Shoppers are still strong, shrugging off North America’s inflation

 US and Canadian stock markets slightly declined on the week that ended November 18 on the reiteration of their central bank’s officials that interest rate increases are not over and controlling record-high inflation is a higher priority than the performance of financial markets.

 

S&P 500 and Nasdaq declined 0.69% and 1.57% and Canada’s S&P/TSX lost 0.65% during the week. The US dollar index also gave record-high gains against other major currencies and traded at 0.97 EUR and 0.84 GBP. Canadian dollar however is lost ground to the USD and traded at 0.75.

 

The latest third-quarter earnings report of the US retailers like Foot Locker and Gap topped estimates and showed that shoppers in North America are not worried about inflation or recession and eagerly spending money. This fact will put central banks on the continuous path to increase rates.

 

Historically speaking, western countries are not used to inflation deviating from the 2% target for an extended period but this time analysts believe that the central banks may have to consider that raising interest rates continuously will break the economy and should accept it around 4% for the foreseeable future.