Macroeconomics: The Day Ahead for 28 November

A modest schedule of data and events stands under the now very long shadow of protests against increasing Covid-19 lockdown measures in China, which will dominate the near-term narrative, and only serve to exacerbate concerns about the global slowdown, and bear down heavily on commodity prices and risk assets. There is little more than weak Australian Retail Sales and Thai Trade to digest, while ahead lie Eurozone M3 and Private Sector Credit, along with UK CBI Retailing and US Dallas Fed Manufacturing surveys, and Canada’s Q3 Current Account. Lagarde’s regular testimony on ECB monetary policy and a smattering of other ECB and Fed speakers feature in terms of events. China’s leadership faces some very tough decisions on its zero Covid policy, which are clearly not only not working but unsurprisingly prompting social unrest on a scale not seen since the Tiananmen Square protests of 1989 and 1976. On the other hand, lifting restrictions threatens to completely overwhelm its healthcare system, (above all with so many over-60s unvaccinated), which was the primary reason for implementing the Zero Covid policy in the first place. But with the authority of the CCP clearly under threat as social unrest rises, and the economy already ailing, the CCP leadership desperately needs some likely very provocative solutions.

RECAP: Brief preview: 

The new week brings month end, a deluge of US data (Payrolls first and foremost, Consumer Confidence, PCE/Personal Income, House Prices, Pending Home Sales, revised Q3 GDP, Auto Sales & Construction Spending), Manufacturing PMIs/ISM; China NBS PMIs, Eurozone & national CPI, Japan, Brazil and India Q3 GDP, Australia Q3 CPI, and Canada labour data. The Fed publishes its Beige Book and there are again plenty of central bank speakers, with Fed’s Powell speech at the Brookings Institution on Wednesday front and centre, above all given some divergence in messaging from Fed speakers in the past fortnight, and as markets focus in on the December rate decision.

China’s Covid outbreak and mounting civil protests against lockdown measures, labour unrest (strikes) in the UK, EU and parts of Asia, Russia’s barbaric destruction of Ukraine’s energy infrastructure, anecdotal evidence suggesting a very sharp cold snap at the start of December in Europe, chatter ahead of the December 4 OPEC meeting, and a very fragile UK government will continue to provide the overarching themes. As previously noted, and as has been all too evident in a number of markets, above all energy, market liquidity conditions remain poor, and therefore bouts of spikey volatility will continue to be likely.

In the commodity space, the UN FAO publishes its monthly Food Price Index, but the focus will be on oil markets, which for the time being are fixated on weak demand, and dismissing low inventories, above all given some improvement in terms of diesel stocks.

A quieter week for corporate earnings is headlined by Canadian Banks, and will also have retailer reports on Black Friday and Cyber Monday demand, with Bloomberg News highlighting the following in terms of earnings: Crowdstrike, Dollar General, Hormel Foods, Intuit, Kroger, Marvell Technology, Pinduoduo, Salesforce, Snowflake, Synopsys, Veeva Systems and Workday. 

While there is no coupon issuance in the USA this week, it will be a busy week in Europe, with debt sales from the EU, UK, Germany, France, Italy, Netherlands and Spain.