experienced notable movements as well. The EUR/USD exchange rate jumped from 1.1520 to 1.1590, with the USD/SEK decreasing by 10 figures. These ups and downs are a result of market participants reacting to shifting economic expectations and outlooks.
Norway’s mainland GDP growth figures are due out in a few weeks. More importantly, the current consensus among experts is for a significant slowdown to 0.2% for the third quarter. This possible deceleration could impact monetary policy deliberations across the district.
In another significant development, US envoy Steve Witkoff is scheduled to meet with President Vladimir Putin next week to discuss advancing the peace plan. Tensions are understandably still very raw. Most recently, Moscow has signaled that it is unlikely to accept the 19-point peace plan, which Ukraine and the United States have worked out together.
“deal to end this War is FINAL or, in its final stages” – US President Trump
Fiscal Strategies and Future Projections
With calls for fiscal restraint rising, UK Chancellor of the Exchequer Rachel Reeves is being urged to revise fiscal forecasts upwards. Most analysts expect her to substantially raise her starting estimate. They think she will have to increase it from GBP 10 billion to at least GBP 30 billion to meet some of the new economic challenges expected.
These changes have occurred at an unprecedented moment when many North American and global markets face acute pressure from international and domestic forces. The macroeconomic environment is extraordinarily uncertain. Investors are now looking hard at how these indicators and political developments are going to shape economic policies going forward and what those policies will mean for market performance.