Modest run of data has Australia Q3 GDP and German Factory Orders to digest ahead of UK Construction PMI, US ADP Employment and US/Canada Trade; NBP and BoC rate decisions, BoE Financial Stability Review
US ADP Employment seen picking up marginally, but confirming slowing labour demand, JOLTS hint at downside risk
Bank of Canada set to hold again, but stick with tightening bias as lower but still elevated CPI, and continued strength in domestic demand and fiscal spending to sustain caution in inflation fight
EVENTS PREVIEW
Today’s run of data and events is none too overwhelming, with Australian Q3 GDP and German Factory Orders to digest ahead of the UK Construction PMI, US ADP Employment estimate and US & Canadian Trade. There are rate decisions in Poland and Canada, while the BoE publishes and holds a press conference on its BoE semi-annual Financial Stability Review, while Wall St big bank CEOs testify to the Senate Banking Committee on regulatory oversight, with the UK also selling 10-yr.
** Canada – BoC rate decision **
The BoC is expected to continue to hold rates at 5.0%, but also to retain a tightening bias. Inflation is gradually easing, but at 3.1% y/y headline and 3.5%/3.6% on core measures, the BoC is going to be in no hurry to suggest that the inflation battle has been won. Q3 GDP data was weaker than expected at -1.1% q/q SAAR, but with a very sharp upward revision to Q2 from -0.2% to 1.4%, and with Q3 GDP boosted by fiscal spending, the BoC is under no pressure to ease back on its restrictive policy stance.
** U.S.A – Nov ADP Employment **
While the ADP survey has been a near useless predictor for the establishment Payrolls survey, it has often tied in well with the Household Survey from which the Unemployment Rate is derived. Expectations are for a 130K gain following on from 113K and 89K in prior months, and indicate that labour demand has slowed to around the Fed’s suggested breakeven Payrolls rate, i.e. the level at which the Unemployment Rate remains unchanged. Eminently this is an assumption based on models of labour demand which post-pandemic economic trends have torn to shreds, but it at least offers a guideline for markets about the potential Fed reaction function.
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