Market movers today
In the US, PCE figures for November are due. CPI numbers (usually a good predictor of PCE) for November were weaker than expected. Based on CPI, weest imate PCE core increased 0.1% m/m (1.5% y/y versus 1.4% in October , although October was very close to 1.5% y/y) and PCE headline increased 0.3% m/m (1.8% y/y versus 1.6% y/y in October). The difference between the monthly increase in core and headline PCE is driven by increasing energy prices. However, with yesterday’s slighter weaker than expected Q3 core PCE released with the Q3 GDP, there’s downside risk to our call. Also, in the US, we are due to get core capex orders for November. Capex orders gained strong momentum in the autumn and regional capex plans suggest this trend will continue. The average of the regional capex plans is at its highest level since February 2007, indicating continued tailwinds for core capex orders in coming months.
In the UK, the index of services for October is released today. This indicator is important for the assessment of growth at the beginning of Q4. According to PMI services, service sector growth has been muted in Q4.
The Danish fiscal budget for 2018 should be approved in the third budget hearing after the Liberal Alliance stated that it will support the budget law. We also get the revised national accounts data for Q3 in Denmark, when we will find out whether growth is still estimated to have been as bad as suggested previously.
In Sweden, November retail sales are due to be released. We expect to see modest increases of 0.5% m/m and 1.2% y/y. However, we note that the modest y/y figure reflects mainly a very strong sales performance a year ago.
NAV is due to publish December jobless numbers today in Norway. All leading indicators are point ing to continued above-t rend growth and rising employment and vacancies seem to be holding up well. Therefore, we expect an unchanged jobless rate of 2.3%, which translates into a moderate decrease in seasonally adjusted terms. We expect gross unemployment – our preferred jobless measure – to fall by 1,000 people m/m.
Selected market news
It has been fairly quiet overnight . The market focus this morning is on Spain, as the regional elections in Catalonia showed a win for the pro-independence part ies, with the three separatist groups winning a majority with 70 seats (68 needed). The result is a big blow to Prime Minister Mariano Rajoy’s effort to contain the independence movement when he triggered Article 155 in October. Also, Rajoy’s People’s Party lost eight of its 11 seats, with unionists turning to Ciudadanos, which became the party most voted. The vote leaves political uncertainty as a continued market theme in Spain. Yet , the separatist s’ democratic mandate to leave the rest of Spain remains weak. Market reaction has been fairly muted, with EUR/USD trading 25 pips lower. SPGBs are likely to suffer today but we doubtt his will last long.
Yesterday, 128 UN nations voted in favour of a UN resolut ion calling for the US to drop its recognition of Jerusalem as Israel’s capital (nine nat ions voted against , 35 blank votes), thereby defying US President Trump’s threat to cutaid to yes-voting nations.
