Market movers today
In the euro area, the German Q3 GDP print will be in focus today, confirming whether or not the economy has plunged into ‘technical recession’. GDP already contracted by -0.1% q/q in Q2 and PMIs took a further dip in Q3. Amid an extended industrial recession and growing signs of weakness in the service sector, which has so far been robust, we look for another negative growth rate of -0.1% q/q today, although a rebound in September exports creates some upside risks.
UK retail sales for October could get a boost from Brexit stockpiling. In March, hoarding ahead of the original Brexit date similarly contributed to a surge in sales, though the impact will probably not be as pronounced this time.
A range of ECB (Chief Economist Lane and Vice President De Guindos) and FOMC speakers (Clarida, Evans, Powell, Williams and Bullard – all voters) will also be scrutinized for any new monetary policy hints, as markets continue to scale back their rate cut expectations.
In Scandinavia, markets will keep an eye on the Swedish labour market data for October and the Danish Q3 GDP indicator.
Selected market news
Overnight, Asian equity markets traded on the weak side as Australian labour market data came out soft, Hong Kong news stayed unchanged and Chinese activity data missed estimates.
In a speech yesterday, Fed chairman Jerome Powell reiterated his content with the communication of a pause or halt in interest rate cuts. According to Bloomberg, “we see the current stance of monetary policy as likely to remain appropriate.”
Global yields rallied on the back of the sell-off in equities despite comments from President Trump that the US and China are very close to a deal. The comments from Fed Chairman Powell that US monetary policy is on hold did not lift rates and supported the bull flattening of the curve as US CPI-data was weaker than expected.
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