Market movers ahead

  • In the UK the House of Commons votes on the new Brexit deal tomorrow. We expect the vote to be close, but do not think it will reach majority. Our base case remains another extension followed by a snap election.
  • Euro area PMI figures are expected to continue to show weakness, as the current manufacturing recession drags on into Q4.
  • The ECB will present the outcome of its monetary policy discussions. We expect the cacophony from governing council members will receive attention in the Q&A.
  • In the US, we expect core capex data to come out slightly weaker, but Markit PMI to remain largely unchanged.
  • In Sweden we expect the Riksbank to signal a delay of the intended next rate hike. However, we still expect it will eventually cut rather than hike rates early next year.

Weekly wrap-up

  • In the US-China trade war we got a ‘phase one’ deal (see our US-China Trade , 12 October). With the US’s apparent willingness to compromise, we raise the probability of a bigger deal ahead of the 2020 election to 50%.
  • The Swedish labour market report did not correct as we expected, as the unemployment rate held steady at 7.4%.
  • We have updated our MacroScope model (16 October) which points to a mixed picture in the near term, with emerging market economies projected to have reached the bottom, while the US, euro area and Japan continue to show near-term weakness.

Full report in PDF.

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