The markets month ahead: December events for your trading diary

Get a preview of the month’s important market-moving events with our look ahead to December. 

Economic events to watch in December 

OPEC-JMMC meetings – Thursday December 2nd  

OPEC+’s December meetings will take on a different shape to its other monthly get-togethers. Crude oil has dipped below $70 for the first time since September. Questions are being raised over oil demand, especially with the emergence of the Omicron COVID-19 variant. With President Biden releasing oil from the US Strategic Petroleum Reserve, OPEC+ is likely to rethink its monthly production increases. 

US nonfarm payrolls – Friday December 3rd  

The US job market is in focus this Friday with the latest NFP print. Last month’s beat market expectations with 571,000 new jobs created in November. The hospitality sector led the way with 185,000 new roles. Can the momentum keep going? Jobless claims are at their lowest levels since 1969, but the US labour sector remains tight. 

Bank of Canada rate statement – Wednesday December 8th  

A fresh rate statement from the Bank of Canada is on the way. Is a rate hike getting closer? Governor Tiff Macklem has hinted as such, but one won’t be coming until Canada’s economic slack picks up. Inflation is high, but Macklem is putting all his chips in the nation’s flexible inflation target based around a 2% midpoint between 1-3%. Will it be enough to stave off inflation’s killer bite? 

US CPI data – Friday December 10th  

Speaking of inflation, we can gauge its effects on the US economy with the CPI data for November which comes this month. In the US, it’s already positively scorching. Prices rose 6.2% in October – the fastest rate seen since December 1990. Core inflation was also up 4.6%. It’s hoped inflation prints this scalding may force the Fed into action, but so far, no luck. 

US retail sales – Wednesday December 15th  

November’s retail stats are usually a good indicator of the strength of US holiday spending. Not only is Thanksgiving towards the end of the month, but also the Black Friday and Cyber Monday spendathons too. Interestingly, early projections suggest American shoppers have spent less during this year’s Black Friday event – down 28% year-on-year. This is the first time Black Friday sales have fallen. Is inflation proving too much for US consumers? 

FOMC statement – Wednesday December 15th  

Wednesday December 15th is a busy day for the US economy. The FOMC gives its final statement of 2021 today at a time when the job market is tight, and inflation is high. At the start of the month, Chair Jerome Powell stated it was time to retire the word “transitory” in relation to inflation, triggering market thoughts that a rate hike could finally be on the way. We’ll learn more about the direction of the US economy at this month’s FOMC talks. 

Bank of England rate statement – Thursday December 16th  

Hints that a UK rate hike was on coming were dropped in November, but one might not come just yet. The Omicron variant has caused jitters to economists around the world and the Bank of England’s top bods are no different. A 25-basis-point rate hike was being talked up, but it looks like Governor Bailey et al are holding fire until Omicron’s impact can really be measured. 

ECB Rate Statement – Thursday December 16th  

The big rate statements come thick and fast in mid-December. Following the Bank of England on December 16th is the European Central Bank. Unlike the Bank of England, the ECB has been pretty explicit about its rate hike plans. That is to say, one won’t be coming in December and won’t be coming in 2022 either. Christine Lagarde has warned against rushing into a “premature tightening” of ECB policy – but if inflation continues to grow across the bloc, something will have to give. 

Flash PMI data – Tuesday December 21st  

See how EU and UK are doing in terms of productivity with the final flash PMI estimates for 2021. November’s PMI numbers threw up some surprise for the EU at least. Its composite PMI index jumped from 54.2 in October to 55.8 in November. Conversely, the UK’s scores edged down month-on-month from October’s 57.8 to a November reading of 57.7. A small decline, but a decline, nonetheless.  

US Core PCE data – Thursday December 23rd  

There’s still time to squeeze in the Fed’s preferred inflation metric before markets shut down for Christmas. Much like other inflation ratings, personal consumer expenditures are up throughout the US. The latest reading showed household spending was up 4.1% year-on-year – the largest year-on-year jump since the 1990s. It’s probably we’ll round off the year with yet another hot PCE print.  

Major economic data 

Date  Time (GMT)  Asset  Event 
Wed 01-Dec  12:30am  AUD  GDP q/q 
  1:15pm  USD  ADP Non-Farm Employment Change 
  1:30pm  CAD  Building Permits m/m 
  2:00pm  GBP  BOE Gov Bailey Speaks 
  3:00pm  USD  Fed Chair Powell Testifies 
  3:00pm  USD  ISM Manufacturing PMI 
  3:00pm  USD  Treasury Sec Yellen Speaks 
  3:30pm  OIL  Crude Oil Inventories 
       
Thu 02-Dec  8:00am  EUR  Spanish Unemployment Change 
  All Day  All  OPEC-JMMC Meetings 
  1:30pm  USD  Unemployment Claims 
  2:00pm  USD  Treasury Sec Yellen Speaks 
  4:30pm  USD  FOMC Member Barkin Speaks 
       
Fri 03-Dec  8:30am  EUR  ECB President Lagarde Speaks 
  11:00am  GBP  MPC Member Saunders Speaks 
  1:30pm  CAD  Employment Change 
  1:30pm  CAD  Unemployment Rate 
  1:30pm  USD  Average Hourly Earnings m/m 
  1:30pm  USD  Non-Farm Employment Change 
  1:30pm  USD  Unemployment Rate 
  3:00pm  USD  ISM Services PMI 
  Tentative  USD  Treasury Currency Report 
       
Tue 07-Dec  Tentative  CNY  Trade Balance 
  3:30am  AUD  Cash Rate 
  3:30am  AUD  RBA Rate Statement 
  10:00am  EUR  ZEW Economic Sentiment 
  10:00am  EUR  German ZEW Economic Sentiment 
  3:00pm  CAD  Ivey PMI 
       
Wed 08-Dec  3:00pm  CAD  BOC Rate Statement 
  3:00pm  CAD  Overnight Rate 
  3:00pm  USD  JOLTS Job Openings 
  3:30pm  OIL  Crude Oil Inventories 
  Tentative  CAD  BOC Press Conference 
  6:01pm  USD  10-y Bond Auction 
       
Thu 09-Dec  1:30pm  USD  Unemployment Claims 
  6:01pm  USD  30-y Bond Auction 
       
Fri 10-Dec  1:30pm  USD  CPI m/m 
  1:30pm  USD  Core CPI m/m 
  3:00pm  USD  Prelim UoM Consumer Sentiment 
       
Tue 14-Dec  1:30pm  USD  PPI m/m 
  1:30pm  USD  Core PPI m/m 
       
Wed 15-Dec  2:00am  CNY  Retail Sales y/y 
  7:00am  GBP  CPI y/y 
  1:30pm  CAD  CPI m/m 
  1:30pm  CAD  Common CPI y/y 
  1:30pm  CAD  Median CPI y/y 
  1:30pm  CAD  Trimmed CPI y/y 
  1:30pm  USD  Core Retail Sales m/m 
  1:30pm  USD  Retail Sales m/m 
  1:30pm  USD  Empire State Manufacturing Index 
  3:30pm  OIL  Crude Oil Inventories 
  7:00pm  USD  FOMC Economic Projections 
  7:00pm  USD  FOMC Statement 
  7:00pm  USD  Federal Funds Rate 
  7:30pm  USD  FOMC Press Conference 
  9:45pm  NZD  GDP q/q 
       
Thu 16-Dec  12:30am  AUD  Employment Change 
  12:30am  AUD  Unemployment Rate 
  7:00am  GBP  Retail Sales m/m 
  8:30am  CHF  SNB Monetary Policy Assessment 
  8:30am  CHF  SNB Policy Rate 
  9:00am  CHF  SNB Press Conference 
  12:00pm  GBP  Asset Purchase Facility 
  12:00pm  GBP  MPC Asset Purchase Facility Votes 
  12:00pm  GBP  MPC Official Bank Rate Votes 
  12:00pm  GBP  Monetary Policy Summary 
  12:00pm  GBP  Official Bank Rate 
  12:45pm  EUR  Main Refinancing Rate 
  12:45pm  EUR  Monetary Policy Statement 
  1:30pm  EUR  ECB Press Conference 
  1:30pm  USD  Philly Fed Manufacturing Index 
  1:30pm  USD  Unemployment Claims 
  2:15pm  USD  Industrial Production m/m 
  2:45pm  USD  Flash Manufacturing PMI 
    USD  Flash Services PMI 
       
