Macro Events & News
FX News Today
ECB’s Mersch: No indication yet of economic pessimism after Paris. The Executive Board member said in a speech in Frankfurt that “we should shy away from drawing premature conclusions about whether the terror attacks will have any economic impact”, adding that “we have no indication of any economic pessimism as a result of the Paris attacks, let alone weaker hard data”. He warned that “doom-and-gloom talk is not warranted at this stage”. Clearly, with the attacks less than a week away, we don’t have any data yet that fully reflects the impact of the events and Mersch is right, it is too early to draw conclusions, even if markets seemed to stabilise relatively quickly. The fact that Bund futures dropped on the comments highlights though just how sensitive markets are to central bank remarks ahead of the December council meeting.
Asian stock markets are narrowly mixed, with Chinese equities under pressure for a second day, after President Xi Jinping said the economy is facing “considerable downward pressure”. Japanese markets struggled to make headway as the Yen advanced. GBP is under pressure and the EUR is little changed against USD. Oil prices meanwhile are slightly higher.
US NAHB home builder sentiment index fell 3 points to 62 in November, from an upwardly revised 65 in October (was 64). It’s the first decline since May, but it’s from a post-recession high, with the 65 level the best since 2005. The current single family sales index dipped to 67 from 70. The future sales index dropped to 70 from 75. But the index of prospective buyers traffic rose to 48 from 47. Homebuilders continue to cite low inventories as problematic, while the stronger labor market and expanding economy are beneficial.
US industrial production slid 0.2% in October. Capacity fell to 77.5%. Those missed expectations. The 0.2% September decline in production was not revised, though August was nudged up to 0.1% from -0.1% previously. September capacity utilization was revised to 77.7% from 77.5%. Manufacturing improved last month, rising 0.4% after declines in June, August, and September. Motor vehicle/parts production picked up, rising 0.7%. Excluding vehicles/parts, manufacturing was up 0.4%. Machinery production increased 0.3%. Computer, electronics production was up 0.1%. Utilities slumped 2.5%, however, with Mining down 1.5%.
The 0.2% October U.S. CPI headline and core price gains both beat estimates, with little in the way of rounding errors from respective gains of 0.200% and 0.202%. We saw the expected small 0.3% energy price rise with a 0.2% food price gain, but medical care prices surged 0.8% alongside a firm 0.4% tobacco price rise.
Main Macro Events Today
US Housing Starts: October housing starts are out today and should reveal a 2.2% decline to a 1,180k (median 1,160k) headline from 1,206k in September.
US Building Permits: We expect permits to rise to 1,150k from 1,105k and completitions to edge up to 1,030k from 1,028k in September.
FOMC Minutes: markets focus on the Fed minutes to find out clues on whether the Fed is still likely to raise rates in December and what might be the rate hike path in 2016.