Market movers ahead
- We expect the Fed to deliver another 25bp cut next week despite the internal disagreement within the FOMC. Economists are divided evenly on whether the Fed will cut but markets have fully priced in a cut.
- We expect the Bank of Japan to remain on hold, although investors are pricing some 50% probability of a rate cut.
- In the US, we expect a weak jobs report on Friday, with an increase of just 50,000.
- Preliminary Q3 GDP data for both the euro area and US are due out.
- In China, we are looking forward to getting both Caixin and official PMI manufacturing for October, which diverged in September.
- The UK is supposed to leave the EU on 31 October but we expect another extension.
Weekly wrap-up
- On the Brexit deadlock, we see two ways forward: Either Prime Minister Boris Johnson’s deal will pass eventually, or we are heading for a general election on 12 December. We are leaning towards the latter.
- October PMIs still painted a lacklustre picture of the global cycle at the start of Q4.
- Central bank action – or rather inaction – took centre stage later in the week. Mario Draghi’s last ECB meeting brought little in terms of new policy signals.
- Norges Bank did not send any new policy signals either and held on to a rate path that anticipates no moves in the coming period. We still expect a rate hike in March 2020.
- The Riksbank reconfirmed its intention to hike policy rates back to zero in December, despite the weak cyclical position of the Swedish economy and a growing divergence from other global central banks.
