MNI Global Morning Briefing

Thursday kicks off with the release of the UK's short-term monthly indicators at 0700GMT, followed by French industrial production at 0745GMT. At 1245GMT the ECB's interest rate decision will be closely watched, while in the US, the release of initial jobless claims at 1330GMT is the highlight of the day.

French industrial production to tick up slightly

French industrial output is expected to continue its recovery in October, albeit at a slower pace than in the previous month, as the second wave of infections weighs on business activity and demand. Monthly output is seen at 0.4% in October after growing by 1.4% in September. Production was still 5.1% lower than in February despite the recent increases. Survey data suggests a small dip going forward. The French manufacturing PMI dropped below the 50-mark in November with output falling for the first time in six months. Insee's business climate indicator ticked down marginally in November and remains well below the long-term average and the pre-crisis level.

UK monthly GDP expected to continue recovery

Monthly GDP is forecast to tick up marginally by 0.2% in October after rising by 1.1% in September. September's uptick was the fifth consecutive increase after the record fall in April. However, September GDP was still 8.2% below the levels seen in February. Looking ahead, November is likely to see another significant decline due to the second lockdown which hits the service sector particularly hard. Both industrial production and services are forecast to slow in October. Industrial production is seen at 0.3% after growing by 0.5% in the previous month. Markets look for the monthly index of services to increase by 0.3% after an 1.0% uptick in September. Survey evidence is in line with market expectations. The services PMI shifted back to contraction in November as companies noted a sharp decline in business activity due to tighter restrictions.

ECB expected to focus on PEPP and TLTROs

The European Central Bank is set to 'recalibrate' policy on Thursday, with all expectations that the main tools of focus for the Governing Council will be on the Pandemic Emergency Purchase Program (PEPP) and the Targeted Long-Term Repo Op (TLTROs). It is likely both the size and duration of the PEPP will be boosted, with the total envelope seen at EUR1.85 trillion or more - an increase of at least EUR500 billion. The TLTRO is likely to see changes to duration and possibly even the terms. Other tools could also be amended and used, depending on how the whole working package is seen coming together.

Alongside the policy decision, the ECB will publish its updated projections. Overall growth for 2020 is seen in line with the September numbers -- with GDP overperforming in Q3 but underperforming in Q4. Inflation expectations will remain well below target all through the projection period through 2023.

US jobless claims seen rising slightly

Initial jobless claims filed through December 5 should tick up slightly to 723,000 after slipping to 712,000 through November 28. Initial filings last week were up 506,000 from one year ago, according to the St. Louis Fed. Initial claims trended upward through most of last month, but likely overstate the number of actual filings, according to a Government Accountability report released this week. Economists continue to question how accurate the labor department report is as a bellwether of labor market improvement.

The main events to look out for on Thursday are the press conference following the ECB's interest rate decision and a speech by New York Fed's Nathaniel Wuerffel.