<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-820x462.jpeg" alt="" class="wp-image-428937" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The White House is seen at dusk on September 30, 2023 in Washington, DC. Samuel Corum | Getty Images</figcaption></figure>



Moody’s Investors Service on Friday lowered its ratings outlook on the United States’ government to negative from stable, pointing to rising risks to the nation’s fiscal strength.



The ratings agency has affirmed the long-term issuer and senior unsecured ratings of the U.S. at Aaa.



“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues,” the agency said. “Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”



Brinkmanship in Washington has also been a contributing factor, Moody’s said.



“Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability,” the ratings agency said.



As far as keeping the nation’s ratings at Aaa, Moody’s said that it expects the U.S. to “retain its exceptional economic strength.” “Further positive growth surprises over the medium term could at least slow the deterioration in debt affordability,” the agency said.



“While the statement by Moody’s maintains the United States’ Aaa rating, we disagree with the shift to a negative outlook,” said Deputy Secretary of the Treasury Wally Adeyemo in a statement. “The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset.”



Moody’s move to cut its outlook arrives as Congress faces the looming threat of a government shutdown once more. For now, the government is funded through Nov. 17, but lawmakers in Washington remain at loggerheads over a bill ahead of the deadline.



Newly elected House Speaker Mike Johnson (R-La.) has indicated that he will release a Republican government funding plan on Saturday, a move that would permit members time to read it before an expected Tuesday vote on the measure.



But his plan to fund certain parts of the government through Dec. 7, and other parts through Jan. 19, known as a laddered continuing resolution, or CR, is dead on arrival in the White House and in the Democratic-controlled Senate.



“Moody’s decision to change the U.S. outlook is yet another consequence of Congressional Republican extremism and dysfunction,” White House press secretary Karine Jean-Pierre said in a statement.



Back in August, Fitch cut the U.S. long-term foreign currency issuer default rating to AA+ from AAA, citing “expected fiscal deterioration over the next three years,” as well as an erosion of governance and a growing debt burden.



Feuding in Washington was also an issue. “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch said at the time.

107309632-1696164614298-gettyimages-1699382269-President_Biden_Spends_Saturday_At_The_White_House_As_Government_Shutdown_Looms

Moody’s cuts U.S. outlook to negative, citing deficits and political polarization

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-820x547.jpg" alt="" class="wp-image-428933" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">WASHINGTON, DC &#8211; FEBRUARY 14: (AFP OUT) U.S. Vice President Joe Biden (R) and Chinese Vice President Xi Jinping talk during an expanded bilateral meeting with other U.S. and Chinese officials in the Roosevelt Room at the White House February 14, 2012 in Washington, DC. While in Washington, Vice President Xi will meet with Biden, President Barack Obama and other senior Administration officials to discuss a broad range of bilateral, regional, and global issues. (Photo by Chip Somodevilla/Getty Images)</figcaption></figure>



U.S.-China relations, marred in the past year by a series of inflection points, have reached one of the most tense periods perhaps since 1972, when the two nations established diplomatic ties.



A Chinese spy balloon. Close encounters in both the air and the Taiwan Strait. Diplomatic spats over the theft of technology, hacking and trade. A drought of military-to-military talks. Even the lapse of a panda agreement.



All point to worsening relations that will hang over next week’s meeting between President Joe Biden and China’s President Xi Jinping, their first in-person meeting in about a year, and the first time since 2017 that Xi has stepped foot on American soil.



But experts and U.S. officials caution not to expect markedly improved relations post-meeting.



“We should probably keep a pretty low bar in terms of tangible outcomes and deliverables,” said Colleen Cottle, deputy director of the Global China Hub at the Atlantic Council. “This is a meeting that’s probably much more about symbolism and showing a commitment among both leaders to maintain high-level communications and keep communications flowing over the course of the next year.”



Senior U.S. administration officials detailed a handful of agenda items during a briefing with reporters. The leaders are expected to discuss hot-button issues including military communications, human rights and the South China Sea, an official said.



“We’re not talking about a long list of outcomes or deliverables,” a senior administration official told reporters. “The goals here really are about managing the competition, preventing the downside risk of conflict and ensuring channels of communication are open.”



Neither the U.S. nor China appears to be gearing up for a significantly positive swing in relations, experts said.



