The question now for investors and economists is not when the first rise will come, but the timing of the second and third.
Much of the data generated by the United States economy is positive, particularly the latest non-farm payroll reading, which was largely seen as the rubber stamp to a certain rise next week.
There are some signs however that all the procrastination and the new policy of factoring in global economic conditions alongside US domestic data has meant the rise has come too late to be anything but a symbolic one off.
Brokers Liberum put out an ‘early cycle indicators’ research note saying that industrial inventories in the US have been cut to a level only seen twice before in recent times, which is an early indicator of a softening economy at least in the short run.
“The rate of the current de-stock has only been seen thee times in 30 years, with inventories now at a three year low. Inventories are historically not this low so early into a recession, suggesting the recession may be short-lived,” said Liberum’s analysts.
“US new orders fell into recession this month, a risk we highlighted in our September ECI, last seen in 2012 and 2009. We await the direction of inventories – which are at their lowest level since 2009 – as its key to determine whether the current industrial recession has further legs.”
There is also the recent PMI report to consider, which showed a contraction in US manufacturing.
Then we have the fact that inflation remains very subdued, at just 0.2% year on year.
