EXECUTIVE SUMMARY
- TRUMP PICKS ROBERT F. KENNEDY JR. AS HEALTH SECRETARY
- UK ECONOMY SLOWS IN Q3 ON SEPT DOWNTURN
- EC WINTER FORECASTS POINT TO STILL SUBDUED RECOVERY
- CHINA OCT RETAIL SALES SURGE ON HOLIDAY, TRADE-INS
Figure 1: UK GDP increased by 0.1% in Q3-2024, a tenth below expectations
Source: ONS
NEWS
US (WSJ): Trump Picks Robert F. Kennedy Jr. as Health Secretary
President-elect Donald Trump said he would nominate environmental lawyer and vaccine skeptic Robert F. Kennedy Jr. to serve as health and human services secretary, putting a noted critic of U.S. public policy atop the country’s vast health bureaucracy.
US (MNI): Gaetz, Hegseth & Gabbard Picks Could Spur Move to Recess Appointments
President-Elect Donald Trump's picks for the offices of Attorney General, Secretary of Defense, and Director of National Intelligence could spur action in the Senate to enable recess appointments given the controversial nature of each of the candidates. The controversial nature of the AG, Secretary of Defence, and NSI picks would usually raise the prospect of being rejected at their Senate hearings, even with a Republican-controlled chamber. With a 53-47 split in favour of the GOP, it would be easy to assume a simple passage. However, Senators Lisa Murkowski (R-AK) and Susan Collins (R-ME) are long-standing moderates who both would likely vote down these nominees.
EUROZONE (MNI): EC Winter Forecasts Point to Still Subdued Recovery
The European Commission sees a subdued recovery for the euro area according to projections in its autumn forecasts published Friday, with growth now seen modestly lower than previously expected in both 2024 and 2025, before picking up pace somewhat in 2026. Growth for the Euro Area is estimated at 0.8% this year, rising to 1.3% in 2025 (in line with ECB's September projection and 0.1pp lower than the EU's Spring projection) and 1.6% in 2026. The Commission said lower interest rates and rising real disposable incomes would help drive better growth rates into next year and 2026. Euro Area inflation is forecast to decline from 2.4% this year to 2.1% next year and then 1.9% in 2026. Core inflation is also seen slowing in 2025, but ending the year just above the ECB's current target.
GERMANY/CHINA (MNI): Xi & Scholz to Meet on G20 Sidelines
MNI (London) German gov't officials have confirmed that Chancellor Olaf Scholz will hold a bilateral meeting with Chinese President Xi Jinping on the sidelines of the G20 summit, taking place in Rio de Janeiro, Brazil next week. The gov't official says that in the 19 Nov meeting, the two leaders will discuss the war in Ukraine and 'economic issues'. Relations between China and the EU have been strained in recent weeks following the imposition of higher tariffs on Chinese-made electric vehicles entering the Union. However, Germany was one of the few nations that voted against the imposition of tariffs.
UK (BBG): UK Chancellor Gets Up to £10 Billion From Quiet BOE Change
It was announced as almost a footnote. But a change to the way the Bank of England’s bond portfolio is managed has freed up as much as £10 billion ($12.7 billion) for UK Chancellor Rachel Reeves in coming years, helping to keep a lid on borrowing. Reeves wrote to BOE Governor Andrew Bailey on Tuesday to agree that the cash buffer held to protect the central bank against unexpected losses on its holdings should be “slightly recalibrated and reduced.” It means the Treasury will transfer less money to the BOE as the reserve is allowed to run down.
CHINA (MNI): China Optimistic on Property Despite Investment Fall
MNI (Beijing) Authorities are optimistic about the future trend of the real-estate market, despite property investment falling 10.3% in October, after a package of measures to promote the sector proved effective, according to Fu Linghui, spokesperson for the National Bureau of Statistics on Friday. October’s data indicated an initial stabilisation of prices, Fu noted. However, authorities would focus on the sector's quality in future rather than quantitative increases, following a long period of rapid expansion, he added.
JAPAN (BBG): Japan’s Union Chief Says Real Wage Growth Needed Before BOJ Hike
Japanese workers need to see consistent gains in real wages for the Bank of Japan to continue raising interest rates and normalizing policy, according to the leader of one of Japan’s largest labor unions. “Without a rise in real wages, and the rise being solidified, the BOJ can’t hike rates,” said UA Zensen’s President Tomoko Nagashima, in an interview with Bloomberg on Thursday. While she was concerned about rate hikes’ immediate impact on smaller businesses with loans, she also pointed to the “abnormality” of having zero rates.
