- Modest schedule of data has German Ifo, Japan & US flash PMIs and UK
Mortgage Approvals; plenty of ECB speak on supervision; politics via
way of German coalition talks and risk of Irish Govt collapse may rule
the roost
- Germany Ifo: PMIs and more importantly Bundesbank monthly report hint
at upside risks relative to forecasts
- US Markit PMIs: seen slightly higher and at solid levels, but still
lagging much stronger signals from other data and surveys
- Charts: China 5 & 10 yr Govt yields; China 5 yr govt vs AAA yield;
Shenzen and Shanghai stock indices
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** EVENTS PREVIEW **
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Today's post-Thanksgiving schedule looks unlikely to trouble markets in any significant way, compromising as it does no more than US and Japan flash PMIs and Germany's Ifo Business Climate, with a smattering of more regulatory related ECB speakers, and an expected no change rate decision in Colombia. Politics will once again likely steal a march on the schedule of data and events, as there appears to be some movement with Germany's SPD to at least discuss the possibility of a new grand coalition, which from my perspective ideally should also include the FDP to ensure a robust majority, though the SPD and FDP are worlds apart on the thorny issue of immigration. However it is the possibility that the Irish government collapses, as Fianna Fail threatens to withdraw from the "confidence and supply" agreement with Fine Gael PM's Varadkar, due to Deputy PM Fitzgerald's handling of a police whistleblower case. Fine Gael has indicated it might withdraw the threat if Mrs Fitzgerald were to resign. A collapse would lead to fresh elections, and obviously muddy the waters on the key December 14-15 EU summit, where Ireland effectively has a veto in terms of progressing Brexit talks to establishing a trade pact, above all due to the thorny issues of the border with Northern Ireland.
** G7 - November PMIs / Ifo Business Climate
- Following on from the robust Eurozone PMIs yesterday, which above all suggested that labour demand is now surpassing its previous 2006 peak, we have had the Japan flash Manufacturing PMI hitting a new 3-yr high, with the pick-up paced by strength in Export Orders, thus mirroring the message from the official Trade data on Wednesday. Attention then turns to the German Ifo Business Climate, where the risks look to be to the upside of expectations of 116.7, not only given the better than expected PMIs, but also a glowing report on the economy and outlook from the Bundesbank, which largely dispensed with its customary cautionary nit-picking, using such terms as exceptional and rarely better. As is well documented, the US Markit PMIs have only belatedly picked up the strength that has been evident in the more closely followed ISM and NFIB Small Business Confidence surveys, and the consensus looks for a marginal pick-up in the Manufacturing PMI to 55.0 from October's 54.6, while the Services measure is seen at unchanged 55.3 - both eminently solid in terms of levels of activity, but not pointing to the 4.0% plus SAAR Q4 GDP growth which other data and surveys are starting to imply.
Re: China a few charts attached to ponder, bond yield trend clearly rather more of a concern than the dip in stock indices, though there is obviously a feedback loop, particularly given the hefty clampdown on WMP products.
from Marc Ostwald