Market movers today
On top of a bunch of US economic data (see next bullet), any news on the US-China trade talks will take centre stage. The talks are dragging out but we believe a deal will be struck before 15 December, when Trump is scheduled to raise tariffs further on China. A move we believe he would like to avoid as it will hurt the US economy more than previous tariff increases.
We are up for some interesting US numbers today. Core durable goods orders for October will give more insight into the state of investment growth. Capital investments have become the weak spot in the US economy given the weakness in the manufacturing sector globally and the ongoing trade war. Monthly real private consumption growth and PCE core inflation in October will also receive market attention. Based on retail sales, real private consumption growth was solid in October. Based on CPI, PCE core likely rose 0.15% m/m in October, which would yield an unchanged yearly rate of 1.7% y/y; still below the Fed’s target of 2.0%. Also US initial jobless claims and Chicago PMI will be out. Both numbers have been weakening lately; markets look for a stabilisation. Finally, we get the second estimate of Q3 GDP .
In Scandi markets , Sweden releases household lending and trade balance, while Norway provides numbers on unemployment (LFS).
Selected market news
Risk sentiment remains positive with most Asian equities modestly in green following the tech rally from US counterparts yesterday that brought all three major US benchmarks to new record highs. Due to the lack of tier-1 economic data releases markets have contiUS President Trumpnued to trade risky assets higher, underpinned by US-China trade signals that negotiations are progressing ahead of the unofficial 15 December deadline when tariffs are set to rise.
Diminished trade worries and improved global industrial signals have underpinned the USD that has seen multiple sessions of gains. Despite a stronger greenback, commodities also rebounded in the beginning of this week. Notably, the price of Brent crude broke above the USD64/bbl level, but base metal prices also rallied. The JPY was a clear loser from the increase in commodity prices with USD/JPY rising above 109, while commodity currencies AUD, NZD, CAD and NOK posted gains.
Yesterday, US President Trump stated that the phase 1 negotiations were in the ‘final throes’ supporting the China message earlier in the session that consensus had been reached on properly solving relevant issues. Recently, trade concerns have resurfaced on Congress passing a bill supporting protesters in Hong Kong but so far Trump has not given any signs of whether he plans to sign the bill. For now that is taken as good news as the two parties negotiate on the final key matters, which according to sources are intellectual property rights, Chinese purchases of agricultural goods and not least the rollback of existing tariffs.
Overnight Chinese industrial profits showed the lowest yearly growth rate on record by falling 9.9% in October. The decline is in line with signals from PPI-CPI differentials – a proxy for industrial margins, see chart – and underpins a still weak domestic demand. The release also highlights the weak inflationary impulse exported globally.
