The macro review for w/c 19 November 2018 – Global growth remained in focus last week.
In the US, the question is whether the Fed will pause rate hikes. Prelim PMI’s for Nov indicated growth had slowed across manufacturing and services. The advance durable goods orders report for Oct had a large headline decline for new orders. This was partly because of large transport orders over the last few months, but there is some evidence that growth in ‘core’ orders have slowed somewhat.
Data on housing was a little mixed, but still shows that housing continues to slow. The housing market conditions index in fell relatively hard in Nov. But the Oct existing home sales recorded the first monthly increase in six months. New residential construction continues to slow.
The ECB minutes confirmed that current European data was weaker than had been expected. The Dec ECB meeting will be an important opportunity, with more data, to determine whether the current weakness is transitory or more persistent in nature.
Data out this week for Europe continues along the slowing theme. Prelim PMI’s highlight growth had slowed further in Nov – across both manufacturing and services in both core and periphery countries. Output growth in manufacturing is almost neutral and new orders declined. In Germany, both services and manufacturing growth continued to slow with manufacturing new orders and export orders declining.
The decline in German Q3 GDP was confirmed. The largest contributor was the decline in exports. But household consumption also contributed to the decline. The positive change in inventories offset the declines to a large degree.
The Japanese trade balance deteriorated in Oct. While exports grew at a faster rate (than in Sep), imports grew faster. CPI growth ex fresh food remained unchanged at 1%. Energy prices continue to impact CPI growth.
The Brexit agreement was approved at the EC meeting on 25 Nov. The UK Parliament is expected to vote on the deal on 12 Dec 2018.
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);
UPDATED – Outlook for w/c 25 November 2018 – A very full week of events, treasury issuance, Fed, ECB, BoE speeches and data releases.
The week kicks off early with the special EC summit on 25 Nov to finalise and formalise the Brexit agreement. The draft agreement then needs to be approved by both sides and there is still much uncertainty regarding the direction of the Brexit agreement through the UK Parliament.
It’s going to be an extremely heavy week for treasury issuance – the US Treasury will auction and settle approx. $285b in US Treasury securities, raising approx. $80.8b in new money. The 4wk and 8wk bill announcements are TBC. Its also month end and $24.9b in treasury securities will mature on the Fed balance sheet of which $12.3b will be reinvested.
The G20 Leaders’ Summit commences at the end of the week with a full week of meetings leading up that event. Presidents Trump & Xi are expected to meet on the sidelines regarding trade. Recent reports/statements/comments (posturing) are setting a more adversarial tone leading up to the meeting.
In the US this week, there will be a relatively full agenda of Fed speeches, included Chairman Powell at the Economic Club in NY. As we move into the realm of ‘no forward guidance’ we’ll be looking for signalling on the future path of rates. FOMC minutes will also be released this week. Data releases of note include the second estimate for GDP, house price data and PCE price index data.
Although there is no formal announcement, expect some US headlines regarding retail sales/traffic results regarding US Black Friday/Cyber Monday.
Prelim Japanese Industrial production this week will be an important follow-up on recent poor results. The expectation is for higher industrial production in Oct.
Eurozone and Germany CPI data.
ECB Draghi and BoE Carney speeches on Monday.
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
