What to watch

It is a fairly light day for economic data with focus on the Bank of Canada meeting as well as any Covid-19 related restrictions, particularly in the UK and Eurozone.

• The Bank of Canada meeting will not see any new policy measures today with forward guidance largely expected to be unchanged. However, there will be focus on how the BoC balances talk of a strong labour market against the risks of Omicron over the winter. See the MNI BoC Preview here.
• There will be focus on short sterling and gilts on the open. There is increasing talk of Plan B being introduced to combat the spread of the Omicron variant. This would entail bringing back recommendations to work from home if possible and make mask wearing compulsory in more places (not just medical/retail/transport). The more controversial discussion is whether Covid passports will be introduced and if so how widespread these are. The overall economic impact would largely be through consumer confidence with retailers and the hospitality sector having hoped for strong trade through November and December. Markets are not pricing too much probability of a December hike now, but the short sterling strip is likely to see a small bid (in contrast the Eurodollar strip was largely flat overnight).
• We also note the MNI story that was published yesterday, in which former Fed staffers told MNI that "transitory" could be replaced with something like prices are "expected to eventually recede". This would elongate the period of elevated inflation, but still not concede that there are too many concerns regarding a more permanent inflationary issue. See the full story here.