Fri 17-Dec  Tentative  JPY  Monetary Policy Statement 
  Tentative  JPY  BOJ Press Conference 
  9:00am  EUR  German ifo Business Climate 
       
Tue 21-Dec  12:30am  AUD  Monetary Policy Meeting Minutes 
  8:15am  EUR  French Flash Services PMI 
  8:30am  EUR  German Flash Manufacturing PMI 
  8:30am  EUR  German Flash Services PMI 
  9:00am  EUR  Flash Manufacturing PMI 
  9:00am  EUR  Flash Services PMI 
  9:30am  GBP  Flash Manufacturing PMI 
  9:30am  GBP  Flash Services PMI 
  1:30pm  CAD  Core Retail Sales m/m 
    CAD  Retail Sales m/m 
       
Wed 22-Dec  1:30pm  USD  Final GDP q/q 
  3:30pm  OIL  Crude Oil Inventories 
       
Thu 23-Dec  1:30pm  CAD  GDP m/m 
  1:30pm  USD  Core PCE Price Index m/m 
  1:30pm  USD  Core Durable Goods Orders m/m 
  1:30pm  USD  Durable Goods Orders m/m 
  1:30pm  USD  Unemployment Claims 
  3:00pm  USD  Revised UoM Consumer Sentiment 
       
Tue 28-Dec  8:00am  CHF  KOF Economic Barometer 
  3:00pm  USD  CB Consumer Confidence 
       
Wed 29-Dec  3:00pm  USD  Pending Home Sales m/m 
  3:30pm  USD  Crude Oil Inventories 
       
Thu 30-Dec  1:30pm  USD  Unemployment Claims 
  2:45pm  USD  Chicago PMI 
       
Fri 31-Dec  1:00am  CNY  Manufacturing PMI 

 

Adelanto semanal: ¿cuán alto se elevará la inflación este mes en Reino Unido?

Esta semana, descubriremos cuál es la situación de la inflación en EE. UU. gracias a dos importantes informes. Una vez más, esta semana la inflación será la clave. El IPC británico acaparará todas las miradas: ¿si los datos reflejan una inflación elevada, esto llevará al Banco de Inglaterra a subir los tipos en diciembre? También conoceremos el IPC de Canadá, además de los últimos datos sobre comercio minorista en Estados Unidos, a las puertas de la temporada de gastos navideños.

Últimos datos del IPC británico: la inflación del país en el punto de mira

¡Ah, la inflación! Ese perro ladrador y mordedor. Para la práctica totalidad de las principales economías, el camino hacia la recuperación tras la pandemia se ha forjado con precios elevados, aparentemente, en todas las áreas de la sociedad.

Esta vez, nos centraremos en el coste de los bienes de consumo. En la mañana del miércoles, Reino Unido publica el Índice de precios al consumo de Octubre.

¿Qué confirmarán estos datos? Muy probablemente, la inflación de los precios de los bienes de consumo será alta, si los datos de septiembre no fallan. Ya se encuentra muy por encima del objetivo del 2 % del Banco de Inglaterra (BoE). Los datos de septiembre, que se publicaron en octubre, mostraron un aumento interanual del 3,1 % del IPC, por segundo mes consecutivo.

A pesar de este panorama, aún quedan motivos para mantener ser optimistas o, al menos, no del todo fatalistas. El IPC mensual se sitúa en el 0,3 %, lo que supone un descenso desde el aumento del 0,7 % de agosto.

Entonces, podríamos decir que la economía se mueve en la buena dirección, ¿verdad? La Cámara de Comercio británica no está de acuerdo. El grupo minorista ha afirmado que se trata de «distorsiones temporales» y que no reflejan la realidad sobre el terreno.

Nada más cierto: un ejemplo lo tenemos en los precios de combustible, que se están disparando, en parte, a causa de las compras masivas debidas al pánico inducido por los medios de comunicación a principios de otoño, así como a causa de los altos precios del crudo. En Reino Unido, el precio del combustible aumentó un 12 % en octubre, según datos de la Oficina Nacional de Estadística (ONS).

Si el IPC vuelve a arrojar una gran subida de precios, ¿hará que los miembros más moderados del BoE adopten una postura más conservadora? Neil Wilson, nuestro responsable de análisis de mercados, ya ha profundizado en el criterio del Comité de Política Monetaria (PMC) del BoE con respecto a sus intenciones de subir los tipos.

No cabe duda de que el gobernador Andrew Bailey no ha lanzado señales claras. Ante los meses de comentarios de Bailey acerca del uso de sus herramientas y de la lucha contra la inflación, los mercados apostaban por una subida de tipos en la reunión del PMC de noviembre. Llega la conferencia de prensa del BoE de noviembre y ¡sorpresa! No hay subida. Gracias, Andrew.

La realidad es que, en Reino Unido, los bienes de consumo y el coste de la vida aumentan con rapidez. Por algún sitio tendrá que salir esta situación, más pronto que tarde.

Los datos se considerarán como un principal catalizador de la libra, ya que probablemente constituirá un factor decisivo en la reunión del BoE de diciembre, en la que muchos esperan que los legisladores suban los tipos.

El IPC de Canadá, una presión adicional para el banco central

Al otro lado del Atlántico, la elevada inflación ha sido una especie de toque de atención para el Banco de Canadá (BoC).

El aumento de los datos del IPC hizo que la inflación ascendiera a un máximo de 18 años en septiembre, según el informe del último mes. Este mes, nos centraremos en cómo ha evolucionado este indicador en octubre en los datos que se publicarán este miércoles.

La inflación anual según el IPC alcanzó el 4,4 % en septiembre, ligeramente superior al 4,3 % previsto por los analistas. Se trata del mayor ritmo de crecimiento desde febrero de 2003, según la Oficina de estadística canadiense. Además, supone el sexto mes consecutivo en el que la inflación fulmina el rango de control del BoC de entre el 1 y el 3 %

Al igual que Reino Unido, gran parte de esta situación se justifica por el aumento en los precios del combustible, la energía y los alimentos. Sin embargo, a diferencia del Reino Unido, el BoC parece que, efectivamente, pretende tomar las riendas de la situación.

El BoC ya ha comenzado el proceso de desescalada de su programa de compra de activos. A raíz de la elevada inflación, parece que el gobernador Macklem y compañía están preparando una subida de tipos para abril de 2022.

¿Será este el catalizador que impulse una bajada de precios? Puede que sí o puede que no. Según Macklem, la alta inflación podría mantenerse durante el resto de 2022. Los elevados precios de la energía y los cuellos de botella de la oferta —los mismos demonios a los que generalmente se enfrenta el mundo— probablemente seguirán haciendo acto de presencia.

EE. UU.: ¿un nuevo aumento en las ventas minoristas a la vista?

Actualmente, las ventas minoristas en EE. UU. están viviendo un buen momento, aunque el aumento del valor puede que sea resultado de la subida en los precios de los bienes de consumo.

Si nos fijamos únicamente en los datos, en septiembre, se produjo un aumento mensual del 0,7 %, frente al 0,2 % previsto. Esta subida supone una continuación del incremento del 0,9 % registrado en agosto, cuando los mercados preveían que caería un 0,7 %.

Parece que la Covid-19 no afecta al gasto, y esto es algo positivo. Suban o no los precios —el IPC de octubre arrojó un arrollador aumento del 6,2 %—, los datos apuntan a que los consumidores estadounidenses están dispuestos a gastar el dinero que tanto les cuesta ganar. Esta actitud puede favorecer al país en el cuatro trimestre.

Las perspectivas también son halagüeñas para la temporada de festividades. Estamos a las puertas de la época de gastos de Acción de Gracias/Navidad. Según las previsiones de la National Retail Foundation, el gasto en estos dos intensos periodos de compras será entre un 8,5 % y un 10,5 % superior a 2020, lo que se traduce, aproximadamente en entre 843 400 millones y 859 000 millones de dólares.

No estaría nada mal que las ventas anuales superaran el PIB de la mayoría de países del mundo.

Seguimos con las estimaciones del National Retail Foundation, que considera que EE. UU. también está a punto de experimentar un extraordinario repunte en las importaciones de bienes de consumo en 2021. Esta subida se produciría a pesar de los cuellos de botella en la oferta y la logística a causa de la pandemia global.

Esta asociación de comercio minorista afirma que, aunque los niveles de importación con contenedores ha bajado con respecto a hace un año, siguen siendo sólidos y van camino de aumentar un 18 % en general en 2021, conforme a lo previsto.

