Macroeconomics: The Day Ahead for 25 November

The data schedule has a busy look to it, though closer inspection suggests it will be the mix of current readings on the US economy via way of Consumer Confidence and regional Fed surveys, and delayed reports on Retail Sales and PPI for September, along with House Prices, which will be the focal points. Otherwise there are the detailed final Q3 GDP reading in Germany to digest, with the UK’s CBI Retailing survey ahead. A light schedule of corporate earnings features Alibaba Group, Analog Devices and Dell Technologies, which accompany some more ECB speakers and the start of Asia Copper Week in Shanghai. Market sentiment remains fickle, but will doubtless get a boost from a positive White House evaluation of a call between Presidents Trump and Xi yesterday. Perhaps more significant in terms of US policy making concerns is the suggestion that the president has proposed extending ‘Obamacare’ subsidies for a further 2 years (a key demand from Democrats during the government shutdown), which along with the recent rollback of tariffs on a broad array of agricultural goods underlines that the November 2026 mid-term elections are very much front and centre, and that inflation and cost of living pressures remain right at the top of voter concerns. That said, it would not be safe to assume that this sidelines risks from US government policy initiatives for 2026. Meanwhile the detailed breakdown of German Q3 GDP not only confirmed no growth, but also an unexpected drag from Private Consumption (-0.3% q/q) in addition to the expected headwinds from trade (with the latest Ifo Exporter Sentiment dropping back into negative territory), which were primarily offset by a 0.8% q/q rise in Govt Spending, and a tepid 0.3% q/q rebound in Capital Investment (following a revised -1.1% q/q fall in Q2). We have been sceptical about market euphoria about a brighter outlook for German CapEx and GDP as a result of the Merz government’s sharp increase in investment, infrastructure and defence spending, and remain so.

** U.S.A. – November Consumer Confidence, September Retail Sales **

– Much of this week’s data run will be catching up on those items not published during the govt shutdown, and while potentially significant, they are both rather historical in terms of the Fed’s December rate decision, and more than likely needing to be treated with caution from a reliability perspective. Sept Retail Sales are seen up 0.4% m/m headline, slowing from August’s 0.6%, but still a solid pace of expansion, while Sept PPI is forecast to rise 0.3% m/m headline and 0.2% m/m on core, leaving y/y rates barely changed at 2.6% and 2.7% respectively, while both CS and FHFA Sept House Price measures are expected to edge up by just 0.1% m/m. But it will be November Consumer Confidence that attracts most attention, with a further drop to 93.4 from 94.6 expected, the fourth consecutive decline, with a particular focus on the Labour Differential (Jobs Plentiful minus Hard to Get), which steadied in October (9.4 vs. prior 8.7) after a run of declines. Given a stream of layoff announcements, the risks would appear to be for a further drop, though drawing a line from the NFIB survey, which continues to highlight hiring difficulties, this would continue to suggest that labour demand has cooled significantly, but many companies are less willing to lay staff off, given continued skilled labour shortages.