US initial jobless claims rose 31k to 742k in the week ending November 14, above expectation of 707k. Four-week moving average of initial claims dropped -14k to 742k.
Continuing claims dropped -429k to 6372k in the week ending November 7. Four-week moving average of continuing claims dropped -525k to 7055k.
UK Trade Minister Liz Truss told the Parliament today, “we’re determined to reach a deal with Canada before the end of the year — it will help our trade from cars to beef to fish to whiskey.” “I do hope that in the future, as Canada is a member of the Trans-Pacific Partnership which has advanced chapters in areas like data and digital, that we will be able to go much further and build a much deeper relationship with Canada,” she added. The UK Department for International Trade also said negotiations are “at an advanced stage and progressing well.”
Last week, Canadian Prime Minister Justin Trudeau also said a trade deal could be reached by January 1. “I know that rolling over and demonstrating free trade deals is important for the U.K. government. Canada is a really easy one. We’re there for it. We’d like to do it, so I am very hopeful that it’s going to get done but that’s up to the U.K. government,” Trudeau said.
At a European Parliament heading, ECB President Christine Lagarde warned that “we continue to be confronted with serious circumstances, from both a health and an economic perspective…The key challenge for policymakers will be to bridge the gap until vaccination is well advanced and the recovery can build its own momentum.”
Lagarde added, ” the euro area economy is expected to be severely affected by the fallout from the rapid increase in infections and the reinstatement of containment measures, posing a clear downside risk to the near-term economic outlook.” She also reiterated that ECB will “recalibrate” its instrument on the basis of the updated economic projections and reassessments in December.
She also noted that the pandemic emergency purchase programme (PEPP) and targeted longer-term refinancing operations (TLTROs) “have proven their effectiveness in the current environment and can be dynamically adjusted to react to how the pandemic evolves.” So, they are “likely to remain the main tools for adjusting our monetary policy.”
Tokyo raised coronavirus alert to the highest level today, as new daily cases hit record high above 500. Governor Yuriko Koike said the government would would take steps to combat the coronavirus “with the view that infections could reach 1,000 cases a day”.
Prim Minister Yoshihide Suga also urged citizens “once again to be vigilant about taking basic precautions… “We ask that people engage in quiet, masked, dining. I will do the same starting today,”
While facing risks of more restrictions, Finance Minister Taro Aso said it’s currently not thinking about giving households cash handouts for a second time.
Bundesbank President Jens Weidmann urged a Financial Times article that the Eurosystem should consider “only purchasing securities or accepting them as collateral for monetary policy purposes if their issuers meet certain climate-related reporting obligations”.
Additionally, central banks should only use credit ratings from agencies that that appropriately include climate-related financial risks.
Weidmman also said governments should do their part on climate, by raising taxes on carbon, or using “cap and trade” schemes. It is not the task of the Eurosystem to penalize or promote certain industries, Weidmann added.
Australia added 178.8k jobs in October, much better than expectation of -30.0k decline. Full-time jobs rose 97k while part-time jobs rose 81.8k. Unemployment rate rose 0.1% to 7.0%, better than expectation of 7.2%. Also, participation rate jumped notably by 0.9% to 65.8%. Monthly hours worked jumped 21million or 1.2%.
Bjorn Jarvis, head of Labour Statistics at the ABS, said: “This strong increase means that employment in October was only 1.7 per cent below March, and reflects a large flow of people from outside the labour force back into employment. Encouragingly, the rise in employment was also accompanied by a strong rise in hours worked, particularly in Victoria, where hours increased by 5.6 per cent.”
Canada CPI accelerated to 0.70% yoy in October, up from 0.50% yoy, above expectation of 0.4% yoy. CPI common rose to 1.6% yoy, up from 1.5% yoy, above expectation of 1.50% yoy. CPI median was unchanged at 1.9% yoy while CPI trimmed was unchanged at 1.8% yoy, both match expectations.
StatCan noted: “Prices rose in five of the eight major components on a year-over-year basis in October. While the shelter component contributed the most to the year-over-year increase, the all-items index rose at a faster pace in October compared with September, mainly due to the food component. ”
BoE Chief Economist Andy Haldane said in a speech that Covid is “not a traditional cyclical shock” whose effects would eventually wash-out. It’s instead a “structural shock” with lasting implications for individuals behaviors and business model. The pandemic crisis “already flicked a digital switch”, on how we spend, work and save. The crisis has could has accelerated the changes and could “serve as a catalyst for faster innovation in the future”, he added. “What was a digital priority pre-Covid has, for many, now become a digital necessity.”.
On monetary policy, Haldane said one of the “most pressing issues” is the “zero (or close to zero) lower bound (ZLB) on interest rates.” ZLB arrives from a “technological constraint on the ability to pay or receive interest on physical cash, whether positive or negative. In principle, a widely-used digital currency could mitigate, if not eliminate, that technological constraint by enabling interest rates to be levied on retail monetary assets.” And, “the potential macro-economic benefits of easing the ZLB constraint appear to be significant.”
Eurozone CPI was finalized at -0.3% yoy in October, unchanged to September’s figure. Core CPI was finalized at 0.2% yoy. The highest contribution came from food, alcohol & tobacco (+0.38%), followed by services (+0.19%), non-energy industrial goods (-0.03%) and energy (-0.81%).
EU CPI was finalized at 0.3% yoy, also stable compared to September. The lowest annual rates were registered in Greece (-2.0%), Estonia (-1.7%) and Ireland (-1.5%). The highest annual rates were recorded in Poland (3.8%), Hungary (3.0%) and Czechia (2.9%). Compared with September, annual inflation fell in fifteen Member States, remained stable in two and rose in ten.
