The euro fell to below $1.15 in the second week of November, its lowest level since July 2020, after the United States reported higher-than-expected inflation, which fueled a rise in the dollar. Meanwhile, policymakers at the European Central Bank (ECB) have maintained their dovish stance, while the Federal Reserve of the United States has begun to reduce its post-pandemic monetary support, and the Bank of England has maintained expectations for a rate hike in December.
As previously said, tightening monetary policy to combat the current bout of inflation in the Eurozone would be counterproductive. However, top ECB supervisor Andrea Enria stated on Tuesday that low ECB interest rates were now causing bank margins to be squeezed. Last week, ECB President Christine Lagarde stated that a rate hike would be “extremely doubtful” in 2022, deflating investors’ expectations for a 10 basis-point increase in the bank’s deposit rate next year.
There was also a slew of disappointing economic data from the United States. But it did not prevent the dollar from rising against the Eurodollar in the following months. Early assessments showed that consumer sentiment in the United States declined to 66.8 in November of 2021 from 71.7 in October and fell below market forecasts of 72.4, according to the University of Michigan. As a result of rising prices and the growing conviction among consumers that no viable strategies have yet been created to mitigate the damage caused by rising inflation, the reading was the lowest since November 2011.
The gauge of current conditions fell to 73.2 from 77.7, while the expectations sub-index fell to 62.8 from 67.9. The gauge of current conditions fell to 73.2 from 77.7. Meanwhile, inflation forecasts for the year ahead increased to 4.9 percent from 4.8 percent, while the outlook for the next five years remained steady at 2.9 percent. While the number of job openings in the United States decreased by 191,000 from a month earlier to 10.4 million in September of 2021, it remained significantly higher than the 10.3 million predicted by the market, indicating that the country is still well above pre-pandemic levels due to the ongoing labor shortage.
For the second month in a row, the number of positions available in state and local government education decreased by 114,000, while other services decreased by 104,000, real estate and rental and leasing decreased by 65,000, and educational services decreased by 15,000 positions over the month (-45,000). Jobs in health care and social support climbed by 141,000, while those in state and local government excluding education increased by 114,000, those in wholesale trade increased by 51,000, and those in information increased by 51,000.
In all four regions, the number of job vacancies remained relatively unchanged. The number of new hires fell by 38,000 to 6.459 million, while the total number of separations, which includes quits, layoffs and discharges, as well as other types of separations, increased by 186,000 to 6.218 million. As the market reopened on Friday following the Veterans Day holiday the day before, 10-year Treasury yields were around 1.57 percent, as investors continued to digest the prospect that inflation will remain high for a longer period of time than expected, which could force the Federal Reserve to tighten policy sooner rather than later.
Meanwhile, the yield on the five-year Treasury note increased to 1.26 percent, while an indicator of the yield curve flattened to its lowest level since March 2020. The number of Americans who voluntarily quit their employment increased to 4.4 million in September, setting a new record since the data was first made public in 2000, as workers sought higher earnings and better working conditions, according to the Bureau of Labor Statistics.
In the leisure and hospitality, industrial, and health care sectors, there was a record number of persons who decided to leave their positions. In addition, the number of people quitting their jobs in the arts, entertainment, and recreation, other services, and state and local government education has increased.