En cualquier caso, todo esto no son más que suposiciones; antes de afirmar nada, tendremos que saber qué dicen los datos de octubre.

Temporada de ganancias: últimas tandas de resultados

La temporada de ganancias está a punto de llegar a su fin.

La publicación de resultados del tercer trimestre se ha sucedido a lo largo de las últimas semanas. Prácticamente todas las empresas de megacapitalización ya han publicado sus resultados. Hasta ahora, hemos visto informes de récord en Wall Street, como los de Apple, Tesla o Alphabet, la matriz de Google.

Wal-Mart, Nvidia y Cisco son las grandes empresas que presentarán sus datos esta semana.

Principales datos económicos

Date  Time (GMT)  Asset  Event 
Mon 15-Nov  2:00am  CNY  Retail Sales y/y 
  1:30pm  USD  Empire State Manufacturing Index 
       
Tue 16-Nov  12:30am  AUD  Monetary Policy Meeting Minutes 
  2:30am  AUD  RBA Gov Lowe Speaks 
  1:30pm  USD  Core Retail Sales m/m 
  1:30pm  USD  Retail Sales m/m 
  2:15pm  USD  Industrial Production m/m 
  5:00pm  USD  FOMC Member Barkin Speaks 
       
Wed 17-Nov  7:00am  GBP  CPI y/y 
  1:30pm  CAD  CPI m/m 
  1:30pm  CAD  Common CPI y/y 
  1:30pm  CAD  Median CPI y/y 
  1:30pm  CAD  Trimmed CPI y/y 
  3:30pm  OIL  Crude Oil Inventories 
  9:05pm  USD  FOMC Member Evans Speaks 
       
Thu 18-Nov  2:00am  NZD  Inflation Expectations q/q 
  1:30pm  USD  Philly Fed Manufacturing Index 
  1:30pm  USD  Unemployment Claims 
  3.30pm  GAS  US Natural Gas Inventories 
       
Fri 19-Nov  7:00am  GBP  Retail Sales m/m 
  1:30pm  CAD  Core Retail Sales m/m 
  1:30pm  CAD  Retail Sales m/m 

 

Principales informes de resultados

Tue 16 Nov  Wed 17 Nov  Thu 18 Nov 
  Cisco Systems (CSCO) AMC   
Walmart (WMT) PMO    Alibaba (BABA) PMO 
  NVIDIA (NVDA) AMC   

 

No relief for sterling amid BoE mess

A tale of two central banks

A key part of the central banker role is communication. Meetings take place infrequently, maybe 8 times a year, so in the gaps in-between, when trading days are long, markets lust for guidance in other forms. Policymakers are generally free between meetings to make speeches, give Q&As, do TV interviews etc. Sometimes they are compelled by lawmakers to explain their policies, too. Naturally what they say is comprehended, dissected and assessed by the market as to what their words imply for the course of monetary policy. There is never an absolute: nobody will say ‘we are going to raise rates next month’. That is why you have the meeting and produce an official statement. But you can make it clear to the market what you think about the state of things and where you think is the likely or appropriate course of monetary policy.

After an uneasy start in his job, Jay Powell, the Fed chairman, is very good at doing this. Perhaps not quite as adept as Mario Draghi at carefully steering market expectations, but close. He has spent six months painstakingly guiding the market to expect this week’s announcement on tapering asset purchases. No tantrum, barely much of a reaction even. Talk of rate hikes is scorned.

Contrast this with the performance of Andrew Bailey, the relatively new head of the Bank of England. Loose – in retrospect – remarks over recent weeks led the market to expect an interest rate rise yesterday, only to be confounded by not just a failure to deliver on that but an apparent indifference to the fact that policy was so poorly communicated. “It is not our responsibility to steer markets on interest rates,” he said. Oh, right? That’s kind of the antithesis of the job description, but you’re the man in the hot seat I suppose.

Frequently handing over to Broadbent and Ramsden to answer questions he seemed unable to tackle, Bailey’s remarks were problematic. For example, he cautioned on the scale of rate bets seen in markets – saying he thinks the market has priced in too many rate rises. Maybe he shouldn’t have been stoking those expectations with hawkish remarks on inflation. Then, in response to a later question about whether the market was right or wrong, he said: «None of us are going to endorse the market curve at any point in time.” That is just untrue. Michael Saunders on Oct 9th: “I think it is appropriate that the markets have moved to pricing a significantly earlier path of tightening than they did previously.” In response to a question about stagflation he rambled on about its etymology, said the bank doesn’t really use that word, so no before handing over to someone else to actually attempt an answer to the question. Even if you don’t use the word ‘stagflation’, you know the question is about falling growth and higher prices.

It seems like the BoE thinks ‘we’ll say something and the market can make of it what it likes, that’s not our business”. To a degree, that’s true. You can’t account for what others make of your statements. But you can be a lot more careful about those statements in the full knowledge that the market will read something into them since you are the governor of the Bank of England and not just anybody. There were several opportunities in recent weeks to lean against the aggressive market pricing, to gently nudge the market in the right direction, but the governor elected not to do that. The feeling is now that the BoE under Bailey has lost credibility and we will not be able to read as much into his remarks as we have done. This is not a good situation for a central banker to be in. I leave you with this, among the listed candidate requirements from the BoE’s job spec for Governor: “The ability to communicate with authority and credibility internally, to Parliament, the media, the markets and the wider public.”

Anyway, is the December meeting live? Citi and others think so, expecting a 15bps hike at the next meeting. Bailey said the vote at 7-2 was ‘close’, which maybe hints at several members – as I suggested may be the case yesterday – being close to swinging towards hiking but were not persuaded this week. Or not…it’s hard to tell these days. This morning on Today the governor said the BoE would not ‘bottle it’ when it came to raising rates and insisted they will rise. He also said that the Bank wants more time to assess the impact of the end of furlough on the labour market, and that this was the primary reason for not hiking rates yesterday. This could certainly indicate that Dec is ‘live’, since the Bank would not have had time to gauge the scarring, which so far looks small. But, then again, it might not.

Sterling got hit hard and is lower again this morning. GBPUSD blew through the 61.8% retracement area we’d highlighted at the start of the week and looks to retest 1.3410 September low and possible round number support at 1.340. This may mark the bottom though in the medium-term – if not then look to 1.3180, the 38.2% retracement of the 2020 low to 2021 high.

GBPUSD Chart 05.11.2021

Markets

European stock markets are mixed, showing a bit of caution ahead of today’s nonfarm payrolls print in the US. The FTSE 100 is up again and north of 7,300 as the softer pound appears to be delivering a bit of a boost as we witnessed in the aftermath of the Bank of England announcement yesterday. The DAX is flat but the Euro Stoxx 50 is up 0.3%. The dollar is firmer with DXY at 94.40, yields steady with 10s around 1.53%, and gold bashing its head against the $1,800 resistance again support by lower real rates.

Wall Street rallied for a 6th straight day, with the S&P 500 and Nasdaq both notching fresh record highs. The Dow Jones slipped back as financials struggled, with GS and JPM leading the index lower. Broadly speaking the Fed’s patient approach and the removal of any overhanging worry around the tapering is good for risk, whilst fundamentals in the form of earnings are positive. Both US and European equities are trading at record peaks.

We said at the start of the week that the coming days were a big test for central banks. Have they passed that test? After the blowout in the bond market, the spike in front-end yields, central banks have not this week been as hawkish as some feared. Is that a failure to grasp the inflation snake? Maybe, I tend to think so, but many believe that central banks are right to be patient since the inflation is not just a function of demand this time. The transitory inflation narrative remains, and the CBs didn’t really pull the trigger and continue to err on the side of caution.

Shares in Peloton cratered by a third in after-hours trading after it reported a wider-than-expected loss. Pinterest was up 6% after a decent beat, whilst Uber fell after its loss was larger than forecast. Airbnb delivered record quarterly revenues and earnings. The firm posted $2.24bn in revenues versus the consensus of $2.05bn, whilst net income surged 280% to $834m.

The S&P 500 looks a tad overextended however and ripe for a pullback. The 20-day SMA has been a good anchor and a retreat to this area at 4530, a drop of 3% roughly, could be achieved without upsetting the longer-term trend.

