Last week’s spotlight was on the Federal Reserve Meeting on Wednesday with the Federal Last week’s spotlight was on the Federal Reserve meeting on Wednesday with the Federal Open Market Committee delivering a third rate cut for 2019. The Fed signalled they were on pause and that the “mid-cycle adjustment” was over for now. Markets reacted, however, as if the Fed were still dovish, as stocks and indices in the US (and globally) rallied, the US Dollar weakened against most currencies whilst US Bonds pushed to lower yields.
On the macroeconomic data front, the US Employment report took centre stage on Friday. The Non-Farm Payroll element was far stronger than consensus as the October data came in at 128K jobs added (expected at 89K), with September data revised up to 180K (from 136K). Furthermore, Friday also saw Caixin China Manufacturing Purchasing Manager Index (PMI), with October Chinese factory activity expanding at its quickest pace in over two years.
With stocks having already rallied on Wednesday post-Fed, these positive data points saw another equity market surge with the S&P 500 and the Nasdaq new record peaks, the latter overcoming the July high.
In the UK the spotlight has switched from Brexit to a snap general election, with the UK now going to the polls on 12th December. This brings fresh confusion and uncertainty, as the coming weeks see the major political parties hit the campaign trail, complemented by opinion polls. Please see our broader History of the Pound here and an article here on CNBC on the outlook for the Pound into the general election.
Various conflicting reports surfaced last week regarding the US-China trade talks with Bloomberg news on Thursday citing unnamed Chinese officials, that a long-term US-China trade deal was going to be difficult. Then the Xinhua News Agency (Chinese state-media) stated on Friday that China and the US “reached consensus on principles”.
The US impeachment enquiry of President Trump saw further subpoenas issued last week and further testimony expected this week. This news story will unfold further this week and likely on into year-end and 2020.
What to Watch
The political parties on the UK election trail, plus any voting and opinion polls will be in the geopolitical spotlight this week, alongside any further US-Sino trade talk developments.
From the Central Banks, the Reserve Bank of Australia (RBA) meet Tuesday and then on Thursday the Bank of England (BoE), with no interest rate changes expected from either.
On the data front, Monday brings European Manufacturing PMI data, Tuesday sees US ISM Non-Manufacturing PMI, European Services and Composite PMI data are released Wednesday. Then Thursday brings German Industrial Production and Friday sees Chinese trade data and the Canadian Employment report.
|4th November||European Manufacturing PMI; US Factory Orders|
|5th November||RBA interest rate decision; US ISM Non-Manufacturing PMI|
|6th November||New Zealand Employment report; European Services and Composite PMI|
|7th November||German Industrial Production; BoE interest rate decision|
|8th November||Chinese trade data; Canadian Employment report; US Michigan Consumer Sentiment Index|