Market movers today
A quiet start to an otherwise interesting data week. Norwegian retail sales and US new home sales for October will be released today.
The ECB’s Lagarde will give a speech in the afternoon.
Later in the week, the most important release will be the euro area flash HICP on Thursday, we expect further cooling in both headline (2.7%; Oct 2.9%) and core (3.9%; Oct 4.2%) inflation terms. In the US, October Personal Consumption Expenditures (PCE) and November ISM Manufacturing index will be released on Thursday and Friday, respectively. In China, both official NBS and Caixin manufacturing PMIs are due for release (Thursday and Friday, respectively).
The Reserve Bank of New Zealand (RBNZ) will be the only G10 central bank having a monetary policy meeting this week (Wednesday). We expect an unchanged rate decision.
OPEC+ will meet on Thursday and the UN Climate summit COP28 begins on the same day.
The 60 second overview
Market wrap: US bond yields have continued Friday’s move higher in Asian trading this morning while equity futures are lower. EUR/USD continues to creep higher.
Israel and Hamas may extend the truce beyond Monday if they can agree on more hostage releases. US President Biden said he hoped the truce could go on as long as hostages were released. Hamas said it would extend the truce if serious efforts were made to increase the number of Palestinians released by Israel. Prime Minister of Israel Benjamin Netanyahu said on Sunday he would welcome extending the truce if it meant that on every day 10 hostages would be released adding that after the truce they would return with full force to achieve the goal of eliminating Hamas.
US released PMIs on Friday for November still pointing to growth below trend but not yet at recession levels. Manufacturing PMI declined from 50.0 to 49.4 (consensus 49.9) while service PMI rose slightly from 50.6 to 50.8 (consensus 50.3). It left the composite PMI unchanged at 50.7 (long term average 54.1).
Chinese government agencies unveiled 25 measures to support financing for the private sector in yet another move to underpin private sector development. It continues the charm offensive towards the private sector that has taken place over the past year in efforts to rebuild confidence and highlight the importance of the private sector.
US Black Friday online sales were up 7.5% compared to last year as consumers were chasing deals.
Equities: Equities were modestly higher on Friday, thereby locking in solid gains for another week. Both US and European markets were about 1% higher for the week. This takes most regions back to late summer-highs and we find this motivated. Gains have been broad-based, with very little distinction between value/growth, cyclicals/defensives or small/large caps. This was also the case on Friday. Unlike the past few weeks, the increase in equities was not been driven by falling yields. In fact, US and European yields have even risen some 10bp for the week. Bond vol coming down is enough to drive equities and will continue to do so, in our view. Asian markets and US futures are lower again this morning.
FI: Last week was eventful given the Dutch election and the surprise victory by the Freedom Party led by Geert Wilders and the closure of the German inflation liked programme by the German Debt Agency (Finanzagentur). Furthermore, the uncertainty surrounding the German fiscal situation continues. Last week the German government suspended the debt brake for 2023 and we expect more news on the budget for 2024 in the coming weeks. Looking at the move in the bond market, yields rose modestly during the week in US and Europe.
FX: EUR/USD rose above the 1.09 mark, while the USD/JPY remains just below 150. EUR/GBP declined below 0.87, primarily due to better-than-expected UK PMIs. EUR/SEK remains slightly above 11.40 after the Riksbank decision, while the EUR/NOK is hovering around 11.70.
Credit: Credit spreads as measured by CDS indices were generally tighter last week as sentiment was buoyed by hopes of a soft landing. iTraxx Main closed at 68bp which was 2bp tighter during the week, while Xover was 12bp tighter at 375bp.
Nordic macro
In Sweden the Financial Market Statistics is released today; household lending growth will the most interesting part of the statistics. Norway releases retail sales for October.