S&P Chart 05.11.2021

Oil prices plunged as Saudi TV reported the country’s oil output would top 10m bpd by December. OPEC+ committed to raising output at 400k bpd, resisting calls from the White House to do more. Speculative positions are being unwound and the market is starting flip from draws to builds. Reuters reported Saudi energy minister Prince Abdulaziz bin Salman as saying that oil stocks will see «tremendous» builds at the end of 2021 and the start of next year because of slowing consumption.

Wide day for crude prices on Thursday highlighted by the $5 candle. Bearish MACD crossover still in charge.

Spot Oil Chart 05.11.2021

BoE credibility?

“Oh, the grand old Duke of York 
He had ten thousand men 
He marched them up to the top of the hill 
And he marched them down again” 

 

There’s been a lot of talk about loose shopping trolleys in Westminster today amid the government’s U-turn on MPs’ standards. (I didn’t know they had any?). But we need to look only to Andrew Bailey for our grand old Duke of York, happily marching markets up the hill to expect a rate hike today only to need to march them back down again. 

 

The Bank of England delivered a surprise by not raising rates, sending gilts and sterling into a bit of a spin. It’s really one of those moments where you have to question the communication strategy of the BoE. It had multiple occasions on which it could have gently nudged against the growing market anticipation around the November meeting being live but chose not to, and appeared to actively encourage tightening bets. Credibility is at stake, Mr Bailey. I’d said a hike was no slam dunk due to the way certain MPC members were leaning, but Bailey has been cheerleading tighter policy and didn’t vote for it himself – which suggests either he’s bad at communicating his views or there were simply not enough votes for him so he refrained from being a minority voter.

 

Members of the MPC voted 7-2 to keep rates at 0.1%, a move that the market had not anticipated. Recent chuntering from the members had suggested a hike was incoming but it looks like the Hawks didn’t have the votes this time – 7/2 maybe belies just how close they were to hiking today though. Dave Ramsden and Michael Saunders were the two known hawks calling for a hike, but none of the others followed in their wake. Although Catherine Mann did join those two in voting for an end to QE. 

 

Market reaction has been swift with sterling offered off the back of the announcement. GBPUSD moved rapidly to test the 61.8% level we’d targeted at the start of the week. The FTSE 100 popped higher on the news with lower sterling and looser monetary policy seen as positive for risk.

Cable reaction following today's BoE rate decision.

 

The Bank of England is sticking to the transitory line on inflation…

 

“CPI inflation is expected to dissipate over time, as supply disruption eases, global demand rebalances, and energy prices stop rising. As a result, CPI inflation is projected to fall back materially from the second half of next year.” 

 

And thinks expectations are not off the leash – despite year-ahead expectations rising to 4.4% in October. A slight fall in 5- and 10-year expectations was cited as a reason to be calm. 

 

“The MPC judged that inflation expectations remained well anchored in the United Kingdom at present.” 

 

Caution around employment just enough to warrant dovishness, it would appear.

 

“Initial indicators suggest that unemployment will rise slightly in 2021 Q4.” 

 

But tightening is still seen ahead  – the question for markets is when?

 

“The Committee has judged that some modest tightening of monetary policy over the forecast period was likely to be necessary to meet the 2% inflation target sustainably in the medium term.” 

Stocks rally after Fed tapers, BoE hike no slam dunk

“We wouldn’t want to surprise markets”

Tapering, so what? Market reaction to the long-awaited start of the Federal Reserve’s trimming of monthly bond purchases has been muted but positive. Stocks in Europe and US are at record highs – tapering is not tightening. The Fed managed to spend months carefully guiding the market to expect this move, by which it will take 8 months to reduce its $120bn-a-month QE programme, at a rate of $15bn-a-month; it’s not about to let market expectations for an interest rate hike get out of control. Still the Fed is still behind the market on this one and could be forced in to raising rates sooner than it expects. Jay Powell urged patience and caution, and seems to have largely pulled of the trick of not tying the tapering timeline to a provisional lift-off date for rates.

“Our decision today to begin tapering our asset purchases does not imply any direct signal regarding our interest rate policy. We continue to articulate a different and more stringent test for the economic conditions that would need to be met before raising the federal funds rate,” Powell said.

Both the dollar and stocks rose, with Wall Street achieving yet another record high and European stocks marking fresh record highs again this morning. Shorter dated bond yields were steady, US 2yr yields up a fraction at 0.47%, whilst the bigger move was seen further out the curve with 10s hitting 1.6%. That would be the kind of reaction Powell wanted – as far from the taper tantrum of the past as you can imagine.  As he said in the press conference, the Fed “wouldn’t want to surprise markets”.

What we did see was the Fed trying to shift the goalposts a bit on the inflation narrative. That’s important since it indicates it’s not rushing to hike to combat inflation, and in no hurry to raise rates. He explained that “transitory” for the Fed does not mean “short-lived” but rather that “it will not leave behind permanently – or very persistently higher – inflation”. This takes us into the arena of ‘long transitory’, which is a convenient intellectual get-out for the Fed without it needing to admit it got the inflation call wrong in the first place. On the labour market, Powell said there is “still ground to cover” to reach “maximum employment”.

Bank of England

Today the Bank of England is expected to raise rates, but that does not mean it will. It’s going to be a tough call as the nine members of the Monetary Policy Committee are not singing from the same hymn sheet. There are possibly three main outcomes from today’s vote – hiking 15bps and no attempt to push back on market expectations for future rate rises; a hike with a pushback against expectations for further hikes; or no hike. The ‘no hike’ outcome could also be split into one in which the Bank signals readiness to move next month, or one without such a signal.

As noted a couple of weeks ago in our preview, whilst some are worried about inflation, it’s all that clear if the hawks have the votes.

The MPC is relatively evenly split in terms of hawks and doves, so it is not abundantly clear if the recent messaging from some members – albeit including the governor – matches with the votes.

Bailey has sounded hawkish, and we know Ramsden and Saunders are itching to act. Huw Pill, the new chief economist replacing Andy Haldane has also sounded hawkish, though less so than his predecessor.

Commenting after UK inflation expectations hit 4% for the first time since 2008, he said: “The rise in wholesale gas prices threatens to raise retail energy costs next year, sustaining CPI inflation rates above 4 per cent into 2022 second quarter.” We place him in the ‘leaning hawkish’ camp.

On the dovish side, Silvana Tenreyro is highly unlikely to vote for a hike next month, calling rate rises to counter inflation ‘self-defeating’.

Deputy governor Broadbent said in July that he saw reasons for the inflation tide to ebb. The spike in energy prices since then could lead him to change his mind but for now we place in the ‘leaning dovish’ camp,

Rate-setter Haskel said in May he’s not worried by inflation, and in July said there was no need to reduce stimulus in the foreseeable future. He goes in the Dovish camp with Catherine Mann, who said last week that she can hold off from raising rates since markets are doing some of the tightening already. “There’s a lot of endogenous tightening of financial conditions already in train in the UK. That means that I can wait on active tightening through a Bank Rate rise,” she said.

That leaves Jon Cunliffe somewhat the swing voter. In July he stressed that inflation was a bump in the road to recovery.

Dovish Leaning dovish Centre Leaning hawkish Hawkish
Tenreyro

Mann

Haskel

Broadbent Cunliffe Pill Saunders

Ramsden

Bailey

We look to see whether the recent spike in inflation and inflation expectations has nudged the likes of Cunliffe, Pill and even Broadbent to move to the Hawkish camp. It seems unlikely that governor Bailey would have pointed the market towards quicker hikes if he did already have a feeling for the MPC’s views on the matter. He had ample opportunity to push back against market expectations but didn’t, which favours a dovish hike today, which is likely to be negative for sterling – though we note the dollar is topping at recent resistance and could pull back.

Sterling looks bearish still and little the BoE can now do for it with the hikes priced in – only disappoint. Near-term resistance offered by the 20-day SMA at 1.37, bearish MACD crossover still in play calling for retest of the 61.8% retracement around 1.3560, which was the mid-Oct swing low the provided the base for the rally through to Oct 21st.

GBPUSD Chart 04.11.2021

Inflation

Inflation is here and here to stay, which is probably why the Bank will ultimately raise rates. Yesterday’s services PMI indicated that while companies reported a sharp and accelerated rise in business activity during October, operating expenses and prices charged by service providers increased at the steepest rates since the survey began in July 1996.

