With the Pacific G10 Macro Rates Team
Last week was all about the US election, the market and indeed the world was transfixed on vote counts and electoral college seats.
In the end the “Blue wave” did not prevail, but Joe Biden looks a comfortable winner as president elect. This dampened expectation of a considerable fiscal increase combined with easy monetary policy, and thus growth trajectories were lowered and the 5-30 usd swap curve flattened 6.4 bp over the week. Positive China PMI’s early in the week helped global outlook, meanwhile CV-19 cases are still increasing at an alarming rate in many G10 countries.
US: The FOMC left its target rate unchanged at 0.00% to 0.25%. The ISM report was positive across all sectors with Manufacturing 59.3 (56 exp., 55.4 prev.), New Orders 67.9 (62 exp., 60.2 prev.), Prices Paid 65.5 (61.5 exp., 62.8 prev.) and Employment 53.2 (49.6 prev.) All employment related data was positive with the Nonfarm Payrolls report printing at 638k (580k exp., 661k prev.), Private Payrolls at 906k (680k exp., 877k prev.) and the Unemployment Rate 6.9% (7.6% exp., 7.9% prev.) the participation Rate increased 61.7% (61.5% exp., 61.4% prev.) and average hourly earnings were +0.1% MoM (0.2% exp., 0.1% prev.)
Canada: Oct jobs data was positive with the unemployment rate dropping to 8.9% (9.0% exp., 9.0% prev.) and the participation rate at 65.2% (65.0% exp., 65.0% prev.). Only the manufacturing PMI disappointed by dropping a little at 55.5 (56 prev.)
Eurozone: Retail sales dropped to -2.0% MoM (-1.5% exp., 4.4% prev.). French data showed private payrolls positive at +1.8% QoQ (0.2% exp., -0.8% prev.). German data disappointed with Industrial Production 1.6% MoM (2.5% exp., -0.2% prev.) Finally, Italian PMIs were mixed with Manufacturing at 53.8 (53.7 exp., 53.2 prev.), Services at 46.7 (47 exp., 48.8 prev.) and the Composite at 49.2 (49.2 exp., 50.4 prev.) Retail sales were weaker at -0.8% (-1.5% exp., 8.2% prev.)
Sweden: Swedish PMIs were strong with Manufacturing at 58.2 (55.3 prev.), Services at 55 (54.7 prev.) and the Composite at 55.9 (54.9 prev.). The 3Q GDP was also strong at +4.3% QoQ (5.0% exp., -8.6% prev.)
Norway: The Norges Bank left its target Rate unchanged at 0.0% (0.0% exp., 0.0% prev.) and Industrial Production came in weaker -1.7% MoM (1.1% prev.)
No tier 1 data
Bank of England left Bank Rate unchanged at 0.1% (0.1% exp., 0.1% prev.) but expanded the Asset Purchase Program Total 895b (845b exp., 745b prev.)
Australia: RBA cut rates with the cash and 3Yr targets reduced to 0.1% (0.1% exp., 0.25% prev.) 3Q Retail Sales Ex Inflation QoQ 6.5% (6.0% exp., -3.4% prev.) Retail Sales MoM -1.1% (-1.5% exp., -4.0% prev.)
New Zealand: House Prices showed strong increases printing 8.0% YoY (7.6% prev.) and 2Yr Inflation Expectation ticked higher at 1.59% (1.43% prev.). The 3Q Unemployment rate also ticked higher 5.3% (5.3% exp., 4.0% prev.), which the central bank will be keeping an eye on.
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