Written Commentary
Heavily front loaded data schedule has German PPI surge, better than expected UK Retail Sales, Consumer Confidence and Norway GDP to digest, Canada Retail Sales ahead along with raft of ECB, Fed and BOE speakers
UK: rebound in Sales and Confidence a welcome surprise, but details hint both at front-loading of spending and squeeze on personal incomes
Eurozone: OECD forecast upgrade for France underlines strong momentum, but rising infection rates in many parts of Europe likely to be a bigger near-term concern
USA: Fed Clarida speech in focus as doves start to concede 2022 rate hike may be ‘appropriate’
EVENTS PREVIEW
Today’s heavily front loaded data calendar has Japan’s national CPI (as expected), and better than expected UK Retail Sales & GfK Consumer Confidence, and larger than anticipated PSNB budget deficit, a 70-yr high for German PPI, along with French Unemployment and Norway’s Q3 GDP to digest, with Canadian Retail Sales the only item of note ahead. Another very busy day for ECB and Fed speakers, many of whom have already spoken this week, but not Fed vice chair Clarida, who will thus be a focal point and all the more so after two of the Fed’s most dovish members (Bostic & Evans) conceded that 2022 rate hikes may be ‘appropriate’; BoE Chief economist Pill’s speech will also get plenty of attention. The complexities of EU-Polish bilateral relations will be in the spotlight again today, after a strong display of unity when the Polish and German Interior Ministers met yesterday in respect to migrant crisis at the Belarus border, today will focus on the high tension ‘rule of law’ dispute as EU Justice Commissioner Reynders heads to Warsaw for talks. While the OECD made notable upgrades to its French GDP forecasts for 2021 & 2022, the chatter around the Eurozone growth prospects will focus on the jump in infection rates, and increasing hospitalization rates and fatalities in Northern, Central and Eastern Europe, above all in Germany and Austria, with the latter said to be likely to implement a full lockdown, i.e. not just for the unvaccinated.
The earnings season is now winding down, and there may be a few traders and investors starting to wind down their books, as next week brings US Thanksgiving, traditionally marking the start of the holiday season. As a result, next week’s statistical and event schedule is a little thin, with G7 flash PMIs and a busy run of surveys in Europe and the UK the likely highlights, with the US awaiting Durable Goods, Home Sales and revised Q3 GDP, Japan looking to Tokyo CPI, while Australia has Q3 CapEx and Construction Output, with FOMC and ECB policy meeting minutes also on tap.
U.K. – October Retail Sales / November GfK Consumer Confidence
– After disappointments on both Retail Sales and Consumer Confidence in recent months, today’s better than expected outturns are a welcome improvement, though following the inflation and labour market data, they only make the prospect of a December BoE rate hike look even more likely. Nevertheless there are elements within both that advise some caution. Notably within GfK Consumer Confidence, the sharp rebound in the Large Purchases Climate was accompanied by a deterioration in views on Personal Finances, and the recovery in Economy Expectations was much more modest, and still heavily negative in terms of overall balance. As for Retail Sales, a much stronger than expected 1.6% m/m ex-Auto Fuel (and a positive revision to September’s fall) were very welcome, though it remains to be seen whether this proves to be a case of consumers front loading Christmas related purchases given widespread media reports of potential shortages. The fact that second hand, charity and auction shops were a key contributor to the bounce hints at the squeeze on personal income, and perhaps an element of consumers hunting around for less readily available goods, though as this was mainly clothing, it is probably more the former than the latter.
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Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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