Week in review

• U.S. services PMI fell to 57.0; manufacturing PMI rose to 59.1
• Eurozone PMI composite rose more than expected to 55.8
• The Bank of Korea rose monetary policy rates again to 1%

Week ahead

• U.S. consumer confidence, unemployment and payrolls data
• China Markit/Caixin services and manufacturing PMI
• Eurozone unemployment, PPI and retail sales

Thought of the week

In an effort to tame soaring energy costs, the U.S. announced it will release 50m barrels of crude from their Strategic Petroleum Reserve. Other oil-consuming nations will also join in on the effort. This move was partly a response to the Organization of Petroleum Exporting Countries’ and its allies’ (OPEC+’s) reluctance to make more increases in their output. This stockpile release would definitely be costly for OPEC+ producers to offset if they were to do so in their December meeting, as it is estimated that it would need to give up the next two months of output increases to offset this move. However, the stockpile release will likely not have much impact on inflation at all, with the main reason being that the total estimated amount released is just not enough to make a dent to the strong energy demand. While we expect energy inflation to eventually subside next year, investors should pay attention to the potential impact of higher interest rates and look more carefully at valuations.

Energy inflation is a significant driver of U.S. inflation

Year-over-year change, seasonally adjusted

Source: Bureau of Economic Analysis, Bureau of Labor Statistics, FactSet, Federal Reserve, J.P. Morgan Asset Management.
Data reflect most recently available as of 26/11/21.

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