Digesting strong Singapore GDP, mixed German GDP details and surging
French PMIs, awaiting German/Eurozone PMIs, UK Q3 GDP details, CBI
Distributive Trades; Account of ECB October meeting and OPEC meeting
also in focus
- FOMC minutes: markets 'dovish' take on minutes a prime example of
'wilful blindness' and 'wishful seeing'
- ECB minutes: focus on level of disagreement about fixing an end date
for QE
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** EVENTS PREVIEW **
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It's Thanksgiving, and as such market activity will slow to a crawl, though the day's schedule is not short of its highlights, both in data and event terms. The detailed readings on Q3 GDP in Germany (highlighting that net exports were the primary contributor to growth) and the UK (seen unrevised), Eurozone 'flash' PMIs and the UK CBI Distributive Trades survey and Canadian provide the focal points in data terms. Meanwhile the October ECB minutes follow hot on the heels of the Fed minutes, while the meeting of OPEC’s Economic Commission Board will set the scene for next week's OPEC ministerial meeting, which sources suggest will opt for a 9-month extension of the current OPEC/Non-OPEC production cap, though noises from Moscow have suggested that major Russian producers would prefer as shorter 6-month extension. South Africa's SARB will inevitably keep rates on hold at 6.75% today, i.e. until it is clear what will emerge from the ANC leadership conference in December, and it will also be wary of tomorrow's S&P and Moody's sovereign ratings reviews, and how that all plays out for the ZAR. As for the FOMC minutes, the only surprise in this was the mainstream media's inability to perform basic Fed watching tasks, whish in the case of FOMC minutes involves noting the difference between 'All', 'Most', 'Many', 'Some' and a 'couple'. So with that in mind please read the FOMC minutes headlines and explain how the headline writers came to the conclusion that the majority of the FOMC is more concerned about inflation than a tight labour market:
- Many participants at Oct. 31-Nov. 1 meeting felt interest rate
increase likely warranted in the near term if U.S. economy
remains on track
- Meeting included broad inflation debate, with a few participants
saying rate hike should be deferred until data showed inflation
was clearly on a path to Fed's 2 percent target
- Concerns about inflation were widely shared; "many participants"
observed that weak inflation could prove persistent and may
reflect drop in inflation expectations
- Discussion also included possibility Fed itself may have undercut
inflation expectations by tightening monetary policy while
price rises were below its target
- A couple of participants discussed possibility that "alternative
frameworks," such as price level targeting, might be warranted
given persistent inflation shortfall
- Many participants said the economy is operating at or above full
employment and would continue growing above trend
- Most participants, however, continued to think that tighter
labor markets would ultimately produce higher inflation
** Eurozone - 'Account' of October ECB meeting **
The 'account' of the ECB's October council meeting should shed some light on the extent of the disagreement among council members about not setting an end date for the QE programme, when it announced the extension for 9 months at EUR 30 bln as of January. It may well offer some hints on how the proportion (govts relative to corporates) of the QE programme may change, and perhaps some hints on changes to staff forecasts, following a hefty hint from Mersch about an unsurprising upgrade to GDP forecasts in a recent speech.
from Marc Ostwald