Macroeconomics: The Day Ahead – 9 December 2020
Good Morning: The Long & the Short of it and The Bigger Picture
Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist
- Digesting strong Japan Orders, mixed China inflation, as expected German Trade and China lending; US JOLTS Job openings and Mexico CPI ahead; politics still in the driving seat: focus on last ditch Brexit talks, Merkel budget speech and US fiscal package; bond sales in Germany, UK & USA
- Merkel speech likely to underline erosion of authority at home & abroad
- Canada BoC seen holding policy rate and maintaining QE volume, to underline lower for longer commitment
While there is major data to digest – Japanese Machinery Orders (trouncing forecasts with a 17.1% m/m jump), China’s inflation metrics (mixed: PPI better than expected -1.8% but weak at -1.5% y/y, CPI -0.5% weaker than forecast Flat y/y, on food price base effects)) and German Trade (largely in line with consensus, slight miss on imports) – the remainder of the statistical schedule – US JOLTs Job Openings, Mexican and South African CPI – is unlikely to garner much attention, as the focus remains on pandemic related and political news, with “last ditch” Brexit talks between Johnson and von der Leyen in focus, but also EU recovery programme, US fiscal package & tensions with China. There also appears to be an ebbing of what might be termed ‘gung ho buy every dip’ in risk assets, that probably has less to do with uncertainty, and more a desire to book profits (where applicable) and withdraw to the sidelines until the new year, given overstretched valuations in equities and credit, and likely poor liquidity depth in markets over the next few weeks, along with a continued high level of event risk. The Bank of Canada policy meeting looks to be something of a non-event, with no changes either on rates or its QE programme expected, though it will reaffirm its commitment to maintain policy settings for the foreseeable future, and to do more if the economic outlook deteriorates, or financial conditions tighten. The overnight speech by PBoC governor Yi Gang bears some scrutiny given increasing warnings by Chinese officials about debt levels, above all local govt, and the risk of further interventions, such as the AntFinancial IPO suspension. Merkel’s speech in the Bundestag will doubtless continue to lay bare her diminishing authority, both at home in respect of the management of the Covid-19 crisis with the federal govt at loggerheads with state govts over movement restrictions, as infection rates flatline at a high level rather than turning decisively lower as in France, UK or Spain. Internationally her bridge building reputation is in tatter given the EU recovery programme impasse and the knife edge Brexit negotiations. A relatively busy day for govt bond auctions has German 2-yr, UK 15-yr and US 10-yr.
To view the full report and to sign up for daily market commentary please email firstname.lastname@example.org
The information within this publication has been compiled for general purposes only. Although every attempt has been made to ensure the accuracy of the information, ADM Investor Services International Limited (ADMISI) assumes no responsibility for any errors or omissions and will not update it. The views in this publication reflect solely those of the authors and not necessarily those of ADMISI or its affiliated institutions. This publication and information herein should not be considered investment advice nor an offer to sell or an invitation to invest in any products mentioned by ADMISI.
© 2020 ADM Investor Services International Limited.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.