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G10 Macro Rates Market Analysis – Weekly Review – 23rd November 2020

Monday, November 23, 2020

With the Pacific G10 Macro Rates Team 
Another week, another Covid-19 vaccine to save humanity and the economy. This time it was Moderna with a 95% efficacy and a more practical storage temperature at fridge type levels rather than -80c for Pfizer’s offering. This however did not kick off the same positive market surge as the previous week’s news, as increasing numbers of COVID19 cases and further lockdowns in the US dampened growth expectations and caused rates to rally. Broad indices for stocks and currencies ended little changed on the week. Oil bucked the mood, rallying on continued optimism that future growth will increase demand.

With the official recognition of the president elect still dragging on, a spat broke out between the Treasury Secretary Mnuchin and the Federal Reserve. The former asking for the return of unused money on several of the government programs due to expire at year end and enacted in the aftermath of the March crisis. The news made more ripples in the newswires than in government bond markets, and in the end, the Fed agreed late Friday night on paying.

North America
US: Oct core retail sales disappointed at 0.2% (0.6% exp., 1.5% prev.) suggesting a consumer reaction to increasing Covid-19 infection rates.

Canada: The Oct unemployment rate for printed at 7.0% (7.1% exp., 6.9% prev.) and CPI Core held steady, with the Trim YoY measure printing 1.8% (1.8% exp., 1.8% prev.). Sep retail sales bounced with both the headline measure at 1.1% MoM (0.2% exp., 0.4% prev.) and Ex Auto measure at 1.0% MoM (0.0% exp., 0.5% prev.)

Eurozone: German Oct PPI managed to retain its positive slant at 0.1% (0.1% exp., 0.4% prev.) with the YoY measure at -0.7% (-0.8% exp., -1.0% prev.)

Sweden: No tier 1 data

Norway: Norwegian 3Q Mainland GDP came as expected 5.2% QoQ (5.2% exp., -6.3% prev.) echoing bounces in other economies. Swedish Oct Unemployment printed better at 8.6% (9.0% exp., 9.0% prev.)

3Q GDP was stronger at +5.0% QoQ (4.4% exp., -7.9% prev.), however Oct CPI emphasised the struggles the country still faces with the headline measure at -0.4% YoY (-0.4% exp., 0.0% prev.) and the core measure -0.2% YoY (-0.3% exp., 0.0% prev.)

Oct monthly CPI was slightly stronger at 0.0% (-0.1% exp., 0.4% prev.) with CPIH 0.9% YoY (0.7% exp., 0.7% prev.) and Oct CPI Core 1.5% YoY (1.3% exp., 1.3% prev.) Oct core retail sales were very strong 1.3% MoM (0.0% exp., 1.6% prev.) bringing the YoY measure to 7.8% (5.9% exp., 6.4% prev.

Australia: Oct employment was unambiguously strong at +178.8k (-27.5k exp., -29.5k prev.) and this was in the face of an increasing labour pool with the participation rate increasing significantly to 65.8% (64.8% exp., 64.8% prev.). This reflects the resurgence of Australian economy as Covid-19 restrictions started to be lifted in Victoria State.

New Zealand: No tier 1 data

For further information on the Pacific G10 Macro Rates team, their experience and strategy please see below 

Read the Strategy Information Sheet

IMPORTANT INFORMATION: Issued and approved by Pacific Capital Partners Limited, a limited company registered in England and Wales, authorised and regulated by the Financial Conduct Authority . The information contained herein is not approved for use by the public and is only intended for recipients who would be generally classified as investment professionals. Information or opinions contained in this article do not constitute an offer to sell or a solicitation, or offer to buy, any securities or financial instruments or investment advice or any advice or recommendation.

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