Macroeconomics: The Day Ahead for 21 November

As is the case for much of this week, the day’s run of statistics is rather unlikely to have anything more than a passing impact, comprising as it does: the overnight UK PSNB (slightly better than expected) and Q3 Output per Hour, EU27 New Car Registrations along with South Korea’s Nov 1-20 Trade, while Canadian CPI, and US Existing Home Sales lie ahead. Today’s ECB speakers have some very weighty topics on their minds, with Lagarde talking about ‘Inflation kills democracy’, while Centeno addresses ‘Fiscal vs. Monetary Policy’, while this evening brings the November FOMC minutes, and there are rate decisions in Hungary and Nigeria. Chipmaker and AI proxy behemoth Nvidia tops the run of corporate earnings, which also sees results from Baidu, HP, Kohl’s and Lowe’s. A busier day for govt bond supply sees Germany sell 5-yr, Finland 10 & 13-yr, while the US offers 2-yr FRN and 10-yr TIPS. Expectations for Nigeria’s CBN rate decision range from 50 bps to 200 bps as new governor Cardoso takes the reins of his first policy meeting. By contrast, Hungary’s MNB is expected to deliver a further 75 bps cut to 11.50%, after initiating cuts to its official policy rate in October with a similarly sized move. Otherwise, the focus will be on the USD’s continued downtrends as markets focus on a Fed inflection on rates (clearly dressing up an old idea in new clothes), and the ongoing fall-out from last week’s German constitutional court ruling, which has prompted the Finance Ministry to put a freeze on nearly all budget spending pledges, thus creating a further headwind for the German economy, with a resolution on how to get over this show stopper likely to test whether the current fractious 3 party coalition can survive.

The Fed and tomorrow’s ECB minutes will likely be more a case of how markets choose to interpret them, above all in terms of the revival of rate pivots, in no small part due to data released since those meetings. Of interest in the FOMMC minutes will be the extent to which FOMC members echoed Powell’s comments about the prior meeting’s ‘dot plot’ had been overtaken by ensuing data and indeed the signals on waning credit demand in the Fed’s Senior Loan Officers’ survey. US Existing Home Sales are seen declining a further 1.5% m/m, with low inventories still as much to blame as high mortgage rates. Canada’s CPI is expected to post a rise of just 0.1% m/m, thus enabling energy-related base effects to drive the y/y rate down to 3.1% y/y from 3.8%, though core measures are seen only 0.1/0.2 ppt lower at 3.6% y/y, enough to keep the BoC hold, but not to ease back from a hawkish bias.