S.KOREA (BBG): South Korean Opposition Leader Found Guilty of Election Crime
A South Korean court on Friday convicted the country’s opposition leader of violating election laws, casting a shadow over the political prospects of a man who has been considered a top contender to be the nation’s next president. The Seoul Central District Court found Democratic Party leader Lee Jae-myung guilty of making false claims in 2021 while campaigning for the presidency and handed down a year-long jail term, suspended for two years.
DATA
UK DATA (MNI): Activity Data a Bit Softer Than Expected
- UK Q3 PRELIM GDP 0.1% Q/Q, 1% Y/Y
- UK SEP SERVICES INDEX +0% M/M, +0.1% 3MM
- UK SEP MANUF OUTPUT -1% M/M, -0.7% Y/Y
- UK SEP IND PROD -0.5% M/M, -1.8% Y/Y
- UK SEP VISIBLE TRADE BALANCE GBP -16.32BN
At first glance: Q/Q GDP a tenth lower than expected. Looks like its driven by the weakness in the September print here - which is -0.1%M/M, 3 tenths below the expected +0.2%M/M (the survey had seen downside risks but only to a +0.1%M/M print). Services were flat (exp +0.2%M/M), IP fell 0.5%M/M (exp +0.1%) - within IP manufacturing production fell 1.0%M/M (exp -0.1%, from a revised 1.3%M/M in Aug (previously reported at 1.1%). Construction broadly in line with the revisions. The biggest contribution to the downside miss in services saw the "information and communication" component, on which the ONS says: "The largest negative contribution in September 2024 came from information and communication, which fell by 2.0%, falling back after growth earlier in the year but remaining 1.2% above its level a year ago."
FRANCE DATA (MNI): French CPI Inflation Momentum Eases in October
- FRANCE OCT HICP +0.3% M/M, +1.6% Y/Y
- FRANCE OCT CPI +0.3% M/M, +1.2% Y/Y
French final October HICP inflation was revised a tenth higher on a rounded basis to 1.6% Y/Y (vs 1.5% flash). On an unrounded basis, HICP inflation was 1.59% vs 1.54% prior. CPI inflation confirmed flash estimates at 1.2.% Y/Y. Core CPI was steady at 1.4% Y/Y, with services seeing a one tenth upward revision to 2.3% Y/Y (vs 2.4% in September) and core goods being confirmed at -0.2% Y/Y (vs -0.3% in September. Looking ahead, the EC's expected services prices (over the next 3 months) series bounced up to 6.5 in October (vs 2.7 prior), but this comes after a steady downward trend through 2024.
CHINA DATA (MNI): China Oct Retail Sales Surge on Holiday, Trade-Ins
- CHINA OCT RETAIL SALES +4.8% Y/Y VS MEDIAN +3.8% Y/Y
- CHINA OCT INDUSTRIAL OUTPUT +5.3% Y/Y VS MEDIAN +5.5% Y/Y
- CHINA OCT UNEMPLOYMENT RATE +5.0% VS SEP +5.1%
China's consumption rebounded more than expected in October, driven by a week-long National Day holiday and the ongoing consumer trade-in programme, though production and investment performance were mediocre, data released by the National Bureau of Statistics on Friday showed. Retail sales rose 4.8% y/y in October to hit an eight-month high, surging from September's 3.2% gain and beating the 3.8% forecast. Retail sales grew 3.5% y/y in Jan-Oct, higher than the 3.3% in Jan-Sep. Industrial production increased 5.3% y/y in October, edging down from September's 5.4% growth and missing the expected 5.5%. Industrial output grew 5.8% in Jan-Oct, unchanged from the previous read.
JAPAN DATA (MNI): Japan Q3 GDP Posts 2nd Straight Rise
- JAPAN Q3 REAL GDP +0.2% Q/Q; MNI MEDIAN +0.2%
- JAPAN Q3 REAL GDP +0.9% ANNUALIZED; MNI MEDIAN +0.8%
- JAPAN Q3 CAPEX -0.2% Q/Q; -0.0 PP CONTRIBUTION
- JAPAN Q3 CONSUMPTION 0.9% Q/Q; +0.5 PP CONTRIBUTION
Japan's economy grew for the second straight quarter over Q3, up 0.2% q/q, or an or an annualised 0.9%, but slowed from Q2's revised 0.5% q/q gain following weaker capital investment and net exports, preliminary GDP data released by the Cabinet Office showed on Friday. The Q3 result was largely in line with the MNI median forecast that pointed to a rise of 0.2% q/q, or an annualised +0.8%. Private consumption, which accounts for about 60% of Japan's GDP, rose 0.9% q/q in Q3 for the second straight rise after Q2's revised 0.7% rise. Business investment fell 0.2% q/q, the first drop in two quarters following a revised Q2 0.9% rise.
