Macroeconomics: The Day Ahead for 11 November

The week ends with a number of countries closed for a variety of Armistice Day 1918 related holidays, though only the US bond market and govt offices will be closed, with US equities open. Whether today’s relatively busy run of statistics and central bank speakers has anything more than a passing impact after a seemingly pivotal US CPI report yesterday is debatable, especially given that the run of UK activity data stands very much in the shadow of next week’s 17 November Budget and accompanying OBR report on the UK’s fiscal and economic position. Markets are unsurprisingly gorging on a large portion of hope-ium, but with these sharp spikes in asset prices and the major about turn for the US Dollar Index also underlining that underlying liquidity is extraordinarily poor, and per se that volatility will remain baked into price action. Sight of the fall-out from the FTX collapse in the crypto space should also not be lost, above all given the impact on retail investors, and the fact that this is a final wake-up call for regulators and politicians, who have dallied for too long. Be the that as it there are UK Q3 and monthly GDP, Industrial Production, Construction Output and Trade data to digest, along with Malaysian Q3 GDP to digest, while ahead lie the EU Commission forecast update, Indian Industrial Production, Brazil Services Output and preliminary US Michigan Sentiment. There are no Fed speakers, but ECB and BoE speakers are plentiful, and while it is Singles day in China, the world’s largest shopping event has been little more than a damp squib, and the current spike in Covid cases and risk of a larger lockdown in Guangzhou is likely to be the bigger consideration for markets, but likely offset by the confirmation of some modest easing of Zero Covid measures. US Michigan Sentiment is expected to see a dip to 59.5 from 59.9, pressured by gasoline prices and rising mortgage rates.

Next week brings a heavy run of US (PPI, Retail Sales, Industrial Production, NAHB, Housing Starts and Existing Home Sales, UK (Unemployment, Average Earnings, CPI, PPI, Retail Sales Consumer Confidence) and Chinese (Retail Sales, Industrial Production, FAI, Property Investment and Sales) data, plenty more central bank speakers, UK Budget and the IEA and OPEC monthly Oil Market Reports.

** U.K. – Q3 GDP, September Industrial Production, Trade **
First blush: Q3 GDP better than expected on a combination of upward revision to Aug GDP to -0.1% m/m from -0.3%, much stronger than expected contribution from net exports (both higher exports, with precious metals again distorting the rise in exports, and a bigger fall in imports) and much stronger than expected Govt Spending (implying a slightly larger hole in public finances to fill). But there was a sharp than expected -0.8% m/m fall in September monthly GDP, which was obviously due to the 10 days of national mourning, however, it’s an open question on how stronger the rebound in October will be, given the fall-out from the political crisis. But that is as noted, a rather technical point, given that next week’s fiscal plan outline will determine the short to medium term outlook for the UK economy.