Trading with point and figure

Dax into the open

2q8aagy.png
 
Digesting as expected Japan CPI, Singapore GDP miss & French
Manufacturing Confidence pick-up; awaiting ECB 'minutes, SARB rate
decision, rash of ECB and BoE speakers; France & Spain auctions,
stuttering BTP Italia sale; US closed for Thanksgiving

- ECB minutes: focus on discussion on economic outlook, possibly already
superseded by recent data and last week's Draghi comments

- South Africa rates: small majority expecting 25 bps rated hike; ZAR
strength and oil price slide may stay SARB's hand

..........................................................................

********************
** EVENTS PREVIEW **
********************

Trading volumes and activity will likely be subdued due to the US Thanksgiving holiday, and the schedule of data and events is dominate by various central bank events, with nothing in the way of major data outside of the overnight Japan CPI & revised Singapore Q3 GDP and the just published French Business Confidence, the latter seeing an encouraging bounce in Manufacturing Confidence and the Own Company Production Outlook, even if the fuel tax protests over the week may well temper activity. The minutes or rather the "account" of the last ECB meeting will only really be of interest if they offer any hints that the ECB was already concerned about downside risks to the growth and inflation outlook crystallizing, otherwise they have probably been superseded by recent data, and the slightly more dovish tone from Draghi and some of this council colleagues, with Mersch, Weidmann, Knot and Visco alll scheduled to speak today, along with BoE's Saunders, Riksbank's Skingsley and BoC's Wilkins. A busy day for central bank rate decisions in Africa is headed by the SARB, with the consensus expecting a 25 bps rate hike, above all given a very close 4-3 vote to hold rates at 6.50% at its last meeting, and a rather hawkish tone from governor Kganyago. Yesterday's CPI data came in just below forecasts (by 0.1 ppt) at 5.1% y/y headline and 4.2% core, and have been rendered somewhat historical given the sharp fall in oil prices, and the relative recent strength of the ZAR, both of which may stay the SARB's hand at today's meeting. Rates are expected to be kept on hold in Nigeria and Zambia, and indeed in Paraguay. France and Spain will both hold multi-maturity government bond auctions, while the Italian Treasury has seen little more than lukewarm retail demand for its inflation0lnked BTP Italia issue, serving as a reminder that while the public may be applauding the government facing down the EU, investors are clearly votign with their pockets.

From Marc Ostwald
 
Ostwald, Marc
08:26 (24 minutes ago)
to Marc

- Digesting German GDP details, awaiting 'flash' PMIs in Eurozone & USA
along with Canada CPI & Retail Sales on likely subdued post Thanksgiving
trading day, focus on weekend EU summit

- Flash PMIs: Eurozone manufacturing seen sluggish, US lower but still good,
Services PMIs expected to signal continued solid pace of expansion

- Canada CPI/Retail Sales: CPI expected to remain close to target as has
been the case all year; Retail Sales seen picking up ex-Autos, personal
consumption to make solid contribution to next Friday's Q3 GDP

..........................................................................

********************
** EVENTS PREVIEW **
********************
With only a half day's trading in the US, and the holidays in Japan and India, another slow trading day is in prospect, though there are at least a number of data points to digest, even if the events schedule offers very little other than looking ahead to Sunday's EU heads of state (Council) meeting, which is expected to ratify the Brexit agreement. Statistically there are Eurozone & US flash PMIs (Japan's Manufacturing PMI will be published on Monday due to today's holiday), Canadian CPI & Retail Sales, and the detailed Q3 GDP reports from Germany & Mexico. It being 'Black Friday' in the retail sector, there will be plenty attention on the anecdotal evidence on sales volumes as the day progresses. There may be some interest in the speeches by Eurogroup's Centeno at the sustainable finance conference in so far as it may touch on the subject of converting the ESM into the equivalent of a European IMF. That said the gloves are now clearly off between Italy and the EU on the issue of the 2019 Budget, with Salvini launching an all-out attack on EU's Moscovici, which bodes poorly going forward, though it is now fairly obvious that the Italian govt is gambling on a change of tone from the EU Commission after the European parliament elections next year.... but as they say six months is a very long time in politics. Next week has a busier run of data, which includes US Personal Income/PCE, revised Q3 GDP, advance Goods Trade Balance, New & Pending Home Sales, Chicago PMI as well as the FOMC minutes, while the Eurozone has CPI, and Japan has Tokyo CPI, Retail Sales, Industrial Production and Unemployment, with Canada looking to Q3 and monthly GDP. The week will ends with the G20 meeting in Argentina, specifically the much anticipated Trump Xi meeting.

** Eurozone / USA - November 'flash' PMIs **
- Projections for the run of 'flash' PMIs are as ever largely rather agnostic, with the existing divergence in Manufacturing between the US (seen at 55.8) and the rest of the G7 (Germany exp. 52.2, France 51.3, Eurozone 52.0) expected to be re-affirmed, though a broadly solid picture is seen for Services (USA 55.0, Germany 54.5, France 55.0, Eurozone 53.6). Yesterday unexpected upturn in both the headline French Manufacturing Confidence (105 vs. prior 104) and the key Own Company Production Outlook (14 vs. 10) suggests some upside risks, though it is the German Manufacturing survey which will command more attention, above all in the wake of the earlier confirmed -0.2% for Q3 GDP. That said the details of German GDP were in many ways rather better than the headline implied. To be sure there was a much bigger deduction from Net Exports than anticipated and Private Consumption was negative (-0.3% q/q, which can be ascribed to the fact that Germans like their holidays, so Europe and the rest of the world, please send your thank you letters!), but overall Domestic Demand was robust at 0.8% q/q vs. a downwardly revised 0.7% in Q2, paced above all by CapEx (0.8% q/q vs. expected 0.4%, Q2 0.5%) and Construction Investment (0.9% q/q vs. vs. expected 0.4%, Q2 rev. 0.9%).

** Canada - October CPI, September Retail Sales **
- CPI has been very steady for most of 2018, with headline seen at 2.2% y/y (unch) and the various core measures around 2.0%, underlining that as with the US, the inflation outlook is not of itself a primary driver of the BoC's gradual tightening of monetary policy. By contrast Canada's Retail Sales have been rather more volatile, but are projected to be unchanged m/m in headline terms, but up 0.3% excluding Autos after dropping 0.4% m/m in August and rising 0.8% in July, which taken together would point to a solid contribution to Q3 GDP (due next Friday), though at

from Marc Ostwald
 
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