“I think the administration here is quite clear and sober about the likely outcomes of the meeting,” said Jude Blanchette, a China expert at the Center for Strategic and International Studies during the think tank’s press briefing. “They’ve been working hard to lower expectations. I think you’re seeing something similar on the Chinese side.”



Despite low expectations, the meeting could pave the way for future discussions about solutions to issues that impact both countries, said Thomas Fingar, a China expert at Stanford University and former chairman of the National Intelligence Council. He cautioned against the idea that a summit’s purpose is to solve some “critical, otherwise insoluble problem. It doesn’t work that way very often.”



He explained that in China’s political system, lower-level officials often need explicit clearance from the top.



“For there really to be movement for lower levels of the system to engage in specifics, it needs a refreshed endorsement from Xi,” Fingar said.



The meeting itself, though anticipated, was not formally announced by the White House until Friday. Even in recent days, Chinese officials were hesitant to confirm that Xi would attend the meeting with Biden. In a press briefing on Wednesday, China’s foreign ministry spokesperson Wang Wenbin said it “won’t be&nbsp;plain sailing to San Francisco, nor can we leave it to autopilot to get us there.”



Similarly, when White House press secretary Karine Jean-Pierre was asked during a briefing on Wednesday whether the meeting was “locked in,” she said, “I just don’t have anything confirmed.”



When announcing the meeting, Jean-Pierre said in a statement that the leaders would discuss “issues in the U.S.-PRC bilateral relationship, the continued importance of maintaining open lines of communication, and a range of regional and global issues,” using the abbreviation for the People’s Republic of China.



“I don’t think there’s any indication that things are going to improve between the two sides,” said Oriana Skylar Mastro, a China expert at the American Enterprise Institute. She added that neither country is willing to make “any significant concessions” or policy changes “that would be necessary to put the relationship on a different track.”



There are potential areas to move the needle on U.S.-China relations, experts say. NBC News also previously reported that the U.S. is hoping to announce a commitment from China to cut down on fentanyl coming into the U.S., as well as improve military communications.



Military-to-military communications are intended to cut down on the risk of unintended conflict.



It comes at a time when a historic number of U.S. warplanes have been intercepted by China. There were more than 180 incidents of Chinese aircraft intercepting U.S. planes since the fall of 2021, said Ely Ratner, the assistant secretary of defense for Indo-Pacific security affairs, in a Defense Department release. Ratner said that is higher than the number of incidents that took place the decade before that.



An interception has been deadly in the past. In 2001, a U.S. military plane collided with a Chinese fighter jet over the South China Sea, killing the Chinese pilot. The Chinese government held the American crew for over a week.



“We’ve raised the importance of (military-to-military) channels in nearly every conversation we’ve had with the Chinese,” a senior administration official said in the press briefing. “This is absolutely critical. And when we’re talking about managing risks, about avoiding conflict, this is exactly the sort of communication we need to be having both at senior levels of our two militaries, but also operator to operator.”



The Biden-Xi meeting comes just weeks after China announced that Li Shangfu would no longer serve as defense minister. Li has been sanctioned by the U.S., and experts say his removal could open the door to better relations on military communication.



A defense minister who has not been sanctioned by the U.S. could make it easier to resume military-to-military talks, said David Sacks, a fellow at the Council on Foreign Relations.



The Chinese position during Li’s tenure had been, “Why would he talk if he’s under U.S. sanctions? Remove the sanctions, and then we can have a dialogue,” Sacks said. “And so now, presumably his successor will not be under those sanctions, and therefore you don’t have that impediment towards resuming mil-mil dialogue.”



Biden and Xi’s meeting also comes in the lead-up to Taiwan’s 2024 presidential election in January, followed by the U.S. election. Taiwan is a self-ruling democracy that China claims as its own. U.S. policy maintains that Washington does not support Taiwan’s independence, though there is a policy of strategic ambiguity over how the U.S. would respond if China were to invade the island.



Experts say that during the meeting Biden may warn Xi against interfering in Taiwan’s election, “also to give whoever the winner of the election is an opportunity to put forward a proposal for cross-strait dialogue,” Sacks said.



When a senior administration official was asked during the briefing about how the Taiwanese election may come up in the Biden-Xi meeting, the officials emphasized U.S. opposition to any potential Chinese interference.



“We’ve been clear publicly and privately that interference in the Taiwan election is something we’re extremely concerned about,” a senior administration official said. “And of course, we’ll plan on delivering that message again.”

