- Month end brings busy run of economic data, but Clinton FBI e-mail saga,
and speculation and conservative party in-fighting over Carney future
casting a long shadow
- Eurozone CPI: modest uptick in headline CPI likely to be overshadowed
by another unchanged core CPI reading
- Eurozone Q3 GDP: steady profile expected, upside surprise would imply
strength in Germany, after mixed run of national readings on Friday
- Week Ahead: BoJ, RBA, Fed and BoE meetings to dominate ahead of
Friday's US labour data; another busy run of corporate earnings
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** EVENTS PREVIEW **
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The final day of the month finds a busy schedule of statistics to digest, though Friday's late flurry of activity as the FBI announced it would be investigating a new "trove" of e-mails potentially linked to Hillary Clinton may prove to be the primary point of focus for markets that now have the US presidential election as their primary point of focus. Be that as it may, there are the overnight Production and Sales data from Japan and South Korea to digest along with the as ever very erratic German Retail Sales (much weaker than expected, but this series correlates appallingly with GDP Personal Consumption). Ahead lie UK Consumer Credit and Mortgage Lending, within which the unsustainable pace of consumer credit growth will be key, along with Eurozone and Italian provisional CPI and Eurozone Q3 GDP, U.S. Personal Income/PCE (already pre-empted by Friday's Q3 GDP) and the Chicago PMI, as well as provisional Q3 GDP from Mexico, and as an accompaniment to a further swathe of corporate earnings. Eurozone CPI is forecast to how a further uptick to 0.5% y/y from 0.4% y/y, but perhaps critically in terms of the near term policy outlook, core CPI is seen unchanged for a third month at 0.8% y/y, confirming the lack of signs of an upswing, which continues to vex many ECB council members. Eurozone Q3 provisional GDP is forecast to be unchanged both q/q at 0.3% and y/y at 1.6%, and follows a mixed set of national readings on Friday, with Spain (0.7% q/q) and Austria 0.4% q/q) offsetting sluggish 0.2% q/q readings in both France and Belgium, with anything higher than expected implying another solid reading from Germany (which reports prov. Q3 GDP on November 15th). The stench of UK Conservative Party internecine warfare hangs over Bank of England governor Carney, serving as a reminder why Mrs May once called the Conservative Party the 'nasty' party, with policy seen on hold at this week's meeting, and the focus on the revisions to the BoE's GDP and CPI forecasts. Frau Merkel's decision not to attend a CSU party conference to allow Bavarian PM Seehofer to bring the CDU's party the CSU into line on her asylum hardly stands out as an act of statesmanship either. Tonight brings the first two of this week's four G-10 central bank policy meetings via the BoJ and RBA, both of which are expected to keep policy rates on hold, with the BoJ also not expected to make any further tweaks to its QQE programme, though Kuroda will underline that many of its targets have a loose timeline.
As for the rest of the week, the usual start of month PMIs dominate the statistical schedule in the middle section of the week, with US Auto Sales and the end of week October labour report likely to be the other highlight. Payrolls are expected to pick-up to 175K after two slightly weaker reports in August (+167K) and September (+156K), with Manufacturing projected to post another slightly smaller fall of -5K after prior drops of -13K and -16K. The Unemployment Rate is seen slipping back to its recent average 4.9% after ticking up to 5.0% in September, while Average Earnings are forecast at 0.3% m/m, leaving the y/y rate unchanged at 2.6%. Overall this would certainly fit with the FOMC hiking rates for the first time in a year in December; the question is the extent to which this week's FOMC statement offers a more explicit hint that a December hike is likely. It will be recalled that the September statement observed: "The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives." It will also be interesting to see if there is any change in the dissenting votes, with George and Mester likely to stand their ground, but Rosengren indirectly hinting he may drop the dissent for this meeting, though he will vote to hike in December.
from Marc Ostwald