Market movers today
This morning we published our Big Picture on the global economy – while the growth in the global economy will continue to moderate, we do not see an imminent recession risk in 2019. The US will see solid growth thanks to still expansive fiscal policy and optimism is high, while the euro area and China will experience short-term challenges giving way to a gradual recovery in 2019. This morning we also published our Fixed Income Top Trades for 2019 and our FX Top Trades for 2019 .
Today, the ECFIN could be the formal start of an excessive deficit procedure (EDP) against Italy. However, as conciliatory remarks have been made by Conte and Tria, markets have found renewed optimism about a potential budget compromise, albeit we think it is still too soon to call.
The House of Commons debate on the UK’s Brexit deal starts today ahead of the 11 December vote.
In Norway, we get Norges Bank’s preferred gauge of economic activity, the regional network survey. We expect a moderate decrease in the aggregated output index for the next six months from 1.46 to somewhere between 1.2 and 1.4. In Denmark the FX reserve numbers for November are released. See page two for more details.
Selected market news
The trade-related rally in global risk markets fizzled out somewhat overnight with US stock futures pointing lower and Asian markets seeing a mixed session. This comes as US officials yesterday scrambled explaining exactly what had been agreed in the meeting between the US and Chinese presidents with Larry Kudlow saying that the agreement was ‘stuff that they’re (Chinese officials, red) going to look at and presumably implement’. Meanwhile the ISM manufacturing recorded another strong reading in November with the headline index rebounding to 59.3, pointing to still solid growth in the US economy, which is in line with our latest update on the US and global economy.
The oil price is steady after the sharp increase yesterday, despite Qatar’s announcement that it will leave the OPEC group on 1 January, possibly due to the strained relations with Saudi Arabia and pressure from US president Trump. Qatar is OPEC’s 11 th biggest oil producer, but only accounts for less than 2% of total output, implying a limited impact on this week’s OPEC production cut discussions. On this note, Saudi Arabia and Russia are reported to disagree on how to share the production cuts. We look for a rebound in the oil price in Q1 next year.
Yesterday, Italian spreads narrowed after the Italian government signalled willingness to compromise on its 2019 budget in order to fend off possible EU punishment under the growth and stability pact. At the Eurogroup meeting yesterday, however, finance ministers endorsed the EU Commission’s critical position.
