Markets are awaiting the upcoming Fed and ECB meetings in December

Market Movers

• Q3 GDP growth in the US is estimated to have been revised up from 1.5% q/q AR to around 2.0% q/q AR as data have been better than expected since the first release, indicating that growth was not that bad in Q3 after all. German GDP components are due, which are expected to show that Q3 growth in Germany was driven by strong growth in private consumption. The data for the decomposition could still attract some attention as it will reveal the degree of weakness in exports and investments.

• We expect German IFO expectations to have improved slightly in November supported by signs of stabilisation in China, the weaker euro and less financial stress.

• The conference board consumer confidence index in the US is expected to have risen, signalling that US consumers are still optimistic.

• BoE members Carney, Haldane, Forbes and Vlieghe testify for the UK Treasury Committee and ECB’s Mersch also speaks today. We will listen carefully to what they have to say on monetary policy.

• Today’s oil investment survey out of Norway will be one of several key releases ahead of Norges Bank’s monetary policy meeting on 17 December. We tentatively predict that the survey will now point to a 10% decline in investment in 2016, which would be neutral not only for us but also for Norges Bank. For more details see Scandi Markets.

Selected Market News

In general, markets are awaiting the upcoming Fed and ECB policy meetings in December. The US closed slightly in red the first day of trading this week following the largest weekly increase so far this year last week. S&P 500 futures is trading at unchanged level. At the time of writing Chinese equity indices are down while the Japanese Nikkei225 is up. Commodities are still under pressure from the Chinese slowdown and the strong USD. Oil gained yesterday as Saudi Arabia will work with OPEC to stabilise the crude market. Brent oil is trading at USD45/barrel. OPEC has produced more than target for the past 17 months. Divergent monetary policy continues to affect bond yields. 2Y government bond yields in Germany stayed around record-low territory (-0.392%) due to the increasing expectations of new easing measures from the ECB while 2Y government bond yields in the US continued higher and closed at 0.9382%, the highest since May 2010, as a Fed hike in December looks like a done deal.

Despite France, the US and Russia moving closer to each other in order to fight against Islamic State, three European diplomats have said that EU sanctions against Russia are likely to be extended due to the situation in Ukraine. The issue will be discussed at the next EU council meeting.

In Belgium, Brussels will be locked down for the fourth consecutive day due to threats of terror attacks. Prime Minister Charles Michel said late Monday that Belgium is still ‘confronted by the same type of threat’.

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