The IHS/Markit report noted (emphasis mine): “Rising costs for energy, fuel, raw materials, transport and staff all contributed to increased prices charged across the service sector. Moreover, the rate of output charge inflation reached a fresh survey-record high in October. Service providers again noted that strong demand conditions and constrained business capacity had resulted in the swift pass through of higher input prices to clients.”

Monthly markets recap: Earnings season, UK’s Autumn Budget and another NFP miss

Join us for a look back at some of the top market-moving stories from October.

October 2021 markets recap

US jobs start the month with another nonfarm payrolls miss

The US labour market didn’t exactly storm out to an early lead. October’s nonfarm payrolls report, which showed jobs data for September 2021, showed another big miss.

That marked two consecutive months of nonfarm payrolls failing to meet estimates.

October’s jobs report showed 194,000 new roles were created in the United State’s labour market. Forecasts called for 500,000 new jobs.

Government positions showed the highest drop in October’s print. The numbers showed a 123,000 fall in the government payrolls. Private payrolls, on the other hand, increased by 317,000.

The unemployment rate provided a few rays of sunlight through the jobs smog. It edged lower, with the rate currently sitting at 4.8%.

There is still a lot of work to be done in the US labour sector. Fed officials have said they still see the labour sector way below full employment levels.

The job data for October is released on Friday 5th of November. Stay tuned to Markets.com for more updates.

 UK launches Autumn budget with big spending plans ahead

Chancellor Rishi Sunak laid out his spending plans in 2021’s Autumn Budget in October. On the whole, the outlook for the UK economy was better than some economists had predicted – but the spending needed to prop it up is going to come directly from taxpayers’ pockets, despite tax cuts.

On the whole, economic observers were disappointed. GBP/USD 0.2% slipped in intraday trading as the budget failed to set the world on fire.

Key takeaways are:

  • Inflation to run at 4.4%
  • UK economy to grow 6.5% this year – still below pre-pandemic levels
  • Government departmental spending will hit £150bn – the highest level this summer
  • £67bn to be spent on road and rail transport links
  • Reduced duties on sparkling wine and draft cider – popping UK hospitality stocks like JD Wetherspoon by up to 5%

One key thing to note was the influence of Brexit on not just this budget but the UK’s fiscal health in general.

The Office of Budget Responsibility (OBR) forecast that the United Kingdom’s trade with the EU will fall 15%. That could translate into a 4% drop in overall productivity. All told, the OBR believes Brexit will do more damage than the COVID-19 pandemic. The saga of (potential) woe is only just starting.

Bank of England rate decision took on renewed focus

Our Chief Markets Analyst Neil Wilson took a stab at predicting whether the Bank of England will raise rates in November in this month.

It’s been a question that’s on everyone’s minds for a while: will the Bank of England really raise rates?

There is a lot at play that is causing some concern for the more dovish members of the Bank’s Monetary Policy Committee (MPC). They think that raising rates now might be a mistake in an era of high inflation and high taxation.

But something has to be done. Governor Bailey has made overtures about increasing the bank rate as one of the levers the BoE could use to control inflation. Sentiment still seems split amongst MPC members, despite what the Bank’s head thinks.

Volvo IPO shifts into overdrive

Volvo cars went public with shares jumping 22% in value on the launch, giving the Chinese-owned Swedish carmaker a valuation of $22bn.

The automobile manufacturer generated $2.3bn via its float.

In our preview of the Volvo IPO, we detailed how the company plans to develop going forward. It’s going green – or at least trying to. With the billions raised by its stock market debut, Volvo can now turn its attention to transforming its product range. That means new electric models and new hybrids, before going fully electric by 2030.

Volvo spin-off and Tesla rival Polestar is also set to go public in a SPAC worth upwards of $10bn.

The Volvo stock CFD is available to trade now on the Markets.com platform. Trading is risky. You may lose money. Only trade if you are comfortable taking any potential losses.

It’s earnings season

October also saw the start of third quarter earnings season on Wall Street.

The reports have been coming thick and fast. So far, it looks like Tesla and the FAANG stocks are amongst this season’s big winners.

Tesla, for example, managed to avoid the same pitfalls seemingly all major car manufacturers have fallen into across the pandemic and post a record-breaking quarter for vehicle deliveries.

Netflix was able to translate the success of its exclusive content like Squid Game into higher sub counts, coming in above Wall Street expectations.

Google parent Alphabet drew on substantial ad revenues to boost its takings in the third quarter.

And, despite revenues missing forecasts, Apple showed huge growth in some of its key segments, such as iPhone sales and its services sector.

There is still a couple of weeks of earnings season still to go. Keep visiting Markets.com for more updates.

Don’t forget to check our November preview too for the events to watch over the coming month

Staley out, stocks up ahead of massive test for central bankers

So, farewell Jes Staley. You ran a good investment bank but are not as Teflon-like as it seemed. Back in February 2020, when news of the investigation into his historic links to Jeffrey Epstein broke, I commented how anything relating to the disgraced financier was surely toxic and said Staley should probably go. It was a reputational thing for Barclays and Staley did not have an immaculate record. After the whistleblower incident and KKR thingy with his brother-in-law it seemed the cat was on his last life; it seemed a question of judgment, or lack of it. I said: “It turns out he’s being investigated by the FCA over his known links to Jeffrey Epstein. The board says he’s been transparent enough, so he has their backing. Coming after the whistleblowing fine, it’s looking like the cat may be running out of lives. I wonder if he can survive this.” 

 

Today Barclays says Staley is out. It all hinges on his “characterisation to Barclays of his relationship with the late Mr Jeffrey Epstein and the subsequent description of that relationship in Barclays’ response to the FCA”. It appears his characterisation of the relationship is not exactly how the FCA and PRA see it. The board thought Staley was «sufficiently transparent” to keep his job last year – a statement at the time that already hinted a bit of a rift between CEO and board. Having seen the preliminary findings of the FCA and PRA report, either they think he wasn’t that transparent enough and/or just don’t want a mucky fight with the regulators to distract, since Staley will contest the findings. It should also be pointed out that “the investigation makes no findings that Mr Staley saw, or was aware of, any of Mr Epstein’s alleged crimes, which was the central question underpinning Barclays’ support for Mr Staley following the arrest of Mr Epstein in the summer of 2019”, the statement from the company said. The FCA and PRA simply said they “do not comment on ongoing investigations or regulatory proceedings beyond confirming the regulatory actions as detailed in the firm’s announcement”. Barclays is right to pull the plug now. It probably could have done it earlier. As I said in February last year: “He’s got to go now as he risks tarnishing Barclays’ reputation.”

 

Shares in Barclays fell more than 1% after the announcement, whilst peers rose – Lloyds rallied about 2% and NatWest over 1%. CS Venkatakrishnan, previously head of global markets, will take the reins. A safe pair of hands but we probably need to see a bit more. Today’s release mentions that “the Board has had succession planning in hand for some timewhich if you had Jes Staley as your CEO would have been a prudent step to take.  

 

Stocks are higher in early trade on Monday, with the Stoxx 600 in Europe hitting a record high. The FTSE 100 trades up 0.5% or so amid a generally positive start to the session, the first of the month. Wall Street closed out Friday with its best month since November 2020 as all three major averages hit fresh all-time highs. Bets that central banks will raise rates to fight inflation may have caused a wipe-out in the shorter end of the bond market last week, but the gyrations are not affecting stock markets too much at the moment. Corporate earnings are strong with about 80% of US firms reporting delivering profits ahead of expectations. A slew of key central bank decisions this week has the potential to up-end the sense of calm but so far, we think policy moves are reasonably well telegraphed. Nevertheless, there are lots of questions facing the central bankers this week. 

 

The Bank of England faces a big test of credibility after a series of hawkish messages from key policymakers in recent weeks. As noted a couple of weeks ago, the situation is finely balanced. Senior policymakers like governor Bailey and chief economist Huw Pill have chucked some fairly hawkish words around. Others remain sensitive to what many believe would be a policy mistake in raising rates into a period of economic slowdown and higher taxes. The BoE will be keen to bill any hike as a dovish one that is designed to get ahead of the inflationary impulse and show it means business, but is not about to start an aggressive tightening cycle. It will be about reducing some of the distortions created post-pandemic and the need to act early before inflation expectations are off the leash and inflation itself becomes more persistent. Sterling is struggling to catch much in the way of a lift from the BoE’s apparent hawkishness and now GBPUSD looking to turn lower with a bearish MACD on the daily chart.

