Macroeconomics: The Day Ahead – 30 November 2020

Good Morning: The Long & the Short of it and The Bigger Picture

Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist

• Month end, US/China tensions, Pandemic and Brexit news likely to sideline busy run of statistics; China PMIs and Japan Production  beat forecasts; Japan Retail Sales in line; awaiting Spain/Germany CPI,  UK lending aggregates, Canada Current Account, US Chicago PMI, Pending  Home Sales & Dallas Fed Manufacturing; OPEC meeting, Lagarde tops run of central bank speakers
• Week Ahead: PMIs in focus ahead of US Auto Sales and Labour report; Powell testimony; RBA and RBI on hold; infection rate and activity restriction reality vs. vaccine hope

EVENTS PREVIEW

As is typical the final day of the month sees a rush of economic data, though it is the solid and slightly better than expected official China PMIs, which will probably be the primary influence beyond pandemic, US/China tensions and Brexit related news, along with month end flows, which are likely to prompt some quite hefty rebalancing flows away from equities. There are also somewhat better than expected Industrial Production from Japan & South Korea, as expected Japanese Retail Sales and a very unsurprising dip in the UK Lloyds Business Barometer to digest. Ahead lie Spanish and German HICP, UK Credit & Mortgage Lending, a slew of EU Q3 GDP reports, Canada’s Q3 Current Account and in the US: Chicago PMI, Pending Home Sales & Dallas Fed Manufacturing survey. On the events side, OPEC meets ahead of the OPEC+ meeting tomorrow, while Lagarde tops another busy day for central bank speakers, but it will be talk of a breakthrough compromise on the thorny issue of fisheries in the UK/EU Brexit talks which will probably command most attention, along with the latest US blacklisting of major Chinese companies (SMIC & CNOOC).

RECAP: The Week Ahead – Preview:

For all that it is not uplifting, the world is coming to terms with the fact that this year’s ‘holiday season’ will be not be very festive, and that even with so many very positive signs on vaccines, it will be months before these facilitate a return to greater activity levels. In the meantime, the battle to constrain and reduce infection rates continues, above all in Europe & North America, but also increasingly in parts of Asia, and as such it is self-evident that the economic and social scars of the pandemic will be deeper than many had hoped or expected, though how deep remains unclear. There is a busy schedule of data as the new month gets under way, dominated by PMIs, US and other labour data, and the usual end of month rush of statistics in Japan, while Australia and Canada both see Q3 GDP. On the events side of the equation both Australia’s RBA and India’s RBI are expected to maintain policy rates, while G7 central bank speakers are again plentiful, with Powell and Mnuchin’s testimony to House & Senate committees on the CARES act (Covid-19 support measures) a focal point, after the recent ‘bust-up’ over the withdrawal of Treasury funding for Fed ‘backstops’; the Fed also publishes its Beige Book, and the OECD releases its latest economic outlook. OPEC (Monday) and OPEC+ (Tuesday) meet, and there are a number of major conferences in the bullishly minded metals sector, along with the virtual “Resetting the Food System from Farm to Fork: Setting the Stage for 2021 UN Food Systems Summit”. But with very little time left before the year-end deadline, it will be the UK/EU Brexit deal talks which will likely dominate the headlines. In terms of govt bond auctions, the UK tops the run with four auctions totalling £9.0 Bln, with France holding an auction of longer dated off the run OATs, Germany selling 5-yr and Japan 10 & 30-yr.

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