There is little doubt that the focus this week will be on the UK general election on Thursday and ongoing US-China trade negotiations ahead of a 15th December deadline. The Federal Reserve and ECB policy meetings are expected to throw few surprises and markets are unlikely to pay much attention to the release tomorrow of UK GDP data for October. However, the release of US CPI-inflation and retail sales figures for November will be important in setting the scene for 2020.
Monday 9th December
Australia: Reserve Bank of Australian Governor Lowe to speak. Markets are still pricing in 18bp of rate cuts by February despite the RBA having kept rates unchanged last week and ruled out QE.
Tuesday 10th December
United Kingdom: GDP (October). UK GDP growth rebounded to 0.3% qoq in Q3 from -0.2% qoq in Q2 but analysts forecast that growth again contracted 0.1% mom in October.
Eurozone: German ZEW economic sentiment index (December). German industrial output contracted sharply in October and yet exports rose 1.2% mom, pointing to a mixed picture. Economic sentiment improved sharply in November, to -2.1 from -22.8 in October, and analysts forecast that it moved into positive territory in December for the first time since April.
Wednesday 11th December
United States: CPI-inflation (November). Core CPI-inflation has been stable at 2.3-2.4% yoy since August, giving the Federal Reserve the confidence to keep rates on hold. Analysts forecast that core CPI-inflation was unchanged at 2.3% yoy in November.
United States: Federal Reserve policy meeting. FOMC members and Chairperson Powell have been clear that the Fed will likely keep rates on hold this week and for the foreseeable future and markets are only pricing in one 25bp rate cut next year.
Thursday 12th December
United Kingdom: General election. UK voters once again return to the polls to elect the 650 members of (the lower house of) parliament. Opinion polls point to the ruling Conservative Party enjoying a 10 percentage point lead over the opposition Labour Party but the modalities of the electoral system make it difficult to accurately predict how many seats the main parties will win. The first exit polls are usually available around 22:00 local time but the full results are only expected the following morning.
Switzerland: Swiss National Bank policy meeting. SNB is likely to once again leave rates on hold.
Eurozone: European Central Bank policy meeting, statement and press conference. ECB President Lagarde is having to deal with divisions with the ECB board as to whether and how the ECB should ease monetary policy further. She seemingly favours more expansive fiscal policies. In any case ECB is likely to keep its policy rates on hold at its last meeting of the year.
Friday 13th December
United States: Retail sales (November). Retail sales were flat in September-October in USD-terms but were down 0.2% in real-terms. While decent wage growth and booming equity markets have put a floor under US consumer demand, falling consumer confidence has seemingly acted as a headwind.
Sunday 15th December
United States: The US is due to introduce tariffs on $156 bn of imports from China on 15th December and both sides have been negotiating to avoid this scenario. It remains unclear how much progress has been made on a Phase One trade deal and whether the US will stick to its tariff plan or give more time for negotiations to make some headway.
