The key economic releases this week are ISM non-manufacturing on Monday and University of Michigan consumer sentiment index on Friday. There are a few scheduled speaking engagements from Fed officials this week.
Away from the US economic calendar, initially focus will be on the Italian referendum result, which already appears to have been largely digested by the market, despite a variety of unknown consequences still to emerge. It will then shift quickly to a critical ECB meeting.
As BofA notes, Mario Draghi’s interview in El Pais on the last day before the ECB starts its pre-meeting “quiet period” sets the landscape quite clearly. The decisions will come next week (in direct contrast with those who advocated waiting until January), tapering “proper” (i.e., winding down the programme) is not on the table, and the discussion on QE ultimately boils down to either continuing with the current pace of buying of EUR80bn for a relatively short period of time, or reducing the pace but buying for a longer period of time. Draghi did not hint at any personal preference there. It seems that both options would be consistent with “preserving the very substantial degree of monetary accommodation” that is needed.
BofA, as well as Goldman and many other banks, expect Draghi to continue monetizing debt at a pace of €80bn per month until Sept. 2017 at the earliest, with flexibility on the capital key and moving the issue limit on non-CAC bonds.
Back to key economic events, the breakdown is as follows:
- In the US we have ISM survey, trade balance, durable goods, wholesale inventories and U.Michigan index. Fed speakers currently on schedule are concentrated on Monday.
- In the Eurozone, beyond the Italian referendum result and the ECB important releases include Eurozone PMIs (Final), October retail sales and 3Q GDP (Final).
- In the UK, the main releases are PMIs, industrial production, trade balance and housing.
- We also highlight the court hearings concerning government’s appeal against A50 ruling.
- In Australia, the focus is on the RBA meeting as well as on the economic releases including trade balance, GDP and foreign reserves.
- In Japan, we await releases on PMIs, GDP, trade balance and money supply.
- In China, the main releases are trade balance and inflation.
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A quick look at the global week ahead on a daily basis:
- This morning in Europe we’re kicking off the week with the remainder of the November PMI’s which includes the final services and composite revisions for the Euro area, Germany and France, as well as a first look at the data for the UK and non-core. Euro area retail sales data for the month of October is also out today. In the US we’ll get the remaining PMI’s as well as the ISM non-manufacturing print for November and labour market conditions index.
- Tuesday kicks off in Germany with the latest factory orders data before we then get the final Q3 GDP reading for the Euro area. In the US tomorrow we’ll get the October trade balance reading, Q3 unit labour costs and nonfarm productivity, October factory orders, December IBD/TIPP economic optimism reading and the final durable and capital goods orders revisions.
- Germany gets things going again on Wednesday when we’ll get the latest industrial production report. French trade data and UK industrial and manufacturing production will also be released. The only data due out in the US on Wednesday is JOLTS job openings and consumer credit for October. China will also release November foreign reserves data at some stage.
- The early data to get things going on Thursday comes from Japan where the final Q3 GDP reading will be released. China will then be following with important November trade data. There’s no data in Europe on Thursday but all eyes will be on the main event of the week, the ECB policy meeting outcome just after midday. The only data out of the US on Thursday will be initial jobless claims.
- We close out the week in Asia on Friday with the November CPI and PPI prints in China. In Europe we’ll get trade data in Germany, industrial production data in France and trade data in the UK. Over in the US we’ll get the final October wholesale inventories report along with a first look at the University of Michigan consumer sentiment report. Away from the data the Fedspeak this week all comes today with Dudley, Evans and Bullard scheduled.
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Finally, here is a full summary of key US events, together with consensus and estimates from Goldman Sachs
Monday, December 5
- 08:30 AM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will give a speech on the economic outlook at the Association for a Better New York.
- 09:11 AM Chicago Fed President Evans (FOMC non-voter) speaks: Chicago Fed President Charles Evans will give a speech at the Executives’ Club of Chicago’s CEO Breakfast. Audience and media Q&A is expected.
- 09:45 AM Markit Flash US Services PMI, November final (consensus 54.7, last 54.7)
- 10:00 AM Labor market conditions index, November (consensus -0.2, last +0.7)
- 10:00 AM ISM non-manufacturing, November (GS 55.0, consensus 55.5, last 54.8): We expect the ISM non-manufacturing index to edge up to 55.0 in the November report, up from 54.8. While non-manufacturing surveys were mixed at the headline level, underlying details from the reports suggest that business activity improved modestly on net in November. The Dallas Fed (+9.6pt to +12.6) and the New York Fed (+6.4pt to -6.8, not seasonally adjusted) service sector surveys both strengthened, while the Philly Fed (-10.7pt to +10.6) and Richmond Fed (-4pt to +3) surveys softened. The Markit Services PMI also ticked down in November. Our non-manufacturing tracker stands at 53.3 for November, from 52.9 in October.
- 02:05 PM St. Louis Fed President Bullard (FOMC voter) speaks: St. Louis Fed President Bullard will give a speech on the U.S. economy and monetary policy at the W.P. Carey School of Business’ Economic Forecast luncheon at Arizona State University. Media Q&A is expected.
Tuesday, December 6
- 08:30 AM Trade balance, October (GS -$41.1bn, consensus -$42.0bn, last -$36.4bn): We expect the trade balance to widen in October to -$41.1bn. The Census Bureau’s new Advance Economic Indicators report showed a larger than anticipated trade deficit in October.
- 08:30 AM Nonfarm productivity, Q3 final (GS +3.4%, consensus +3.3%, last +3.1%): Unit labor costs (qoq), Q3 final (GS +0.8%, consensus +0.3%, last +0.3%): We expect Q3 nonfarm productivity to be revised up to +3.4% (qoq ar) from 3.1%, primarily reflecting upward revisions to output. Unit labor costs are likely to be revised up to 0.8%.
- 10:00 AM Factory orders, October (GS +2.9%, consensus +2.5%, last +0.3%): Factory orders likely moved up in October, following last week’s durable goods report which showed new durable goods orders were firmer than expected.
- 10:00 AM Durable goods orders, October final (consensus +4.8%, last +4.8%); Durable goods orders ex-transportation, October final (last +1.0%); Core capital goods orders, October final (last +0.4%); Core capital goods shipments, October final (last +0.2%)
Wednesday, December 7
- 10:00 AM JOLTS job openings, October (consensus 5,445, last 5,486): Consensus expects job openings to edge down in October following a slight gain in the September report. The layoff and discharge rate moved down to an all-time low for the series.
- 03:00 PM Consumer credit, October (consensus $18.5bn, last $19.3bn)
Thursday, December 8
- 08:30 AM Initial jobless claims, week ended December 3 (GS 260k, consensus 255k, last 268k): Continuing jobless claims, week ended November 26 (consensus 2,048k, last 2,081k): We expect initial jobless claims to decrease to 260k from 268k last week. Last week, initial claims rose more than expected, most likely due to temporary volatility resulting from the Thanksgiving holiday during the reference week.
Friday, December 9
- 10:00 AM Wholesale inventories, October final (consensus -0.4%, last -0.4%)
- 10:00 AM University of Michigan consumer sentiment, December preliminary (GS 94.5, consensus 94.4, last 93.8): We expect the University of Michigan consumer sentiment index to increase further to 94.5 in the December preliminary estimate, following an improvement in the November report. The Conference Board’s consumer confidence index jumped to a new cyclical high in the December report.
Source: BofA, Goldman, DB
