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  • MON: OPEC OMR, Canadian Remembrance Day (Observed).
  • TUE: IEA OMR; UK Average Earnings/Unemployment
    (Oct/Sep), EZ Employment (Q3), German ZEW (Nov), US NFIB (Oct), CPI (Oct),
    Japanese GDP (Q3).
  • WED: Chinese Retail Sales/Industrial Output (Oct), UK
    CPI (Oct), EZ Trade Balance (Sep), US PPI Final Demand (Oct), Retail Sales
    (Oct), Japanese Trade Balance (Oct).
  • THU: CBRT FSR (Oct); Australian Employment (Oct),
    Chinese House Prices (Oct), US IJC (6 Nov w/e), Export/Import Prices (Oct).
  • FRI: US Government shutdown deadline.

UK Labour Market Data (Tue):

Expectations are for the unemployment rate in the 3-month
period to September to rise to 4.3% from 4.2%, the employment change to
contract 198k, headline earnings growth of 8.3% in the 3M/YY period in
September vs. prev. 8.1%, and with the ex-bonus print seen holding steady at
7.8%. Note, the data published will be based on experimental statistics given
the declining response rate to the Labour Force Survey. For the upcoming
release, Pantheon Macroeconomics notes that “on balance, survey indicators suggest
payroll employee numbers merely held steady in October”. The consultancy adds
that “Labour market slack likely will continue to increase if employment
flatlines, as growth in the workforce will remain supported by immigration”. On
the earnings front, PM observes “Month-to-month growth in average weekly wages
likely slowed in September, despite public-sector pay deals”. From a policy
perspective, given that the MPC has refrained from hiking rates for two
meetings and the lack of reliability of the data, the release will likely pass
with little in the way of fanfare. It’s also worth noting that at the November
MPR, the MPC revised higher its medium-term equilibrium rate of unemployment to
4.5% from 4.25%.

Japanese GDP (Tue):

Japan’s Q3 Prelim GDP is likely to show the first
contraction in four quarters, according to a poll conducted by Reuters, with
the Q/Q print seen at -0.1% (prev. 1.2%), whilst the annualised figure is
expected at -0.6% (prev. +4.8%). “This is largely due to a technical payback
from the solid gain in the second quarter”, say ING. In terms of the other
components of the release, Private Consumption is expected at +0.2% (prev.
-0.6%), Capital Expenditures at +0.3% (prev. -1.0%), and External Demand at
-0.1% (prev. +1.8%). The desk at Dai-ichi Life Research suggested that “the
recovery in consumption will likely remain moderate due to the pain from rising
inflation.” From a central bank perspective, BoJ governor Ueda has suggested
that the economy is recovering moderately and this is likely to continue, but
the Bank will patiently maintain easing to support economic activity.

US CPI: (Tue):

Core CPI is expected to rise 0.3% M/M in October, matching
the rate seen in September, while the annual rate of core inflation is also
seen unchanged, at 4.1% Y/Y. The October data is likely to have been driven by
stable energy prices and possible declines in vehicle prices, as high borrowing
costs reduce consumer demand. The incoming inflation data will form a key part
of how the Fed proceeds with policy; Chair Powell this week endorsed a cautious
approach to policy. He said officials were committed to achieving a stance of
monetary policy that is sufficiently restrictive to bring inflation down to 2%
over time, and the FOMC is not yet confident that it has achieved such a
stance, adding that if officials feel that it is appropriate to tighten policy
further, they would not hesitate to do so, noting that ongoing progress toward
target was not assured, and inflation readings have recently given “a few head
fakes.” Powell said the Fed would continue to “move carefully” on policy so
that it can “address both the risk of being misled by a few good months of
data, and the risk of overtightening.” Ahead, analysts at ING forecast a
slowdown in inflation, with the headline rate of CPI easing to 3.3% by
December, and possibly hitting a range of 2.0-2.5% by April 2024; core CPI is
likely to test 2.0% in Q2. ING argues that this outlook means that the Fed will
not need to raise interest rates any further. “Sharper declines are likely in
the first half of 2024,” ING writes, “Powell acknowledged that ‘given the fast
pace of the tightening, there may still be meaningful tightening in the
pipeline’ – this will only intensify the disinflationary pressures that are
building in an economy that is showing signs of cooling.” ING adds that “with
growth concerns likely to increase, this should give the Fed the flexibility to
respond with interest rate cuts,” which it would not describe as stimulus, but
instead a move to bring monetary policy to a more neutral footing.

Chinese Activity Data (Wed):

October Retail Sales are forecast at 7.0% Y/Y (prev. 5.5%),
Industrial Output at 4.5% Y/Y (prev. 4.5%) and Urban Investments at 3.1% Y/Y
(prev. 3.1%). The data will be used to gauge China’s recovery, which the latest
inflation numbers painted as fragile. The PBoC’s policy adviser was on the
wires on Friday and suggested China can achieve slightly above 5% GDP growth
this year, but exports are still expected to face relatively big pressure next
year, and weak external demand and inadequate domestic demand increase
overcapacity pressure. Analysts at ING see Industrial output slowing to 4.3%
“due to base effects, and the official manufacturing PMI also hinted at a
contraction in manufacturing activity, contributing to the slowdown.”, whilst
Retail Sales are expected to be boosted by the first post-pandemic “Golden
Week” holiday. ING posits “China is unlikely to cut the MLF rates as the yuan
is still facing downward pressure amid expectations of “higher for longer” US
rates.”

