This will be an event-filled week, capped off by the G20 meeting. Geopolitics have dominated the landscape much of the year and will remain in play heading into year end. Uncertainties with respect to trade and Italy have weighed on growth outlooks and increased market jitters, but there could be some relief ahead as Italy’s woes appear contained to Italy, while the markets hope for a positive outcome from the Trump-Xi meeting.
United States: Fed Chairman Powell’s speech (Wednesday) will be the market driver this week, while awaiting the G20 meeting in Buenos Aires on November 30 – December 1. Also on the calendar is more Fedspeak along with the FOMC minutes, while data on GDP, income, consumption, and housing will round out the slate. Meanwhile, Fed Vice Chairman Clarida speaks (Tuesday) at the Clearings House annual conference.
Key data is thin this week, but the second look at Q3 GDP (Wednesday), along with income and consumption will highlight, with the latter report including the PCE chain price figures, the FOMC’s favorite indicator. GDP growth in the third quarter is expected to remain at 3.5%, keeping the FOMC on a tightening path into early 2019 since inflation is holding at its targeted rate. October personal income (Thursday) should rise 0.4% after the tepid 0.2% September increase, while consumption is expected to rise 0.5%. New home sales growth for October (Wednesday) are expected to rebound to 5.8%. Consumer confidence (Tuesday) is expected to make yet another new 18-year high in November, rising to 138.0. Other reports include the advance numbers on goods trade, and wholesale and retail inventories, along with Case-Shiller and FHFA home price numbers, pending home sales, as well as the Dallas and Richmond Fed surveys, and the Chicago PMI.
Euro Area: After the Brexit terms agreement, Italy appears to be the only driver of uncertainty over the European outlook with signs that global trade tensions will have a bigger impact on the world economic outlook than initially expected. So far there have been no signs of wider contagion from volatility in Italian assets, however, confidence indicators are unlikely to signal a surprise turnaround and headline inflation is expected to come off recent highs as oil prices slide. The German Ifo Business Climate index for November on Monday is expected to show the headline reading falling back to 102.5 from 102.7 in October, while the Eurozone ESI Economic Confidence report (Thursday) is seen falling back to 109.1 from 109.8, after preliminary consumer confidence already corrected. The Eurozone unemployment rate for October (Friday), meanwhile, is seen steady at 8.1%, while the overall Eurozone HICP rate (Friday) is seen at 2.1% y/y.
United Kingdom: After agreeing about the terms of Brexit, it still remains uncertain whether the deal will pass in the UK parliament, which will debate it in early December. The data calendar this week includes the monthly lending figures from the BoE (Wednesday), and the November Gfk consumer confidence survey (Friday), both of which are expected to decline.
Canada: The country’s GDP (Friday) is expected to slow to a 2.0% pace in Q3 (q/q, saar) from the 2.9% rate of expansion in Q2, close to the BoC’s 1.8% projection. However, falling oil prices are seen keeping the BoC on hold at the December 5 announcement. The current account (Thursday) is projected to narrow to a C$12.0 bln deficit from the C$15.9 bln shortfall in Q2. The October IPPI is due Friday. September average weekly earnings and the November CFIB Business Barometer Index are scheduled for release on Thursday.
Japan: October services PPI (Tuesday) is forecast to cool to 1.1% y/y from 1.2%. October retail sales (Thursday) are seen rising at a 0.8% y/y rate from 0.4% for large retailers, and at a 2.5% y/y overall clip from 2.2% previously. The remainder of the docket comes Friday with the usual month-end deluge. It includes November Tokyo CPI (Thursday), which is penciled in at 1.0% y/y, slowing from 1.5% overall. October unemployment (Thursday) is expected to remain unchanged at 2.35%.
Australia: RBA Governor Lowe speaks (Monday) on “A Journey Towards a Near Cashless Payments System.” Economic data features Q3 construction work done (Wednesday), expected to grow 1.0% after the 1.6% gain in Q2.
New Zealand: The data calendar has Q3 retail sales (Monday), which are expected to rise by 0.9% after the 1.1% gain in Q2. The trade deficit (Tuesday) is seen narrowing to -NZD 1.0 bln in October from -NZD 1.6 bln in September. The RBNZ releases the financial stability report (Wednesday), with Governor Orr holding a news conference to discuss the report (Wednesday).
Switzerland: The calendar features Q3 GDP (Friday), which is expected to come in with 0.4% q/q and 3.1% y/y growth readings.
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Dr Nektarios Michail
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