 

The Federal Reserve looks set to announce tapering of bond purchases but will be leaning hard on any notion that tapering is tightening. Powell is likely to reiterate that «a different and substantially more stringent test» is required for interest rates to move up. The team sticky and team transient inflation match is still happening, though team sticky is clearly winning easily and the referee should call it off shortly. On Friday data showed US inflation running at its hottest in 30 years – headline PCE at 4.4% and core at 3.6%.

 

The Reserve Bank of Australia will need to figure out if it wants to abandon yield curve control. Last week saw a broad bond market selloff that saw the yield on Australian 3-yr paper jump above 1.25%, miles above the 0.1% target. It’s all but given up on this, it seems, though the RBA has still been active in 5- and 7-year paper to drive down yields. The question is whether the ditching of YCC begets a change in forward guidance – does it surrender to market expectations and signal it will likely raise rates before 2024? 

Adelanto semanal: ¿las nóminas no agrícolas darán la vuelta a la tortilla?

Los próximos cinco días nos aguardan importantes reuniones. En el ámbito de los datos, ha llegado el momento de conocer las últimas nóminas no agrícolas. ¿La suerte cambiará para el mercado laboral estadounidense? También tendremos reuniones de bancos centrales en las cumbres del Banco de Inglaterra y la Reserva Federal. La llegada de un nuevo mes trae consigo una nueva reunión de la OPEP y el JMMC.

Nóminas no agrícolas: ¿supondrán un fracaso o un regreso a los buenos tiempos?

Esta semana destaca la publicación de los datos de nóminas no agrícolas (NFP) estadounidenses de octubre.

Los últimos dos meses en el plano laboral de EE. UU. han sido difíciles, puesto que las NFP apenas se han acercado a los niveles previstos en los últimos dos meses. En septiembre, se crearon 194 000 puestos de trabajo, frente a los 500 000 esperados. En agosto, las previsiones auguraban 366 000 puestos de trabajo nuevos. Este mes, se prevé la creación de 720 000 puestos de trabajo.

La creación de empleo es un parámetro clave para decidir sobre la reducción de los estímulos. Aunque aún esperamos que el FOMC anuncie esta reducción el miércoles en su reunión mensual, resulta evidente que el presidente de la Fed, Powell, considera que el mercado laboral aún no se encuentra en la situación en la que debería estar.

Lo que seguramente resultará interesante comprobar, en el corto a medio plazo, es el efecto que tendrá el histórico abandono de puestos de trabajo. En agosto, más de 4,3 millones de estadounidenses dejaron su empleo, algo nunca visto hasta entonces. Existe una multitud de motivos que explican este fenómeno: mayores ahorros, jubilación anticipada, descontento general con el trabajo, etc. Este abandono de puestos de trabajo podría dar lugar a la creación de otros nuevos, lo que supondría un repunte en las NFP, aunque también puede llevar consigo mayor destrucción de puestos de trabajo, como hemos visto recientemente.

Reunión del FOMC: ¿tendremos confirmación de la reducción en las medidas de soporte?

Independientemente de cuál sea el estado del mercado laboral, Jerome Powell afirma que la reducción «sigue su curso».

Como ya hemos comentado, los mercados esperan que la desescalada del masivo programa de compras de activos de EE. UU. dé comienzo en noviembre. Aún estamos esperando una confirmación oficial al respecto, pero esperamos obtenerla en la reunión del FOMC de esta semana.

Actualmente, la Fed compra 120 000 millones de dólares en valores cada mes en el marco de sus extraordinarias medidas de soporte fiscal a causa de la pandemia.

Ante el aparentemente débil panorama laboral y la espiral inflacionista, aún no se prevé que se vayan a subir los tipos. Sin embargo, según Powell, si se empieza a cerrar el grifo de la compra de activos, la Fed podrá tener margen para abordar ambos problemas.

En declaraciones en un encuentro organizado por el Banco de la Reserva de Sudáfrica el pasado viernes, Powell afirmó: «Nadie debería poner en duda que emplearemos estas herramientas para reducir la inflación al 2 % con el tiempo. Al mismo tiempo, consideramos que podemos ser pacientes y permitir que la recuperación se asiente y que el mercado laboral se recupere».

Un par de miembros del FOMC han confirmado que darán su apoyo a la reducción de los estímulos en la reunión de esta semana. Los gobernadores de la Fed Randal Quarles y Christopher Waller se encuentran entre los miembros más conservadores del comité.

«Este mecanismo no debería endurecer las condiciones financieras, ya que muchos de los actores del mercado ya han dado por hecho que se producirá una reducción en los estímulos a finales de 2021», sentenció Waller la semana pasada.

Banco de Inglaterra: subir los tipos o no subirlos, esa es la cuestión

En su reunión de este jueves, el Banco de Inglaterra (BoE) deberá hacer frente a un dilema. El Comité de Política Monetaria (MCP) del banco central se mantiene dividido entre conservadores y moderados, aunque parece que la balanza se inclina más del lado de los primeros.

Pero, ¿habrá una subida de tipos? ¿Es este el momento adecuado para que el BoE se meta en el jardín de los tipos de interés? Pese a la ligera caída del mes pasado, la inflación se mantiene en niveles elevados, y el crecimiento se está estancando.

El gobernador Bailey parece mantener una postura conservadora. A principios de mes, el gobernador del BoE afirmó que el banco tendría que hacer algo para contener la inflación. Una de las herramientas de su kit es la subida de tipos.

Sin embargo, otros miembros de la institución no están tan seguras de la idoneidad de subir los tipos de los mínimos históricos actuales, al menos por ahora. Silvana Tenreyro, una legisladora del BoE, ha indicado que los tipos no se subirán hasta después de Navidad. Silvana, como otros de los muchos miembros más moderados del comité del BoE, considera que la alta inflación es temporal.

El economista jefe del BoE Huw Pill parece que se inclina más por adoptar un sesgo conservador.

En sus primeras declaraciones públicas desde su toma de posesión del cargo, Pill afirmó: «En mi opinión, el equilibrio de riesgos actualmente se inclina hacia la gran inquietud en torno a las perspectivas de inflación, ya que su fuerza actual parece que durará más de lo previsto en un primer momento».

En su reunión de octubre, el MPC votó por unanimidad mantener los tipos sin cambios. Estaremos pendientes de si el conjunto del grupo se mantiene unido o si los conservadores empiezan a dominarlo.

Reunión de la OPEP+: ¿se mantiene el rumbo?

Con la llegada del nuevo mes, tenemos una nueva tanda de reuniones de la OPEP y el JMMC.

La intención de la OPEP+ no es oponerse al sistema. No cabe duda que se ha mantenido fiel a su hoja de ruta en el último par de meses con el aumento estable de la producción en 400 000 barriles diarios al mes.

El cartel ha debido hacer frente a las solicitudes de importantes consumidores de crudo, en particular de EE. UU., para que aumentara aún más la producción. EE. UU. realizó esta petición pese a que atesora millones de barriles de esquisto y podría depender de sus propios recursos, pero ese es otro tema.

Pero siguen en sus trece: la OPEP+ y Arabia Saudí están muy satisfechos con la evolución del mercado del petróleo. Los precios del crudo han aumentado aproximadamente un 50 % interanual en 2021. Además, según Arabia Saudí, se prevé un excedente en 2022.

Ante este panorama, ¿por qué la OPEP y sus aliados deberían realizar cambios? El precio del crudo por barril está en aumento, y estos países dependen de los precios elevados del petróleo para prosperar. Es el caso de Rusia, donde un 40 % de los ingresos del gobierno procede de los hidrocarburos.

Por lo tanto, no se esperan importantes novedades en la reunión de la OPEP y el JMMC este jueves.

Wall Street: nueva tanda de la temporada de ganancias del 3T

No nos olvidemos que la temporada de ganancias sigue en pleno apogeo. La actividad no cesa en Wall Street con la publicación de los resultados del tercer trimestre de las empresas de gran capitalización.

Esta semana, conoceremos cómo les ha ido a ActivisionBlizzard, Uber, Pfizer y Airbnb. Descubra qué empresas publicarán sus resultados y cuándo en nuestro calendario de la temporada de ganancias estadounidense.