Biden-Xi Meeting at the APEC Forum (Wed):

US President Biden and China’s President Xi will hold talks
on the sidelines of the APEC forum in San Francisco, which will be only the
second in-person meeting between the two. No big breakthroughs are expected
from the talks. Instead, analysts will be looking for incremental signs of
improvements in relations. An official has said Biden will discuss Ukraine,
Israel, human rights, Taiwanese elections, South China Sea, North Korea and
fair economic relations when the two meet on November 15th. The official added
that Biden might raise Chinese election influence operations, Fentanyl, AI and
US detainees in China. The US also plans to take necessary steps to restore
military communication with China and will press the issue
“assertively” with Xi, and underscore a desire for China to tell Iran
to not escalate the crisis in the Middle East. Geopolitical analysts at RANE
said that the talks will help to restart working-level dialogues on issues like
trade disputes, but will fail to address the root cause of escalating US-China
tensions and augur little progress on key policy disputes, including climate
change mitigation.

UK CPI (Wed):

Expectations are for headline Y/Y CPI to fall to 4.9% from
6.7%, with the core Y/Y rate seen declining to 5.8% from 6.1%. The prior report
saw the headline Y/Y rate unexpectedly hold steady at 6.7% with the all
services reading ticking higher to 6.9% from 6.8% due to increases in the
volatile package holidays category, as observed by ING who also noted that the
6.9% figure was below the MPC forecast of 7%. This time around, analysts at
Investec note that there will” almost certainly be a sharp decline in October’s
headline rate”, albeit this is more due to base effects. This will mostly be
expressed via utility prices given that in October 2022 gas and electricity
prices rose by 36.9% and 16.9% respectively, thanks to the surge in wholesale
energy costs as highlighted by Investec with the desk also touting recent
anecdotal evidence of a moderation in food price inflation. From a policy
perspective, given that the MPC has kept rates unchanged for two consecutive
meetings, the release will likely have little bearing on the immediate policy
horizon. However, a dovish release could bring forward expectations for 2024
rate cuts. Note, the release may be framed in the context of the performance of
the all-services inflation print which the MPC expects to hold steady at 6.9%.

US Retail Sales (Wed):

Headline retail sales are seen slipping in October, with the
consensus looking for -0.1% M/M (prev. +0.7%). Bank of America’s October credit
and debit card spending data showed a decline of 0.2% M/M in October (vs prev.
+0.2% M/M in September), taking the annual rate to -0.5% Y/Y (vs +0.7% in
September). The bank said that in contrast to the trends seen in the summer,
there is no longer a convergence of services and retail spending. “This month,
we saw a meaningful convergence between lower- and higher-income households’
spending growth, which could be partly explained by the rebound in wage growth
for the latter,” it writes, noting that rising mortgage payments have started
to disproportionately weigh on some higher-income households. “This has led to
slower spending for homeowners relative to high-income renters, and if rent
inflation softens further, renter spending outperformance could play out in
middle- and lower-income families too.” BofA adds that despite a jump in
households resuming student loan repayments, it is still seeing little signs of
a negative impact on spending, and says that household balance sheets still
remain in robust shape.

Australian Jobs (Thu):

October employment is expected
at 18k (prev. 6.7k), while the Unemployment Rate is seen ticking higher to 3.7%
(prev. 3.6%) and Participation is expected to remain at 66.7%. In the RBA’s
latest SoMP, the Bank downgraded its unemployment rate forecast across the
horizon period, while for Dec, the forecast was lowered to 3.75% from 4.00%.
“Conditions in the labour market have gradually eased across a range of
measures, but they remain tight. Employment growth has slowed from its strong
pace late last year and it is now roughly keeping pace with growth in the
working-age population. Firms have been adjusting the hours worked by staff in
response to easing demand growth in the economy. This has seen the
underemployment rate pick up a little more than the unemployment rate recently,
but both remain low by historical standards. Recent strong population growth
has added to the supply of labour while also adding to aggregate demand”, said
the RBA in the release.

UK Retail Sales (Fri):

In terms of recent indicators,
October’s BRC retail sales metric rose 2.6% Y/Y with the accompanying release
noting “retail sales growth slowed as high mortgage and rental costs further
shook consumer confidence. Many households are also delaying their Christmas
spending in the hopes they can grab a bargain in the upcoming Black Friday
sales”. Elsewhere, the Barclaycard Consumer Spending report observed “Overall
Retail spending grew 1.2% in October 2023 compared to this time last year, the
lowest year-on-year growth since December 2022. This comes as the unseasonably
warm October weather meant that consumers held back on making seasonal
purchases such as winter coats and jumpers, resulting in spend at Clothing
retailers falling for the fourth consecutive month, at -3.0% in October 2023”.

US Government Shutdown (Fri):

The US government is set to face another shutdown deadline
on Friday November 17th, giving the GOP majority House and Democratic majority
Senate a week to agree on a stopgap measure to keep the government open.
Reuters notes that the House could vote on a plan on Tuesday, however the House
is struggling to agree on a detailed spending plan for the FY ending September
30th 2024. Similar to the prior debacle, some Republicans are calling for any
measure to include spending cuts and measures that the Democrats would likely
reject. The House has passed seven appropriation bills but the remaining five
are facing headwinds. Meanwhile, the Senate has passed three bills with strong
bipartisan support and could also start moving forward on a measure shortly.
Punchbowl added that providing Schumer files cloture on the short-term CR, it
will set up an initial procedural vote for early next week. The Senate CR is
likely to see the government funded for another month to mid December,
something that will anger House Republicans.

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