The Daily Update - The week ahead

This week is a Thanksgiving holiday-shortened week in the US. Today we will see further Brexit discussions as EU foreign and European ministers meet; according to sources, PM May could look to get cabinet approval to double the ‘divorce settlement’, originally touted at EUR20bn. The new location for the European Banking Authority and European Medicines Agency will also be decided today. On Tuesday we will hear from Fed Chair Janet Yellen “In Conversation with Mervyn King” in New York, and the Chicago Fed National Activity Index could be of interest. Wednesday’s key event will be the UK’s Budget Statement; growth forecasts will grab market attention with Brexit concerns looming. Later we’ll get the FOMC minutes for the 2nd November meeting, we expect little change in rhetoric; a December hike is still pencilled in. Mr Putin is to host discussions on Syria at a summit in Sochi; Turkish and Iranian presidents are due to attend. The preliminary reading for US durable goods orders in October may garner some attention, with market expectations at only 0.3% (vs 2% previously).

US bond and equity markets will be closed on Thursday for Thanksgiving; according to the American Farm Bureau Federation estimates that 46 million turkeys will be consumed and the average cost of feeding a group of 10 has fallen to the lowest level since 2013. In terms of data, we’ll see a number of PMI readings across Europe, and Germany’s Q3’17 GDP print, and the UK’s second reading. Also on Thursday, we’ll see the release of the ECB minutes. OPEC’s Economic Commission Board will gather in Vienna ahead of Nov, 30 meeting; expectations are for the continued enforcement of supply cuts into mid-2019. Black Friday will kick-off with Japan’s manufacturing PMI for November and the German IFO print. This will be followed by US Markit PMIs. The fate of South Africa’s long-term rating hangs in the balance, as Moody’s and S&P publish their reviews on Friday. South Africa is rated BB+ by both S&P and Fitch, and Baa3 by Moody’s so a one-notch downgrade by the latter could see the country’s long-term rating junked. As further delays are expected on the US tax front, Senate is now expected to vote on its version next week; this may see a continuation of the softer market sentiment tone this week. Also, through the week, news on the formation of a German coalition (and a possible fresh election) will grab market attention as will the unfolding events in Zimbabwe; where Mugabe could face impeachment.