RATINGS: Ireland, Portugal & UK All Up for Review After Hours
Sovereign rating reviews of note schedule for after hours on Friday this week include
- Fitch on Ireland (current rating: AA; Outlook Stable) and Latvia (current rating: A-; Outlook Positive)
- Moody’s on Portugal (current rating A3; Outlook Stable)
- S&P on Ireland (current rating: AA; Outlook Stable) & South Africa (current rating: BB-; Outlook Stable)
- Morningstar DBRS on the UK (current rating: AA, Stable Trend)
FOREX: USD/JPY Fades Off Highs as Global Equity Pullback Persists
- Currency markets are trading on a more stable footing early Friday, with the pullback in US equity markets into the Thursday close and the extension this morning underpinning a recovery for the JPY. The moves stem from Powell's relatively hawkish appearance in Dallas yesterday, at which he noted the US economy's persistent strength - lessening the expectations of further rate hikes through 2025.
- As a result, USD/JPY has faded back below the Y156.00 handle, reversing the USD-led rally into the close. While the pair is weaker, the overriding uptrend triggered by the Presidential election remains intact, and a buy-on-dips strategy would target the cycle highs at 156.75 as well as the 76.4% retracement for the downleg posted off the July high.
- Monthly UK GDP data came in softer against expectations, and while GBP is again weaker, pullbacks are limited at these levels and the prospect of a December BoE rate cut remains unlikely - OIS markets priced ~4bps of cuts into year-end, leaving the February or March meetings as the next likely easing move. EUR/GBP touched a new weekly high this morning at 0.8350, with the 50-dma sitting just above as next resistance at 0.8362.
- Focus for the session ahead rests on US retail sales and import/export price indices data, as well as the October industrial production release. Central bank speakers include Fed's Goolsbee, Collins, Williams and Barkin, while ECB's Panetta, Lane and Cipollone are set to speak.
EGBS: Bund Futures Recover From Overnight Lows
Bund futures are +20 ticks at 132.34, having fully recovered from yesterday evening’s light sell-off (which was driven by cautious comments from Fed Chair Powell).
- The uptick in US Treasuries has set the tone for core FI this morning, though Bund futures appeared to find some support from a report that the German Finance Minister will not submit a so-called adjustment proposal for the 2025 federal budget to the Bundestag's budget committee.
- The German cash curve has lightly bull flattened, with 30-year yields ~1.5bps lower today. There has been a modest ASW tightening, keeping spreads around cycle/all-time lows.
- The EC’s Autumn projections for GDP growth and headline inflation were broadly consistent with the ECB’s latest forecasts, with lower interest rates and rising real disposable incomes helping to support a recovery in consumption from next year.
- 10-year peripheral spreads to Bunds are biased a little tighter, with European equities off session lows.
- French final October HICP inflation saw a one tenth upward revision to 1.6% Y/Y, while the Italian reading confirmed flash estimates of 1.0% Y/Y.
- ECB's Panetta, Lane and Cipollone are scheduled to speak later today, with broader focus on this afternoon's US retail sales, import/export prices and industrial production data.
GILTS: Off Lows Alongside Peers, Existing November Ranges Intact
Spill over from swings in wider core global FI dominate thus far, with early weakness reversed as the impact of Fed Chair Powell’s late Thursday comments fades.
- Futures last +16 at 93.76, with the rally running out of steam just ahead of 94.00. Session range 93.51-93.98.
- Zooming out, the contract remains comfortably within its November range.
- Bearish technicals remain intact, initial support and resistance levels of note located at 92.53 and 94.73, respectively.
- Yields flat across the curve.
- GDP data was a little softer than expected but didn’t have much tangible impact.
- BoE-dated OIS shows 2bp of cuts for next month, 26bp of easing through March, 44bp of cuts through June and 64bp of cuts through December ’25, comfortably within recent ranges.
- SONIA futures -1.5 to +4.0, strip flattens.
- Goldman Sachs have updated their BoE forecast to 25bp cuts/quarter to a terminal 3.25% in Q226. They note that "risks around our baseline forecast run into both directions." This call change puts them more in line with the median analyst view, after they previously sat at the dovish end of the spectrum.
- Little of note on the UK calendar ahead of the weekend, with next Wednesday’s CPI data set to provide the next key input for markets and BoE policymaking.
