Dentalfloss
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- Digesting solid run of Asian Manufacturing PMIs, solid Japan Q3 CapEx
and subdued CPI; awaiting European, UK and US PMIs, Canada GDP and
labour data, US Auto Sels; smattering of Fed speakers; US tax
reform bill still front and central
- Japan Q3 CapEx implies upward revision to next week's GDP
- UK Manufacturing PMI seen indicating continued robust level of activity
- US Manufacturing ISM: modest setback expected, some downside risks given
dips in regional surveys, but still suggesting strong pace of output
- Chart: WTI oil future
..........................................................................
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** EVENTS PREVIEW **
********************
The final month of the year kicks off with the usual month ending run of data from Japan (including Q3 CapEx) and South Korea to digest, and Manufacturing PMIs/ISM, with Canadian Q3 GDP and Unemployment rounding off the schedule - all of which may in truth be little more than a minor distraction. A smattering of Fed speak is also due. In terms of the PMIs, the focus will primarily be on the UK PMI and the US Manufacturing ISM. The backwards and forwards on the Senate tax bill and indeed the key Irish border issue in Brexit talks will doubtless continue to be the key overarching themes, just as German coalition talks still look to be a very protracted affair. Both bonds and equities certainly appear to be completely hostage to the US tax reform news. The latter appears to have stalled in the Senate, with some more fiscally conservative GOP Senator suggesting that the corporate tax be limited to just 6 or 7 years, which would be largely self-defeating, or alternatively that the cut is smaller (talk is 22 to 24% as against current 20% proposal), or that there should be further spending cuts. Asian PMIs were broadly positive with the exception of China , where the Caixin measured dipped modestly, though as a rule of thumb the official NBS measures tend to offer a better indication in terms of actual levels of activity in the economy. Japan's Q3 CapEx also proved better than expected at 4.2% y/y (vs. forecast 3.2%), and this in turn implies that Q3 GDP will be revised up to around 2.0% SAAR from the preliminary 1.4%; the accompanying CPI were broadly in line with forecasts, with core measures still very subdued at 0.2% y/y, i.e. a country mile away from the BoJ's 2.0% target.
** U.S.A. - Nov Manufacturing ISM / Auto Sales **
- After another robust set of regional Manufacturing surveys, the Manufacturing ISM is expected to dip fractionally to 58.3 from October's 58.7, with the risks skewed modestly to the downside of the consensus, in so far as while most of the regional surveys were strong, most fell relative to October, and official Goods Orders were also lower for October. A close eye will need to be kept on the Employment and Prices measures. Auto Sales have been all over the place in recent months thanks to the impact of the hurricanes, and there is expected to be some continued overhang, though fairly aggressive 'Black Friday' promotions throughout November suggests any further mean reversion will likely be quite modest, with a solid 17.5 Mln SAAR pace expected, above the average of 17.18 Mln pace seen year to date. Industry estimates suggest the risks are to the upside of the consensus.
For those readers joining us at the ADM ISI London Grains Breakfast (as part of the UK Winter Corn Exchange) this morning, I look forward to sharing some thoughts on the Global Economy and Political Risk, and chatting with you later.
from Marc Ostwald
and subdued CPI; awaiting European, UK and US PMIs, Canada GDP and
labour data, US Auto Sels; smattering of Fed speakers; US tax
reform bill still front and central
- Japan Q3 CapEx implies upward revision to next week's GDP
- UK Manufacturing PMI seen indicating continued robust level of activity
- US Manufacturing ISM: modest setback expected, some downside risks given
dips in regional surveys, but still suggesting strong pace of output
- Chart: WTI oil future
..........................................................................
********************
** EVENTS PREVIEW **
********************
The final month of the year kicks off with the usual month ending run of data from Japan (including Q3 CapEx) and South Korea to digest, and Manufacturing PMIs/ISM, with Canadian Q3 GDP and Unemployment rounding off the schedule - all of which may in truth be little more than a minor distraction. A smattering of Fed speak is also due. In terms of the PMIs, the focus will primarily be on the UK PMI and the US Manufacturing ISM. The backwards and forwards on the Senate tax bill and indeed the key Irish border issue in Brexit talks will doubtless continue to be the key overarching themes, just as German coalition talks still look to be a very protracted affair. Both bonds and equities certainly appear to be completely hostage to the US tax reform news. The latter appears to have stalled in the Senate, with some more fiscally conservative GOP Senator suggesting that the corporate tax be limited to just 6 or 7 years, which would be largely self-defeating, or alternatively that the cut is smaller (talk is 22 to 24% as against current 20% proposal), or that there should be further spending cuts. Asian PMIs were broadly positive with the exception of China , where the Caixin measured dipped modestly, though as a rule of thumb the official NBS measures tend to offer a better indication in terms of actual levels of activity in the economy. Japan's Q3 CapEx also proved better than expected at 4.2% y/y (vs. forecast 3.2%), and this in turn implies that Q3 GDP will be revised up to around 2.0% SAAR from the preliminary 1.4%; the accompanying CPI were broadly in line with forecasts, with core measures still very subdued at 0.2% y/y, i.e. a country mile away from the BoJ's 2.0% target.
** U.S.A. - Nov Manufacturing ISM / Auto Sales **
- After another robust set of regional Manufacturing surveys, the Manufacturing ISM is expected to dip fractionally to 58.3 from October's 58.7, with the risks skewed modestly to the downside of the consensus, in so far as while most of the regional surveys were strong, most fell relative to October, and official Goods Orders were also lower for October. A close eye will need to be kept on the Employment and Prices measures. Auto Sales have been all over the place in recent months thanks to the impact of the hurricanes, and there is expected to be some continued overhang, though fairly aggressive 'Black Friday' promotions throughout November suggests any further mean reversion will likely be quite modest, with a solid 17.5 Mln SAAR pace expected, above the average of 17.18 Mln pace seen year to date. Industry estimates suggest the risks are to the upside of the consensus.
For those readers joining us at the ADM ISI London Grains Breakfast (as part of the UK Winter Corn Exchange) this morning, I look forward to sharing some thoughts on the Global Economy and Political Risk, and chatting with you later.
from Marc Ostwald