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-820x461.jpeg" alt="" class="wp-image-428898" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4.jpeg 1600w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Federal Reserve Chairman Jerome Powell said Thursday that he and his fellow policymakers are encouraged by the slowing pace of inflation but are unsure whether they’ve done enough to keep the momentum going.



Speaking a little more than a week after the central bank voted to hold benchmark policy rates steady, Powell said in remarks for an International Monetary Fund audience in Washington, D.C., that more work could be ahead in the battle against high prices.



“The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance,” he said in his prepared speech.



For the second time in recent weeks, a public address from Powell was interrupted by climate protesters. He briefly left the stage before resuming.



The speech comes with inflation still well above the Fed’s long-standing goal but also considerably below its peak levels in the first half of 2022. In a series of 11 rate hikes that constituted the most aggressive policy tightening since the early 1980s, the committee took its benchmark rate from near zero to a target range of 5.25%-5.5%.



Those increases have coincided with the Fed’s preferred inflation gauge, the core personal consumption expenditures price index, to fall to an annual rate of 3.7%, from 5.3% in February 2022. The more widely followed consumer price index peaked above 9% in June of last year.



Powell said that inflation is “well above” where the Fed would like to see it while describing policy as “significantly restrictive.”



“My colleagues and I are gratified by this progress but expect that the process of getting inflation sustainably down to 2 percent has a long way to go,” he said. “We will keep at this until we succeed,” he later added, saying the Fed is focused on whether rates need to go higher and how long they need to stay elevated.



Stocks headed lower after the speech, with the Dow Jones Industrial Average down close to 200 points. Treasury yields lurched higher after declining for most of the past three weeks, propelled up in large part after a poorly received 30-year bond auction.



“Chairman Powell issued a warning to investors too giddy on the prospect of rate cuts next year,” said Jeffrey Roach, chief economist at LPL Financial. “The Fed will be true to its mandate and hike further should inflation reaccelerate.”



As he has in recent speeches, Powell stressed that the Fed nevertheless can be cautious as the risks between doing too much and too little have come into closer balance. He said the Fed is attuned to the rise in Treasury yields.



“If it becomes appropriate to tighten policy further, we will not hesitate to do so,” he said. “We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of overtightening.”



“Monetary policy is generally working the way we think it should work” Powell said during a discussion following his speech.



Markets are largely convinced the Fed is through hiking rates.



Futures pricing, according to the CME Group, indicates less than a 10% probability that the FOMC will approve a final rate hike at its Dec. 12-13 meeting, even though committee members in September penciled in an additional quarter percentage point rise before the end of the year.



Traders anticipate the Fed will start cutting next year, probably around June.



Powell noted the progress the economy has made. Gross domestic product accelerated at a “quite strong” 4.9% annualized pace in the third quarter, though Powell said the expectation is for growth to “moderate in coming quarters.” He described the economy as “just remarkable” in 2023 in the face of a broad consensus that a recession was inevitable.



Unemployment remains low, though the jobless rate has risen half a percentage point this year, a move commonly associated with recessions.



But Powell noted that the Fed is “attentive” that stronger-than-expected growth could undermine the fight against inflation and “warrant a response from monetary policy.”



He also pointed out that improvements in supply chains have helped ease inflation pressures, but “it is not clear how much more will be achieved by additional supply-side improvements. Going forward, it may be that a greater share of the progress in reducing inflation will have to come from tight monetary policy restraining the growth of aggregate demand.”



The remarks are part of a broader presentation he is giving to the Jacques Polak Annual Research Conference. One broad policy topic he addressed was the challenge posed by keeping rates anchored near zero, where they were before the inflation surge. Powell said it is “too soon” to say whether zero-rate challenges are “a thing of the past.”

107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-820x462.jpeg" alt="" class="wp-image-428864" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">An employee works on the assembly line of LED lighting products in China. Vcg | Visual China Group | Getty Images</figcaption></figure>



China’s consumer prices fell in October, as the world’s second-largest economy struggled with an uneven post-Covid recovery.



Data from China’s National Bureau of Statistics on Thursday showed October consumer price index shrank 0.2% year-on-year, more than the 0.1% decline expected by economists polled by Reuters.



This comes after China’s CPI was unexpectedly flat in September, highlighting the need for further policy support.



