Macroeconomics: The Day Ahead for 29 November

  • Month end in view, as busy day for statistics awaits: digesting Sweden GDP, and lower than expected Australia, Spain and German state CPI; awaiting UK Credit Aggregates, EC, Italy confidence surveys, Canada Current Account, US Q3 GDP revision, Good Trade Balance and Fed’s Beige Book, OECD Economic Outlook update; UK, German and Canada bond auctions
  • UK: Consumer Credit seen around recent average, but Mortgage Lending expected to remain depressed
  • Eurozone CPI: Spanish and German CPI readings suggest sharper than expected headline and core fall, likely to embolden early 2024 rate cut speculation
  • USA: marginal upward revision to Q3 GDP seen, but focus on anecdotal evidence on Q4 in Fed Beige Book


Month end flows will be in view, but statistically today brings us to the ‘business’ part of the week, with inflation data from Australia (falling back sharply after September spike) and Spain overnight, and Germany ahead, Swedish Q3 GDP, Eurozone EC and Italian Confidence surveys, UK Consumer Credit and Mortgage Lending, Canadian Current Account, while the US looks to the first revision to Q3 GDP, Good Trade Balance, Wholesale & Retail Inventories along with the Fed’s Beige Book, as the OECD publishes its Economic Outlook update. As expected both the RBNZ and Bank of Thailand held rates, though the RBNZs’ tone was more hawkish than most had expected, and there is a more modest run of central bank speakers. Govt bond supply comes via way of UK 2-yr, and German and Canadian 10-yr, while Dollar Tree, Foot Locker and Salesforce are among the highlights on the earnings schedule. There will also be a close eye kept on OPEC related news, as sources suggest that talks have reach a stalemate on demands for cuts in African members output (specifically Angola).


** Eurozone – Nov prov. CPI **

– Today’s German (exp. -0.5% m/m 2.5% y/y) and Spanish HICP (exp. -0.1% m/m 3.7% y/y) readings will again be a case of divergent national trends largely accounted for by energy related base effects, mostly due to subsidy adjustments. Overall French, German and Italian HICP are expected to slow sharply, offsetting a modest uptick in Spain, which if realized, would see headline Eurozone CPI (due tomorrow) to slow to 2.7% y/y from 2.9%, and core to remain high but lower at 3.9% y/y from 4.2%. Initial indications from the NRW state CPI (-0.3% m/m vs. expected -0.1%) suggest some downside risks, and with Spanish HICP unexpectedly falling to 3.2% y/y, and domestic core CPI also sharply lower at 4.5% y/y vs. forecast 5.0%, the stage is set for a lower Eurozone CPI, and doubtless plenty of speculation about an ECB rate cut in the early part of next year.


** U.K. – Oct Consumer Credit & Mortgage Lending **

– Consumer Credit is seen little changed in money terms at the recent average of £1.5 Bln, while Net Lending Secured on Dwellings is expected to continue to contract, though at a slightly slower £-500 Mln (Sept £-900 Mln), while Mortgage Approvals are expected to edge up to 45.3K after hitting the lowest level (43.3K) since January in September. The latter is predicated on an uptick in applications as fixed mortgage rates have eased, but still remain some 40% lower than just before the Truss govt induced meltdown. While generally ignored or overlooked, an eye needs to be kept on M4 ex IOFCs 3-mth annualised, which plummeted -5.7% in September, though to a large extent heavily exaggerated by very adverse base effects, which will turn very benign in December.


** U.S.A. – Q3 GDP revised, Beige Book **

– Q3 GDP SAAR may be revised fractionally higher to 5.0%, but this is now very much rear view mirror data, and the focus will be on Beige Book to gauge the extent of the slowdown in Q4, with the anecdotal evidence on labour demand, corporate margins, household spending and the impact of tighter credit conditions perhaps the most closely watched elements. It will as ever be a case of what markets cheery pick out of the report, as was evident in reaction to Waller’s comments yesterday that he is “increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2.0%”, which some have interpreted as opening the way to rate cuts in the first half of next year. However Waller also noted: “but the recent loosening of financial conditions is a reminder that many factors can affect these conditions and that policymakers must be careful about relying on such tightening to do our job.”

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