UK CPI accelerated to 0.7% yoy in October, up from 0.5% yoy, above expectation of 0.5% yoy. Core CPI also rose to 1.5% yoy, up from 1.3% yoy, beat expectation of 1.3% yoy. Largest contribution came from recreation and culture. RPI rose to 1.3% yoy, up from 1.1% yoy, matched expectations.
PPI input was at 0.0% mom, -1.3% yoy, versus expectation of 0.0% mom, -2.6% yoy. PPI output was at 0.0% mom, -1.4% yoy, versus expectation of 0.1% mom, -0.7% yoy. PPI output core was at -0.2% mom, 1.1% yoy, versus expectation of 0.1% mom, 0.4% yoy.
RBA Governor Philip Lowe said it’s “incredibly mutually advantageous” for Australia and China to keep the strong trading relationship in place. But he also emphasized “over time there is tremendous opportunities to broaden out our markets”.
“Australia is in a fantastic location on the globe,” he added. “We are close to the fastest growing region in the world, we have good relationships with Indonesia and India.”
Lowe also noted, “digitalization is not only helping Australians deal with the pandemic, but it will also boost productivity and can help drive future economic growth.”
BoJ Governor Haruhiko Kuroda, said “the economy likely hit bottom around April-June and is expected to continue improving as a trend. That will help price growth turn positive and gradually accelerate toward our 2% inflation target.”
“If inflation hits our 2% target and an exit from our massive stimulus program comes into sight, there will certainly be debate on how to end our ETF buying. But it’s premature to do so at this stage,” he added.
BoE Deputy Governor Dave Ramsden said in a speech that the news of coronavirus vaccine is “clearly encouraging”, even if there is still “some way to go” before delivery of vaccinations. He added that the central bank’s forecasts of recovery in Q1 2021 was already based on assumption of waning direct effect of the pandemic. Hence, vaccine development doesn’t immediately warrant an upward revision to forecasts.
Still, “assuming the recent positive developments do translate into delivery of vaccinations, then they could … bolster resilience and mitigate some of the risks of long-term scarring,”
Ramsden also reiterated that “negative rates remain in the toolbox” in the Q&A section. But, “they’re not something that we’re taking out of the toolbox and applying to the UK at present.”
Richmond Fed President Thomas Barkin also said the economy would face a “rough several months”. The “recent escalation in cases” of coronavirus infections “makes me believe we still have a long way to go”.
He a knowledged that the progress on vaccines are promising. However, “as best I can tell, a broad enough rollout to make us comfortable fully interacting in personal commerce again looks like sometime this summer at best”.
“That means a rough several months still but daylight on the horizon.”
Fed Chair Jerome Powell warned yesterday of the “significant” downside risk in the economy, “especially in the near term” due to resurgence of coronavirus infections. “The concern is that people will lose confidence in efforts to control the pandemic and they will pull back from activities that they think might put them at risk of infection,” he said. “And there are some signs of that already.”
While the ” vaccine news is certainly good news, particularly in the medium term,” Powell said. But “with the virus now spreading as at fast rate, the next few months may be very challenging,”
Fed is “strongly committed to using all out tools” to support the economy. “When the right time comes, and I don’t think that time is yet or very soon, we will put those tools away,” he said. “The recovery is incomplete.”
According to his spokesman, UK Prime Minister Boris Johnson reiterated at a cabinet meeting that his position on negotiation with EU hasn’t changed. That is, he wanted a deal but not at “the cost of our core principles around sovereignty and control over our laws, borders, money and our fish”.
“We are working hard to find solutions which fully respect UK sovereignty, but it is far from certain that an agreement will prove possible and time is now very short,” the spokesman added.
Atlanta Fed President Raphael Bostic told CNBC, “we have short-term and immediate-term concerns with the spike in the virus and what that is going to do in terms of businesses and the things that they are able to produce, in terms of consumers in terms of their willingness to go out and buy things”.
On the other hand, “the vaccine is definitely positive news and it will definitely lead to a pretty robust recovery once it gets into the population deep enough.”
As for next FOMC meeting on December 15-16, Bostic said, “we are going to be paying really close attention to the numbers moving forward to see whether this weakness in retail sales translates into something more deep.”
US retail sales rose 0.3% mom to USD 553.3B in October, below expectation of 0.5% mom. Ex-auto sales rose 0.2% mom, below expectation of 0.6% mom. Ex-gasoline sales rose 0.2% mom. Ex-auto, ex-gasoline sales rose 0.2% mom too.
European Commission Eric Mamer said in a press conference today, “what is clear is that we continue to negotiate intensively with our UK partners and we aim, obviously, to find a deal when the conditions will be there.” But he added, “we are not going to give a blow-by-blow account of what negotiators are working towards.”
Regarding the relations with US, Mamer said “It is still very, very early days and therefore at the moment … the EU is waiting for the new president-elect to take office before starting to comment on what this will imply when it comes to our relationship.”
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Fed Mester: Lack of fiscal package is very concerning
Cleveland Federal Reserve Bank President Loretta Mester said she’s seeing a slowdown from US economic data, after the stronger than expected rebound in Q3. She also emphasized that support is needed for both small businesses and households as coronavirus infections are on the rise.
“The fact that we don’t have a fiscal package is very concerning,” Mester said. “With the disparate impact of this pandemic that’s where fiscal policy plays a role because fiscal policy can be really targeted to the households and small businesses that really need the aid.”