After delays caused by the government shutdown, markets are focused on this week’s potential release of official US economic data. Although investors seek clarity and visibility following a month of ambiguity, the incoming, potentially stale, data is more likely to muddle the economic outlook than provide resolution.
Later today we have the US Empire manufacturing print, and the Fed’s Waller, Kashkari and Williams, the ECB’s Guindos, and Lane and BoE’s Mann all speak at separate events. On Tuesday Home Depot earnings will serve as a bellwether for consumer sentiment. Central bank chatter includes the Fed’s Logan and BoE’s Pill and Dhingra. Eurozone CPI, UK CPI and the US FOMC minutes feature on Wednesday. NVIDIA earnings will also grab market attention given the robust market expectations. Eurozone consumer confidence and US existing home sales are due on Thursday, and the Fed’s Goolsbee and Hammack speak. PMI prints across the eurozone, UK retail sales and the US University of Michigan sentiment readings fall on Friday. The ECB’s Lagarde, Nagel, Kocher and Muller, and the Fed’s Williams, Jefferson and Collins feature.
Initial market optimism, driven by the end of the government shutdown, faded quickly. The yield on the 10-year UST rose 5bps to 4.15%, while the S&P Index was 0.08% higher. The dollar, DXY Index fell 0.31%, and Brent crude gained 1.19%, to close at $64.39pb.
Meanwhile, China’s October data reinforced the persistent issue of weak underlying demand, as both households and corporations remain hesitant to commit to borrowing and long-term capital expenditure. Retail sales were reasonably resilient at 2.9%yoy, industrial value-added growth slowed to 4.9%yoy due to fewer working days. Fixed-Asset Investment (FAI) contracted 1.7%yoy in the first nine months this year, with the property sector remaining a major drag, seeing a steep 14.7%yoy drop in investment. The policy focus is shifting towards more targeted credit support, with the PBoC adopting a less urgent tone on broad-based easing, although continued weakness could bring more forceful measures, including rate cuts, back into consideration.
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