GIVING THANKS
Last week, markets were buoyed by softer inflation and activity data, suggesting that monetary policy could be eased in 2024.
This week, the US has a shortened week due to the Thanksgiving holiday on Thursday but data including November global PMIs (Thursday and Friday), the Fed’s previous meeting minutes (Wednesday) as well as European business and consumer confidence surveys are set to be in focus.
Last week, the S&P 500 rose by 2.3% (MTD 7.8%, YTD 19.3%), while the Euro Stoxx 50 rose by 3.4% (MTD 6.9%, YTD 18.1%). Equities rallied as softer inflation and activity data led to expectations of lower rates.
In the US, October consumer prices rose by 3.2% y/y (headline) and 4.0% (core), both below market expectations. Falls in energy and gasoline prices drove the former and the latter was the lowest level since September 2021. Meanwhile, October retail sales fell by 0.1% m/m, driven by the fall in gasoline sales. The control group figure, which excludes volatile items and is used for calculating GDP, rose by 0.2% m/m. Finally, weekly initial jobless claims rose to 231K, the highest since August.
Chinese economic data for October showed healthy activity. There were upside surprises for both retail sales and industrial production, which expanded by 4.6% y/y and 7.6%, respectively. Fixed-asset investment rose by 2.9% y/y, below expectations of 3.1%.
Eurozone industrial production fell by 1.1% m/m in September. Regional variations continued, with the figure excluding construction down by 1.6% m/m in Germany and by 0.5% in France, while that for Italy was flat and it rose by 1.0% in Spain.
Global bond yields fell (bond prices rise as yields fall) last week as lower inflation and softer growth opened the possibility of more aggressive rate cuts from central banks in 2024. Rate markets now expect 100bps of cuts next year from both the Fed and the ECB, which would bring the key rates to 4.25-4.50% and 3.0%, respectively.
This week, the US has a shortened week due to the Thanksgiving holiday on Thursday but data including November global PMIs (Thursday and Friday), the Fed’s previous meeting minutes (Wednesday) as well as European business and consumer confidence surveys are set to be in focus.
Tue 21st
US – Existing homes sales
Wed 22nd
US – Fed minutes, durable goods orders, initial jobless claims
Eurozone – Consumer confidence
Thu 23rd
Global PMIs
Fri 24th
US – Manufacturing and services PMIs
Germany – IFO business survey
UK – Gfk consumer confidence
This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.