Market movers today
The talks about a US tax deal continue to be the main topic in markets. Also, the market will monitor comments on Brexit negotiations after the talk yesterday between the UK’s Theresa May and the EU’s Jean-Claude Juncker did not result in a deal.
There is no tier-1 data today on the global front but a number of tier-2 data is due to be released: PMI services are released for the euro area and the UK and US will release the ISM non-manufacturing index. The latter is the most interesting as it reached the highest level in more than a decade in the past two months. Although growth is robust in the US, it seems a bit overdone and we could be in for a small decline for November.
Euro retail sales are set to show a decline in October (consensus is -0.7% m/m) after a big increase in September. Overall, the euro consumer is in good shape as signalled by record high consumer confidence.
In Sweden, it is time for industrial orders/production. Also, the Swedish Financial Stability Council will host a press conference at 13:30 CET and the Riksbank Governor Stefan Ingves will give a speech on the risk of a new banking crisis (15:00). In Norway, the Norwegian Regional Network Report and house prices will give more input on the state of the Norwegian economy. (for more on Scandies, see page 2).
Selected market news
China’s Caixin service PMI showed a large increase to 51.9 in November from 51.2 in October, which brought the composite PMI to 51.6 from 51.0. The higher activity in the service thus mitigated the slightly slower activity in the manufacturing sector reported last week. In Japan, the service PMI dropped to 51.2 from 53.4 sending the composite PMI down to 52.2 from 53.4.
Brexit negotiations between the UK’s Theresa May and EU’s Jean-Claude Juncker yesterday did not end with a deal. However, negotiations will continue this week with the aim of reaching a deal before the EU summit next week and potentially already before the end of this week. EUR/GBP rose on the news as the market had priced in a chance of a breakthrough yesterday.
Oil prices dropped yesterday with the price on Brent falling to USD62/bbl. Overnight, it was reported that Saudi Arabia has conducted an airstrike on Yemen – news which is likely to have helped halt the slide in prices. It could further put geopolitical risks back in the spotlight of the oil market this week. According to a Bloomberg survey, OPEC’s crude output dropped in November before the group’s second bi-annual meeting. Coincidently, that brought OPEC’s output down to the lowest level since May when the group first bi-annual meeting to place.
The US Supreme Court yesterday announced that US President Trump’s proposed travel ban could take full effect, restricting people from six Muslim countries from entering the US.
Thomas Barkin was announced yesterday to take over as President at the Federal Reserve Bank of Richmond from Jeffrey Lacker. It means there is one seat less to be filled on the FOMC (there are still four vacant seats on the Board of Governors and no replacement has been announced for New York Fed President Dudley, who will step down next summer).
