The macro review for w/c 12 November 2018 – Slower global growth was a key focus this week across several fronts.
Speeches by regional Fed Presidents and Fed Chairman Powell all acknowledged slower growth globally, although growth remains strong in the US. “Broad consensus” to keep increasing US rates in the near term – but how far and how fast was the question. Mentioned by several Fed Presidents that modest inflation pressure is keeping expectations of rate increases in check.
ECB President Draghi also addressed concerns about slower European growth as GDP growth slowed to 0.2% in Q3, German GDP declined in Q3, Euro area employment growth slowed and CPI growth accelerated. Whilst Draghi claimed some of this weakness was due to ‘one-off’ impacts, some threats remain. Uncertainties around the medium term outlook have increased and will be better placed at the Dec ECB rate meeting to make a full assessment of the risks to growth.
Japanese Q3 GDP also declined – led lower by public and private demand and negative contribution from net exports. More recent data suggests that there might some improvement.
A deal was reached on Brexit, but headwinds/uncertainty remain on whether the UK parliament will approve the deal. Some mixed data – retail sales declined for the second month in a row and the labour survey shows most recent quarter that employment growth remains lower and unemployment increased. CPI growth remained steady.
The USTR has now made formal requests and set dates for public hearings into the negotiating objectives for its trade negotiations with Japan, the UK and Europe.
There are more topics/data releases covered in this weeks review. Use the links in the contents page to navigate to different country sections. Download the review here (hit the back button on your browser to return to the site);
The outlook for w/c 19 November 2018 – Despite more positive messages over the last few weeks, the tone of US-China discussions took a negative turn over the weekend at the APEC meeting. Whether this continues into the lead up to the G20 meeting, may pose some headline risk. Presidents Trump & Xi are expected to meet on the sidelines of the G20 meeting at the end of next week.
A lighter week for US treasury issuance with the US Treasury auctioning and settling approx. $148b in ST bills this week raising approx. $15b in new money. Next week will be month end and so far, its looking to be an extremely heavy week of issuance – with an estimated $295b in treasuries to be auctioned and settled, raising approx. $90.8b in new money.
It’s a short week in the US with the Thanksgiving Holiday on Thursday.
Given the focus on global growth, one of the more important releases later this week will be the prelim PMI’s for the US, Germany and the Eurozone for Nov.
For the US, housing data will be in focus along with Durable Goods data.
UK and Brexit – the special EC summit to finalise and formalise the Brexit agreement is scheduled for Sunday 25 Nov.
Further detail and a calendar of key releases is provided in the full briefing document – download it here (hit the back button on your browser to return to the site);
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
