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According to Westpac analysts, for the US, economic signals were mixed this week.

Key Quotes

“New and pending home sales surprised to the upside in August. But home prices continued to decelerate in July, and Conference Board consumer sentiment began to wilt. Mixed messages were also provided by Federal Reserve officials, with Evans emphasising he believed the FOMC had done enough (to see inflation return to their 2.0%yr target) just as September dissenter Bullard continued to call for another 25bp cut by year end.”

“At this stage, it seems the Committee continues to place their faith in the spending power of the US consumer. We instead believe that GDP growth will slow to and then below trend over the forecast horizon. This view is built on the weakness already evident in business investment feeding through to employment and hence consumption.”

“While some ‘green shoots’ continue to be seen regarding trade, we are a long way from a deal and considerable damage has already been done to the US economy. This week’s developments in Washington regarding a formal impeachment inquiry against President Trump will create yet more uncertainty.”