Sweden’s National Institute of Economic Research (NIER) just published its most recent report. Notably, it includes helpful confidence indicators and explanations of price plan types. This data comes in the context of extreme volatility in global markets and economic life overall. The United States has faced its largest decline in the 10-year Treasury yield. In fact, it dropped below 4.0% for the first time since late October, pushed down by weakening domestic consumption and exports.
Adding to this picture though is Norway, where the most recent numbers show an uptick in mainland GDP in the new normal. The recent Autumn Budget in the UK has sparked some pretty passionate debate. It can’t do much about VAT, but it can encourage potential easing moves from the Bank of England. Profits at Chinese state-owned enterprises have dropped precipitously, a stark reversal from wildly profitable growth.
NIER Report Highlights Confidence and Price Plans
The latest NIER report from Sweden is a model for presenting key economic indicators, including confidence indicators that measure consumer and business confidence. Together, these indicators paint a picture of how the shared economy is understood—both by the public and by investors.
The report outlines pricing strategies that affect inflation expectations. Recognizing these dynamics is extremely important for policymakers as they work to address the challenges of a post-pandemic recovery. The Swedish National Debt Office will announce an updated forecast and borrowing plan on December 18. This update will continue to set the stage for what our economy looks like.
“Ordinary people to pay a little bit more,” signaling a potential increase in living costs that could arise from these economic conditions.
US Treasury Yields Reflect Economic Pressures
In the United States too, the 10-year Treasury yield has recently dipped below 4.0%. That’s the first time it has fallen below that threshold since late October. Falling domestic demand and reduced export activity are the main contributors to this decline. For an otherwise strong U.S. economy, this is highly troubling.
Continued tariff threats have made things worse by severely curtailing domestic demand and exports. Investors are paying close attention to these trends as they try to get a read on the next monetary policy move by the Federal Reserve.
When treasury yields experience such fluctuations, it typically indicates fears about the overall economy that can affect the market’s movement and subsequent investment strategies as a whole.
Norway and the UK Navigate Economic Challenges
In Q3, Norway’s underlying, or mainland, GDP increased by just 0.1% from the previous quarter. This increase exceeded the consensus prediction of 0.2%. This modest increase is a sign that Norway’s economy is doing well overall, in spite of headwinds from abroad.
Back in the UK, the recent Autumn Budget has been the topic of much debate because of its seismic shift in embracing supply-side economic policy. The budget avoided all VAT increases. Once implemented, there’s no doubt that many would interpret this as a concrete step toward the government’s goal of relieving financial pressures for millions of citizens during these unprecedented times.
This lack of VAT increases reinforces expectations for near-term easing from the Bank of England. In fact, financial markets are now anticipating more than a 90% certainty that the BoE will cut interest rates at its next meeting in December. This points to strong confidence that further easing measures will be required to boost growth.
Market Reactions and Global Trends
Despite a slew of bad economic news, stock markets have been on fire lately. The S&P 500 was up 0.7%. Overall, the Stoxx 600 was up by 1.1%, a sign that investor optimism may have returned somewhat, in spite of a tricky economic backdrop.
The growth rate of industrial profit in China plummeted in October. It dropped by 5.5% YoY, a jarring reversal from the robust 21.6% growth rate recorded in September. This unprecedented decline heightens fears about China’s industrial economy vulnerability as the world continues to grapple with widespread global supply chain disruptions.
The developments across Sweden, Norway, the UK, and the US highlight a complex interplay of local and international economic factors. Countries are not only seeing inflationary pressures but under changing market conditions. All eyes are on the new fiscal stimulus and the Bank Indonesia monetary policy committee meeting.