The Market Call

The Market Call gives a periodic summary of major macro events, market themes and selected UK company-specific news.

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December 11, 2023

Central banks look to reassert control in a busy week for macro data

December 11, 2023

Central banks look to reassert control in a busy week for macro data


Macro & Overnight

It is a big week for macroeconomic data. While the US soft landing narrative remains intact, the world economy is walking a fine line between deflationary recession and re-emergent inflation. How the world’s governments finance their growing debt burdens in this sensitive environment adds further complications. But investors will, this week, get some important new data points to fix our position on this delicate path.

Top billing goes to interest rate decisions from the US Federal Reserve on Wednesday, followed by the Bank of England and the ECB on Thursday.

All three central banks will leave rates unchanged and take the opportunity to remind investors that rates can still rise or at least stay high for longer.

Such will be the similarity of the central bank messaging, it might appear co-ordinated. But the extent to which bond markets respond to central banks messaging will be critical.

Last Friday’s strong US jobs data marginally lessened investors’ animal spirits. Central bankers will feel they must do more to contain the markets’ bullish mood and regain control of the inflation narrative.

Today, we get November’s US consumer price inflation data, showing little change and making the journey to 2% seem more difficult.

On Wednesday, we get US producer price inflation, which will be scrutinised for signs of re-emerging inflationary pressures into 2024.

Similarly, investors will note US retail sales data on Thursday and China’s industrial production data on Friday for recessionary or deflationary signals.

In the UK, we get October unemployment data tomorrow and GDP data on Wednesday.

Oil prices and the Dollar are firming up, and bond yields have risen in Asian trading overnight. With gold and bitcoin prices falling, the indications are that the liquidity-fuelled pre-Christmas rally is at least pausing for breath.

It’s a typically quiet Monday with little UK company news.

Prognosticator 

 

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Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close.