- UK Budget and FOMC minutes likely to overshadow data run; booming Australia
Construction Output and as expected South Africa CPI to be digested ahead
of US Durable Goods and weekly Jobless Claims as markets wind down for
Thanksgiving; German 30-yr auction
- UK Budget: many key items already flagged, does 'spreadsheet Phil' have
any more rabbits to pull out of the hat? OBR forecasts and DMO remit also
in focus
- US Durable Goods Orders: modest gains expected after stellar September,
civilian aircraft orders to drag on headline, surveys point to solid
gains in core measures
- US FOMC minutes: debate on balance between labour market and inflation
outlooks perhaps key; along with any discussion of asset price levels
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** EVENTS PREVIEW **
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Appropriately ahead of what will be thin trading conditions over the long US Thanksgiving weekend, today will be the high water mark in terms of this week's data and events schedule. Statistically the booming Australian Construction Output data is to be digested, while South African CPI is due ahead of US Durable Goods and weekly jobless Claims, with preliminary Eurozone Consumer Confidence also due. But as has been the case for all of this week, it will be the events side of the schedule that grabs the headlines via way of the UK Bugdet and the October FOMC minutes. There is also an auction of just EUR 1.0 Bln of 30-yr German Bunds, but with domestic demand bordering on non-existent, and a highly unappetizing 1.19% yield, this will likely be poorly attended, particularly as there has not been any concession factored in for the sale.
** U.K. - Budget **
The inevitable question about this week's budget is how much it will be encumbered by faction fighting within the Conservative party, and indeed by uncertainty related to Brexit negotiations (NB this is not referring to the "Brexit bill). It is expected to contain a number of measures related to Housing, with much speculation about a cut in stamp-duty for first time buyers, but what measures will or will not be adopted to address the chronic housing shortage, above all in London and the South East? Some tinkering with National Insurance, Income tax and pensions contributions are also expected, and a shake-up of VAT thresholds. While there have been plenty of calls for Chancellor Hammond to be 'big and bold', this would appear to run counter to is nickname of 'spreadsheet Phil'. The OBR will also provide its update on the economic and fiscal outlook, with particular interest in its expected (quite sharp) downward revisions to its productivity growth assumptions, which will in turn impinge on what is available as a so-called Brexit "war chest".
** U.S.A. - Oct Durable Goods **
- After a stellar 2.0% m/m headline and 1.7% m/m for Non-defence Capital Goods ex-Aircraft in September, the October data are seen posting a more moderate headline gain of 0.3% m/m, though the core measures are seen up a very respectable 0.5%. Non-defence aircraft Orders are likely to drag at the headline level, though his follows two very solid months (both 4.7% m/m). Survey measures of Orders all point to continued strength, and business investment looks likely to make another solid contribution to Q4 GDP.
** U.S.A. - FOMC minutes **
The Fed minutes are unlikely to offer much in the way of fresh insights, particularly as the majority of Fed speakers have dropped broad hints about a further rate hike in December. It will be interesting to note if there were any discussions about the tax reform bills, and how that might impact policy. It will also be interesting to see how the debate on the balance of arguments went in terms of an ostensibly tight labour market, though without any signs of real wage pressures, was balanced against the 'mystery' (pace Yellen) of low inflation. A close eye also needs to be kept on any discussion about financial asset prices. Ms Yellen's comments yesterday offered few fresh insights balancing a warning that the Fed should not allow the labour market too much, against the view that the slightly lower level of inflation was likely to be transitory, but again reiterating that she is not sure that that will be the case.
from Marc Ostwald