Mediocre, Tailing US 10Y Auction Sees Subdued Foreign Demand

WH Press Sec. Leavitt: October CPI and jobs data likely never to be released. WH Press Sec. Leavitt: The Federal statistical system may have been permanently damaged.

Governing Council members began their deliberations by discussing global economic developments since the July Monetary Policy Report. The impact of US protectionism on major economies around the world had become clearer. Trade flows had begun to shift, and ongoing trade uncertainty had weighed on investment in most advanced economies. Even so, global growth was resilient but was expected to slow over the next two years. Economic growth in the United States remained strong even with higher tariffs on imports. Members attributed much of this strength to the boom in artificial intelligence (AI) investment. US consumer spending was robust overall, contributing to this strength. Consumption was likely supported by segments of the population who have benefited from buoyant equity markets. Employment growth had slowed, and tariffs were beginning to push up US consumer prices. After growth in US gross domestic product (GDP) rebounded in the second quarter of 2025, members expected it to moderate in the second half of the year and in 2026. Growth in the euro area was expected to moderate in the second half of 2025 because of weaker exports and slower domestic demand growth. Fiscal spending on defence and infrastructure could provide some support going forward. In China, growth was robust, boosted by strong government support for households and an increase in exports to other (non-US) countries, replacing lost exports to the United States. However, a sharp decline in investment was expected to contribute to slightly slower growth over the next two years. Members noted that slower-than-expected GDP growth in China could translate into weaker demand and lower prices for raw materials exported by Canada. BoC: Members expressed concern that weakness in the labour force could persist and broaden - Minutes. BoC: Members had a range of views about the timing of the cut but arguments for a move in October were considered more important - Minutes. BoC Meeting Minutes: Some members felt waiting would provide them with more information about economy, jobs and inflation.

MIRAN: SHOULD NOT TAKE INFLATION DATA AS FACE VALUE Fed's Miran: Elevated inflation is due mainly to the measurement process. Fed's Miran: I am in favour of using the Fed's balance sheet more judiciously than it has in the past. MIRAN: QE MAYBE WAS 'OVER-USED' IN PAST