Principales datos económicos

Date Time (GMT+1) Asset Event
Mon 01-Nov 2:00pm USD ISM Manufacturing PMI
 
Tue 02-Nov 3:30am AUD RBA Rate Statement
  3:30am AUD Cash Rate
  8:00pm NZD RBNZ Financial Stability Report
  9:45pm NZD Employment Change q/q
  9:45pm NZD Unemployment Rate
 
Wed 03-Nov 8:00am EUR Spanish Unemployment Change
  12:15pm USD ADP Non-Farm Employment Change
  2:00pm USD ISM Services PMI
  2:30pm OIL Crude Oil Inventories
  6:00pm USD FOMC Statement
  6:00pm USD Federal Funds Rate
  6:30pm USD FOMC Press Conference
 
Thu 04-Nov 10:00am EUR EU Economic Forecasts
  All Day OIL OPEC-JMMC Meetings
  12:00pm GBP Asset Purchase Facility
  12:00pm GBP BOE Monetary Policy Report
  12:00pm GBP MPC Asset Purchase Facility Votes
  12:00pm GBP MPC Official Bank Rate Votes
  12:00pm GBP Monetary Policy Summary
  12:00pm GBP Official Bank Rate
  12:30pm USD Unemployment Claims
  02.30pm GAS US Natural Gas Inventories
 
Fri 05-Nov 12:30am AUD RBA Monetary Policy Statement
  12:30pm CAD Employment Change
  12:30pm CAD Unemployment Rate
  12:30pm USD Average Hourly Earnings m/m
  12:30pm USD Non-Farm Employment Change
  12:30pm USD Unemployment Rate
  2:00pm CAD Ivey PMI

 

Principales informes de resultados

Mon 1 Nov Tue 2 Nov Wed 3 Nov Thu 4 Nov
Pfizer (PFE) Ball Corp (BLL)
Arista Networks (ANET) Activision Blizzard (ATVI) Qualcomm Inc (QCOM) Lumentum Holdings (LITE)
Mondelez (MDLZ) Moderna (MRNA)
The Trade Desk (TTD)
Airbnb (ABNB)
Illumina (ILMN)
Liberty Global Class A (LBTYA)
Peloton (PTON)
Roku Inc (ROKU)
Square Inc (SQ)
Uber Technologies (UBER)

 

The markets month ahead: key events for your November trading diary

Get a preview of the month’s important market-moving events with our November trading preview.

Economic events to watch in November

RBA rate statement – Tuesday November 2nd

The Reserve Bank of Australia kicks things off in November with its latest rate statement. Rates were previously held at their historic yields last time around, but rising bond yields could force Governor Phillip Lowe’s hand this month.

FOMC statement – Wednesday November 3rd

The Federal Reserve speaks on Wednesday November 3rd. Markets are expecting Chair Jerome Powell and the FOMC to finally announce tapering. It’s been on the cards for a while, but with labour markets down and inflation up, it might be time to act.

Bank of England rate statement – Thursday November 4th

The central bank statements come thick and fast at the start of November. Next up is the Bank of England. This month will likely be a showdown between the hawks and the doves on the Monetary Policy Council. Governor Bailey is particularly hawkish and may convince others that a rate hike is the way to go as inflation bites into the UK economy.

OPEC-JMMC meetings – Thursday November 4th

November begins with a very busy week for the markets. A fresh month means another set of OPEC-JMMC meetings. No surprises are expected this time around. The cartel will likely stick to its 400,00bpd increase, despite calls from some major crude consumers to further open the taps.

US nonfarm payrolls – Friday November 5th

The United States’ labour market is under the spotlight at the start of the month too. October’s data will be crucial after two consecutive nonfarm payroll misses. August and September’s numbers fell massively short of expectations so markets will be watching this week’s print with eagle eyes.

US Core CPI data – Wednesday November 10th

The Fed’s favourite inflation metric is released on Wednesday 10th. It appears American consumers are continually being squeezed. Inflation is running hot still, even though the Fed believes high prices are all transitionary. This month’s core CPI release should clear the picture up a bit.

UK preliminary GDP – Thursday November 11th

After better-than-expected GDP forecasts at this year’s Autumn Budget, the UK reports its preliminary Q3 GDP numbers on the 11th of November. Currently, the British Chamber of Commerce doesn’t seem to match the Treasury’s optimism. The BCC puts Q3 growth at 2.8% – a downward revision of its previous 3.5% figure.

US retail sales – Tuesday November 16th

October retail data for the United States comes this month. Retail sales have been beating expectations for the past two months. Observers had previously thought high inflation would hamper growth, but sales data has been defiantly creeping upward.

EU PMIs – Tuesday November 23rd

Supply chain issues have been weighing hard on global productivity across the year. The EU is yet to escape those pressures. With this month’s PMI data we’ll be able to gauge how services and manufacturing is performing across the bloc. For context, The eurozone composite purchasing managers index fell to 56.2 in September from 59.0 in August.

RBNZ rate statement – Wednesday November 24th

The Reserve Bank of New Zealand became one of the first global central banks to hike rates in October. Presumably, it’ll be staying the course this month, but you never know with how pandemic economics can shift from week to week.

Major economic data

Date Time (GMT) Asset Event
Mon 01-Nov 2:00pm USD ISM Manufacturing PMI
       
Tue 02-Nov 3:30am AUD RBA Rate Statement
  3:30am AUD Cash Rate
  8:00pm NZD RBNZ Financial Stability Report
  9:45pm NZD Employment Change q/q
  9:45pm NZD Unemployment Rate
       
Wed 03-Nov 8:00am EUR Spanish Unemployment Change
  12:15pm USD ADP Non-Farm Employment Change
  2:00pm USD ISM Services PMI
  2:30pm OIL Crude Oil Inventories
  6:00pm USD FOMC Statement
  6:00pm USD Federal Funds Rate
  6:30pm USD FOMC Press Conference
       
Thu 04-Nov All Day All OPEC-JMMC Meetings
  12:00pm GBP Asset Purchase Facility
  12:00pm GBP BOE Monetary Policy Report
  12:00pm GBP MPC Asset Purchase Facility Votes
  12:00pm GBP MPC Official Bank Rate Votes
  12:00pm GBP Monetary Policy Summary
  12:00pm GBP Official Bank Rate
  12:30pm USD Unemployment Claims
       
Fri 05-Nov 12:30am AUD RBA Monetary Policy Statement
  12:30pm CAD Employment Change
  12:30pm CAD Unemployment Rate
  12:30pm USD Average Hourly Earnings m/m
  12:30pm USD Non-Farm Employment Change
  12:30pm USD Unemployment Rate
  2:00pm CAD Ivey PMI
       
Tue 09-Nov 10:00am EUR ZEW Economic Sentiment
  10:00am EUR German ZEW Economic Sentiment
  1:30pm USD PPI m/m
  1:30pm USD Core PPI m/m
  6:01pm USD 10-y Bond Auction
       
Wed 10-Nov 1:30pm USD CPI m/m
  1:30pm USD Core CPI m/m
  1:30pm USD Unemployment Claims
  3:30pm OIL Crude Oil Inventories
  6:01pm USD 30-y Bond Auction
  9:45pm NZD FPI m/m
       
Thu 11-Nov 12:30am AUD Employment Change
  12:30am AUD Unemployment Rate
  7:00am GBP Prelim GDP q/q
  10:00am EUR EU Economic Forecasts
       
Fri 12-Nov 2:00am CNY Retail Sales y/y
  3:00pm USD JOLTS Job Openings
  3:00pm USD Prelim UoM Consumer Sentiment
       
Mon 15-Nov 1:30pm USD Empire State Manufacturing Index
       
Tue 16-Nov 12:30am AUD Monetary Policy Meeting Minutes
  1:30pm USD Core Retail Sales m/m
  1:30pm USD Retail Sales m/m
  2:15pm USD Industrial Production m/m
       
Wed 17-Nov 7:00am GBP CPI y/y
  1:30pm CAD CPI m/m
  1:30pm CAD Common CPI y/y
  1:30pm CAD Median CPI y/y
  1:30pm CAD Trimmed CPI y/y
  3:30pm OIL Crude Oil Inventories
       
Thu 18-Nov 2:00am NZD Inflation Expectations q/q
  7:00am GBP Retail Sales m/m
  1:30pm USD Philly Fed Manufacturing Index
  1:30pm USD Unemployment Claims
       