BoE Meeting | SONIA BoE-Dated OIS (%) | Current Effective SONIA Rate (bp) |
|---|---|---|
Dec-24 | 4.678 | -2.2 |
Feb-25 | 4.509 | -19.1 |
Mar-25 | 4.447 | -25.3 |
May-25 | 4.304 | -39.6 |
Jun-25 | 4.256 | -44.4 |
Aug-25 | 4.177 | -52.3 |
Sep-25 | 4.142 | -55.8 |
Nov-25 | 4.088 | -61.2 |
Dec-25 | 4.065 | -63.5 |
EQUITIES: Bearish Theme in Eurostoxx 50 Futures Intact Despite Thursday’s Gains
Despite Thursday’s gains, a bearish condition in Eurostoxx 50 futures remains intact. The move lower this week marks a resumption of the downtrend that started Sep 30. Price has breached 4746.94, 61.8% of the Aug 5 - Sep 30 bull cycle. This exposes 4662.12, the 76.4% retracement point. Initial firm resistance has been defined at 4961.00, Nov 6 high, where a break would highlight a reversal. For now, gains are considered corrective. The trend condition in S&P E-Minis remains bullish and the latest pullback is - for now - considered corrective. A key short-term support has been defined at 5724.25, the Nov 4 low. Initial supports to watch are 5911.09 and 5823.84, the 20- and 50-day EMA points respectively. Recent gains resulted in a breach of the bull trigger at 5927.25, Oct 17 high, confirming a resumption of the primary uptrend. Sights are on 6070.16, a Fibonacci projection.
- Japan's NIKKEI closed higher by 107.21 pts or +0.28% at 38642.91 and the TOPIX ended 10.42 pts higher or +0.39% at 2711.64.
- Elsewhere, in China the SHANGHAI closed lower by 49.113 pts or -1.45% at 3330.726 and the HANG SENG ended 9.47 pts lower or -0.05% at 19426.34.
- Across Europe, Germany's DAX trades lower by 33.11 pts or -0.17% at 19230.1, FTSE 100 lower by 3.82 pts or -0.05% at 8067.32, CAC 40 down 8.42 pts or -0.12% at 7303.38 and Euro Stoxx 50 down 16.85 pts or -0.35% at 4816.68.
- Dow Jones mini down 182 pts or -0.41% at 43720, S&P 500 mini down 35.75 pts or -0.6% at 5942.25, NASDAQ mini down 179 pts or -0.85% at 20832.75.
Time: 09:50 GMT
COMMODITIES: Latest Pullback in Gold Appears to Be a Correction
A bearish theme in WTI futures remains intact and the move lower from the Nov 7 high has reinforced current conditions. The move down exposes $65.99, the Oct 1 low, and $64.16, the Sep 10 low and key support. For bulls, a clear reversal to the upside would instead refocus attention on the key short-term resistance at $77.70, the Oct 8 high. Clearance of this level would resume the recent uptrend. Initial firm resistance is $72.88, the Nov 7 high. The long-term trend condition in Gold is unchanged, it remains bullish and the latest pullback appears to be a correction. However, the latest move down has resulted in a breach of the 20- and 50-day EMAs, and the metal is trading at its recent lows. The breach of the EMAs signals scope for a deeper retracement and sights are on $2511.1 next, the Sep 18 low. Firm resistance is seen at $2667.6, the 20-day EMA.
- WTI Crude down $0.87 or -1.27% at $67.85
- Natural Gas down $0.07 or -2.55% at $2.713
- Gold spot up $1.76 or +0.07% at $2566.49
- Copper up $2.35 or +0.57% at $416.45
- Silver down $0.08 or -0.26% at $30.3595
- Platinum up $9.81 or +1.04% at $949.96
Time: 09:50 GMT
| Date | GMT/Local | Impact | Country | Event |
| 15/11/2024 | 1330/0830 | ** |  US | Import/Export Price Index |
| 15/11/2024 | 1330/0830 | ** |  CA | Monthly Survey of Manufacturing |
| 15/11/2024 | 1330/0830 | ** | CA | Wholesale Trade |
| 15/11/2024 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 15/11/2024 | 1330/0830 | *** | US | Retail Sales |
| 15/11/2024 | 1330/0830 | ** | US | Empire State Manufacturing Survey |
| 15/11/2024 | 1400/0900 | * | CA | CREA Existing Home Sales |
| 15/11/2024 | 1400/0900 | US | Boston Fed's Susan Collins | |
| 15/11/2024 | 1415/0915 | *** | US | Industrial Production |
| 15/11/2024 | 1500/1000 | * | US | Business Inventories |
| 15/11/2024 | 1500/1600 |  EU | ECB's Lane at seminar on Fragmenting Trading System | |
| 15/11/2024 | 1515/1615 | EU | ECB's Cipollone in discussion on productivity | |
| 16/11/2024 | 1115/1215 | EU | ECB's De Guindos at Trilateral Commission meeting | |
| 16/11/2024 | 1300/1400 | EU | ECB's Schnabel speech at Chicago Booth Conference | |
| 16/11/2024 | 1655/1155 | US | Boston Fed's Susan Collins | |
| 18/11/2024 | 2350/0850 | * |  JP | Machinery orders |