Producer prices declined 2.6%, slightly smaller than an expected decline of 2.7% and has been in negative territory for the 13th straight month. China’s PPI was at 2.5% in September, showing factory deflationary pressures remained.



“China is still in a deflationary environment. The domestic demand remains sluggish,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.



Beijing has provided targeted policy support even as recent data suggested growth has remained sluggish. Further hurting consumer confidence is an ongoing debt crisis in two of China’s largest real estate developers. China’s property sector makes up about 30% of its economy.



“With the budget deficit rising and the property developers potentially gaining support from the government, domestic demand will likely improve next year,” Zhang said.



Investors will now be tracking this year’s Singles Day shopping festival, which ends on Nov. 11, to gauge the strength of Chinese consumption.



But excitement about the shopping festival has waned.



“I think this year’s Singles Day sale has not been living up to expectations,” Hao Hong, partner and chief economist at Grow Investment Group told CNBC’s “Squawk Box Asia.”



“Ever since last year, people have stopped spending a lot of money on the Singles Day sale, so it is going to be a muted sales year,” Hong said.

107275996-1690265782638-gettyimages-1568546745-vcg111446786977

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-820x461.jpeg" alt="" class="wp-image-428825" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks.jpeg 1600w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Central banks look to have hit peak rates. Here’s how markets think they’ll come down</figcaption></figure>



The world’s major central banks paused their interest rate hiking cycles in recent weeks and with data suggesting economies are softening, markets are turning their attention to the first round of cuts.



The U.S. Federal Reserve, European Central Bank and the Bank of England dramatically hiked rates over the last 18 months in a bid to tame runaway inflation.



The Fed on Wednesday held benchmark interest rates steady at a target range of 5.25%-5.5% for the second consecutive meeting after ending a string of 11 hikes in September.



Though Chairman Jerome Powell has been keen to reiterate that the Fed’s work on inflation is not yet done, the annual rise in the consumer price index came in at 3.7% in September, down from a pandemic-era peak of 9.1% in June 2022.



Yet despite Powell’s refusal to close the door on further increases in order to finish the job on inflation, markets interpreted the central bank’s tone as a slightly dovish pivot and rallied on the back of the decision.



The market is now narrowly pricing a first 25 basis point cut from the Fed on May 1, 2024, according to CME Group’s FedWatch tool, with 100 basis points of cuts now expected by the end of next year.



Since last week’s decision, U.S. nonfarm payrolls came in softer than expected for October, with job creation below trend, unemployment rising slightly and a further deceleration in wages. Although headline inflation remained unchanged at 3.7% annually from August to September, the core figure came down to 4.1%, having roughly halved over the last 12 months.



“Core PCE, which is the Fed’s preferred inflation metric, is even lower at 2.5% (3-month, annualized),” noted analysts at DBRS Morningstar.



“The lagged effects of a cooler housing market should reinforce the disinflationary trend over the next few months.”



But despite the dovish data points, short-term U.S. Treasurys reversed course to sell off on Monday, which Deutsche Bank’s Jim Reid chalked up to investors beginning to “wonder if last week’s narrative about rate cuts was overdone.”



“The U.S. economy is also proving more resilient than the U.K. and euro zone,” he said.



“For instance, market pricing for the Fed now implies a 16% chance of another rate hike, up from 11% on Friday,” Reid said in an email Tuesday.



“Moreover, the rate priced in by the December 2024 meeting was up +12.4bps to 4.47%. So there was a clear, albeit partial unwinding of last week’s moves.”



Reid also highlighted that this is the seventh time this cycle that markets have notably reacted on dovish speculation.



“Clearly rates aren’t going to keep going up forever, but on the previous 6 occasions we saw hopes for near-term rate cuts dashed every time. Note that we’ve still got above-target inflation in every G7 country,” he added.



<h3 class="wp-block-heading" id="h-the-ecb">The ECB</h3>



The European Central Bank late last month ended its run of 10 consecutive hikes to keep its benchmark interest rate at a record high of 4%, with euro zone inflation falling to a two-year low of 2.9% in October and the core figure also continuing to decline.



The market is also pricing almost 100 basis point of cuts for the ECB by December 2024, but the first 25 basis point reduction is mostly priced in for April, with economic weakness across the 20-member common currency bloc fueling bets that the central bank will be the first to start unwinding its tight policy position.



