The data calendar is light this week with the focus likely to be on preliminary November data for Eurozone PMIs. However, markets will get more colour on monetary policy in the US, Australia, Eurozone and UK, with FOMC vice-chairperson Williams due to speak, the RBA and ECB due to publish minutes of their recent policy meetings and the Bank of England scheduled to publish its inflation report.
Monday 19th November
United States: FOMC member and Vice-Chairperson John Williams to speak. A number of FOMC members, including Chairperson Powell, spoke last week and their tone was decidedly less hawkish than a month ago. Williams is regarded a “centrist” and he could conceivably echo other FOMC members’ concerns about slowing global economic growth.
Tuesday 20th November
Australia: Reserve Bank of Australia policy meeting minutes and RBA Governor Lowe to speak. The RBA has pointed to still low wage growth and a stretched domestic housing market as justification to keep its policy rate on hold and reign back market expectations of a possible rate hike near term. A full 25bp rate hike is not priced until Q1 2020 but central banks in Canada and Norway have turned more hawkish this year and some analysts think the RBA could follow suit with a rate hike in mid-2019.
United Kingdom: Bank of England to publish Inflation Report and hold parliamentary hearing. The BoE has understandably played second-fiddle to Brexit-related developments in recent weeks, with markets only pricing in the first full rate hike in January 2020. UK headline CPI-inflation has been broadly stable around 2.4-2.5% yoy since March and there is no compelling case for a rate hike until it becomes far clearer whether the UK will leave the EU with a Brexit deal in place. BoE Governor Carney also due to speak.
Wednesday 21st November
United States: Durable goods orders (October). This time series, which provides colour on the level of domestic investment in items such as machinery, plants and defense, is typically volatile and analysts forecast a 2.5% mom contraction in the headline number following a 5.3% mom increase in August-September. Markets may nevertheless interpret such a reversal as another indication that US GDP growth slowed further in Q4.
Thursday 22nd November
Eurozone: European Central Bank policy meeting minutes. The ECB has been reducing its net asset purchases since early October and aims to end its QE program by end-year and the minutes are likely to confirm this path. The question is to what extent the slowdown in Eurozone GDP growth and lack of inflationary pressures are influencing the ECB’s medium-term projections for monetary policy, including its tentative plan to start hiking rates post summer 2019.
Eurozone: ECB Board Member Mersch to speak.
United Kingdom: Bank of England Monetary Policy Council Member Saunders to speak.
Friday 23rd November
Eurozone: Manufacturing and Composite Purchasing Managers’ Indices (November, preliminary). The manufacturing index has gradually eroded since late-2017 from 60.6 to 50.2 in October. The composite index, which also includes the services sector and correlates well with Eurozone GDP growth, has steadily fallen to 53.1 from 58.8 in January. The consensus forecast is that both the manufacturing and composite indices were broadly stable in November, which would suggest that GDP growth may have stabilised in early Q4 after having fallen by two-thirds in Q3 to 0.15% qoq from 0.45% qoq in Q2.
