This morning, we have a host of manufacturing PMIs for November, and the US ISM manufacturing print. UK PM Starmer delivers a speech later today, and we will hear from the Fed’s Powell, BoE’s Dhingra and ECB’s Nagel. Eurozone CPI and unemployment will be of interest on Tuesday. As will the OECD’s economic outlook and comments from the Fed’s Bowman. China’s RatingDog services PMI kick-starts Wednesday. We also have Eurozone PPI and US industrial production, ADP employment ISM services and mortgage applications to keep markets busy. Commentary comes from the ECB’s Lagarde, and Lane, and the BoE’s Mann (and again on Thursday). Eurozone retail sales and US initial jobless claims follow on Thursday. Central bank chatter comes from the Fed’s Bowman, ECB’s Cipollone, Lane, Kocher and Guindos. Eurozone GDP, Germany factory orders and the US PCE price Index (favoured by the Fed), consumer income and the University of Michigan consumer sentiment figures will keep markets on their toes on Friday.
The delayed US data prints gave markets something to chew on during the holiday shortened week. The odds for further easing from the Fed rose through the week, with futures markets currently more than certain that the central bank will cut (102.7%) while swaps markets are predicting an 87.7% chance of a cut, at time of writing. The moves came following Waller and Daly’s dovish comments amid the deterioration in the jobs market. The delayed September retail sales report showed weaker-than-expected headline growth of 0.2%mom, with control-group sales actually slipping 0.1%, though this print did not significantly change the strong Q3 consumption forecasts. Meanwhile, consumer confidence sharply declined in November to its lowest level since April, suggesting a cooling labour market and prompting markets to increase the implied probability of a December Fed rate cut.
The yield on the 10-year UST strengthened 5bps to 4.02%, while the S&P Index rose 3.73%. The dollar closed 0.72% lower as futures markets fully priced in a Fed rate cut. Brent crude rose 1.02% to $63.20pb, OPEC+ confirmed a pause to production hikes in Q1’26.
Elsewhere, China’s November economic data showed mixed signals: the Manufacturing PMI edged up to 49.2, suggesting mild stabilisation, while the non-manufacturing PMI softened to 49.5, with services dipping below 50. A separate private survey, the RatingDog China Manufacturing PMI, unexpectedly dipped to 49.9 in November, signalling a contraction driven by soft domestic demand. The renminbi demonstrated notable resilience, appreciating against the dollar, supported by seasonal corporate FX settlement demand and shifting market expectations on US interest rates. Strategically, the low cost of new high-tech defence systems (like the hypersonic missile) highlights China’s emerging “engineer dividend”, the ability to apply industrialised production methods across sectors, which is seen as a crucial long-term competitive advantage.
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