Gilles Moëc, group chief economist at AXA, said October’s inflation print confirmed and amplified the message that “disinflation has come in earnest to Europe,” vindicating the ECB’s “new-found prudence.”



“Of course, the current disinflation does not preclude the possibility that a ‘line of resistance’ would be found well above the ECB’s target. Yet, the confirmation that the euro area was flirting with recession last summer reduces this probability,” Moëc said in a research note Monday.



After the October meeting, ECB President Christine Lagarde batted away the suggestion of rate cuts, but National Bank of Greece Governor Yannis Stournaras has since openly discussed the possibility of a reduction in the middle of 2024 provided inflation stabilizes below 3%.



“This implicitly advocates a forward-looking version of monetary policy which takes lags into consideration to calibrate its stance. In clear, waiting for inflation to reach 2% before cutting rates would be ‘overkill,’” Moëc said.



“There is no doubt in our mind that the current dataflow is clearly favouring the doves, but the hawks are far from having given up the fight.”



<h3 class="wp-block-heading">The Bank of England</h3>



The Bank of England on Thursday kept its main policy rate unchanged at 5.25% for a second consecutive meeting after ending a run of 14 straight hikes in September.



However, minutes from last week’s meeting reiterated the Monetary Policy Committee’s expectations that rates will need to stay higher for longer, with the U.K. CPI holding steady at 6.7% in September. Despite this, the market on Monday was pricing around 60 basis points of cuts by December 2024, albeit starting in the second half of the year.



BNP Paribas economists on Thursday noted an “eye-catching” addition to the MPC’s guidance, which said its latest projections indicated that “monetary policy was likely to need to be restrictive for an extended period of time.”



“Governor Andrew Bailey’s comments at the press conference indicated that this guidance was not intended as push-back on the market-implied policy rate path that underpins its latest forecasts, where a 25bp cut is not fully priced in until the second half of 2024,” they said.



“Instead, the intention was to indicate that cuts are not likely to feature as part of the conversation any time soon.”



At Thursday’s news conference, Bailey emphasized the upside risks to the bank’s inflation projections, rather than entertaining any suggestion of cuts on the horizon.



“While we don’t think it is necessarily indicative of a high risk of further hikes in the near term, we read it as a further sign that the MPC is not considering rate cuts and will not do so for a while,” BNP Paribas added.

107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks

Central banks look to have hit peak rates. Here’s how markets think they’ll come down

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Office-sharing company WeWork filed for Chapter 11 bankruptcy protection in New Jersey federal court Monday, saying that it had entered into agreements with the vast majority of its secured note holders and that it intended to trim “non-operational” leases.



The bankruptcy filing is limited to WeWork’s locations in the U.S. and Canada, the company said in a press release. The company reported liabilities ranging from $10 billion to $50 billion, according to a bankruptcy filing.



“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and expedite this process through the Restructuring Support Agreement,” WeWork CEO David Tolley said in a press release. “We remain committed to investing in our products, services, and world-class team of employees to support our community.



WeWork has suffered one of the most spectacular corporate collapses in recent U.S. history over the past few years. Valued in 2019 at $47 billion in a round led by Masayoshi Son’s SoftBank, the company tried and failed to go public five years ago.



The pandemic caused further pain as many companies abruptly ended their leases, and the economic slump that followed led even more clients to close their doors.



It disclosed in an August regulatory filing that bankruptcy could be a concern.



WeWork debuted through a special purpose acquisition company in 2021 but has since lost about 98% of its value. The company in mid-August announced a 1-for-40 reverse stock split to get its shares trading back above $1, a requirement for keeping its New York Stock Exchange listing.



WeWork shares had fallen to a low of about 10 cents and were trading at about 83 cents before the stock was halted Monday.



Former CEO and co-founder Adam Neumann said that the filing was “disappointing.”



“It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before,” Neumann said in a statement to CNBC. “I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”



As recently as September, the company said it had been actively renegotiating leases and that it was “here to stay.” The company had close to $16 billion in long-term lease obligations, according to securities filings.



The company leases millions of square feet of office space in 777 locations around the world, according to its regulatory filings.



WeWork has engaged Kirkland &amp; Ellis and Cole Schotz as legal advisors. PJT Partners will serve as its investment bank, with support from C Street Advisory Group and Alvarez &amp; Marsal.



CNBC’s Ari Levy contributed to this report.

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