Fri 19-Nov 1:30pm CAD Core Retail Sales m/m
  1:30pm CAD Retail Sales m/m
       
Tue 23-Nov 8:15am EUR French Flash Manufacturing PMI
  8:15am EUR French Flash Services PMI
  8:30am EUR German Flash Manufacturing PMI
  8:30am EUR German Flash Services PMI
  9:00am EUR Flash Manufacturing PMI
  9:00am EUR Flash Services PMI
  9:30am GBP Flash Manufacturing PMI
  9:30am GBP Flash Services PMI
  2:45pm USD Flash Manufacturing PMI
  2:45pm USD Flash Services PMI
       
Wed 24-Nov 1:00am NZD Official Cash Rate
  1:00am NZD RBNZ Monetary Policy Statement
  1:00am NZD RBNZ Rate Statement
  2:00am NZD RBNZ Press Conference
  9:00am EUR German ifo Business Climate
  Tentative GBP Autumn Forecast Statement
  1:30pm USD Prelim GDP q/q
  1:30pm USD Core Durable Goods Orders m/m
  1:30pm USD Durable Goods Orders m/m
  1:30pm USD Unemployment Claims
  3:00pm USD Core PCE Price Index m/m
  3:00pm USD Revised UoM Consumer Sentiment
  3:30pm OIL Crude Oil Inventories
  7:00pm USD FOMC Meeting Minutes
       
Thu Nov-25 Tentative EUR ECB Financial Stability Review
       
Mon 29-Nov 3:00pm USD Pending Home Sales m/m
       
Tue 30-Nov 1:00am CNY Manufacturing PMI
  8:00am CHF KOF Economic Barometer
  1:30pm CAD GDP m/m
  2:45pm USD Chicago PMI
  3:00pm USD CB Consumer Confidence

 

Will the Bank of England actually raise rates in November?

• GBPUSD hits highest in a month ahead of tomorrow’s CPI inflation print
• Hike in November fully priced by markets…
• But will the MPC hawks have enough votes?

Recent commentary from senior Bank of England officials indicates the Monetary Policy Committee (MPC) will raise interest rates when it next meets in November, barely over two weeks from now. Market positioning has also shifted significantly in recent weeks from a single hike next year to one this year and at least two next, with the base rate expected to hit 1% by August.

BoE members have had numerous occasions to push back against market expectations and have led traders towards a November hike as being the most likely outcome. Over the weekend governor Andrew Bailey stressed that the Bank of England “will have to act” to counter inflation. That’s one for team sticky – which if you are a regular reader, you will know I’ve been saying all along. “That’s why we, at the Bank of England, have signalled, and this is another such signal, that we will have to act,” Bailey said. “But, of course, that action comes in our monetary policy meetings.” Ah, but which policy meeting did he mean? Did he mean November – the market certainly thinks so, and there has been no push back on that. Failure to raise rates next month risks Bailey becoming the Old Lady’s second unreliable boyfriend and the inevitable disapprobation for her taste in gentlemen.

Inflation problems

Inflation expectations in the UK increased to 4.1% in September from 3.1% in August of 2021. Actual inflation is also rising quickly. The latest Consumer Prices Index (CPI) rose by 3.2% in the 12 months to August 2021, up from 2% in July. The increase of 1.2 percentage points is the largest ever recorded increase in the CPI series, which began in January 1997. Soaring energy costs are a big factor, but the whole basket is seeing upwards pressure.

The reading of tomorrow’s CPI print is important. Another hot reading underlines the sense of urgency at the BoE. Cooler raises concerns that officials have got their communication muddled. It is once again expected to hit 3.2%.

Team sticky is winning for now but team transient have some cards up their sleeves. For instance, headline inflation would have been 0.3 percentage points lower in August 2021 without the Eat Out to Help Out discounts in August 2020. Demand destruction from higher prices may also start to feed into lower run rates for inflation.

Yield curve inversion

Markets are pricing in a fairly aggressive tightening cycle by the BoE. 2yr gilt yields have hit a two-and-a-half year high. This could be premature – the MPC may not be as hawkish as recent signals indicate, but if it’s correct then the market is also anticipating that the Bank would quickly need to reverse its actions. Forwards and implied interest rate expectations point to inversion – higher rates at the front end, lower further out. This only implies the market believes the Bank would be making a ‘policy mistake’ by hiking prematurely. Others would point out that taming inflation is its core mandate.

Certainly, the BoE like all central bank is dealing with something rather new: a supply shock. Central banks’ policy toolkits are based around levers to drive demand when it is low. They cannot fix supply crunches and imbalances in the economy very easily by stimulating demand. Nevertheless, the Bank is clearly mindful that allowing inflation to run rampant would a) destroy its credibility and b) allow longer-term inflation expectations to become de-anchored. If supply-side worries are longer lasting than first thought, and demand stays robust, it seems prudent for the MPC to use what tools it has to lean on inflation. What’s clear is that the intense debate around the recent comments and change in market expectations shows the Bank is not doing a particularly good job of communicating its position. We may be left in a position where the MPC hikes a couple of times and then has to dial it back, which risks its credibility – albeit whether more or less than it would by allowing inflation expectations off the leash is an open question.

The last meeting

• MPC voted 7-2 to maintain QE, unanimous on rates
• Ramsden joins Saunders in voting to scale back the QE programme to £840bn, ending it immediately
• CPI inflation is expected to rise further in the near term, to slightly above 4% in 2021 Q4 – and the BoE signalled greater risk it would be above target for most of 2022
• Overall, Bank staff had revised down their expectations for 2021 Q3 GDP growth from 2.9% at the time of the August Report to 2.1%, in part reflecting the emergence of some supply constraints on output
• Shift in forward guidance: MPC noted ‘some developments … [since the August Monetary Policy Report] … appear to have strengthened’ the case for tightening monetary policy.
• Rate hikes could come early, even before end of QE: “All members in this group agreed that any future initial tightening of monetary policy should be implemented by an increase in Bank Rate, even if that tightening became appropriate before the end of the existing UK government bond asset purchase programme.”

Doves vs Hawks

But will it go for the hike? The MPC is relatively evenly split in terms of hawks and doves, so it is not abundantly clear if the recent messaging from some members – albeit including the governor – matches with the votes.

Bailey has sounded hawkish, and we know Ramsden and Saunders are itching to act. Huw Pill, the new chief economist replacing Andy Haldane has also sounded hawkish, though less so than his predecessor.

Commenting after UK inflation expectations hit 4% for the first time since 2008, he said: “The rise in wholesale gas prices threatens to raise retail energy costs next year, sustaining CPI inflation rates above 4 per cent into 2022 second quarter.” We place him in the ‘leaning hawkish’ camp.

On the dovish side, Silvana Tenreyro is highly unlikely to vote for a hike next month, calling rate rises to counter inflation ‘self-defeating’.

Deputy Governor Broadbent said in July that he saw reasons for the inflation tide to ebb. The spike in energy prices since then could lead him to change his mind but for now, we place in the ‘leaning dovish’ camp,

Rate-setter Haskel said in May he’s not worried by inflation, and in July said there was no need to reduce stimulus in the foreseeable future. He goes in the Dovish camp with Catherine Mann, who said last week that she can hold off from raising rates since markets are doing some of the tightening already. “There’s a lot of endogenous tightening of financial conditions already in train in the UK. That means that I can wait on active tightening through a Bank Rate rise,” she said.

That leaves Jon Cunliffe somewhat the swing voter. In July he stressed that inflation was a bump in the road to recovery. We look to see whether the recent spike in inflation and inflation expectations has nudged the likes of Cunliffe, Pill and even Broadbent to move to the Hawkish camp. It seems unlikely that governor Bailey would have pointed the market towards quicker hikes if he did already have a feeling for the MPC’s views on the matter.

Dovish  Leaning dovish  Centre  Leaning hawkish  Hawkish 
Tenreyro

Mann

Haskel

Broadbent Cunliffe Pill Saunders

Ramsden

Bailey

Charts

GBPUSD: The hawkishness from policymakers and market repricing for hikes has supported £, though we do note some noticeable dollar weakness in Tuesday’s session that is flattering the view that it’s all BoE driven. Cable breaks new highs ahead of CPI, above 1.3820 to test the 50% retracement off the May peak. Bullish MACD crossover still in play, but starting to look a tad extended.

GBPUSD Chart 19.10.2021

EURGBP Gains capped with a stronger EUR today, but has made a fresh 18-month high. BoE racing to hike against a much more dovish ECB ought to be positive, but yield curve inversion highlights the dangers of viewing FX trades purely from a CB tightening/loosening point of view.

EURUSD 19.10.2021

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