Mixed Economic Data Ahead of Turkey Day

Economic Data

- (UK) Nov CBI Industrial Reported Sales: 27 v 28e
- (IE) Ireland Oct Property Prices M/M: 2.9% v 1.8% prior; Y/Y: 16.3% v 15.0% prior
- (US) MBA Mortgage Applications w/e Nov 21st: -4.3% v +4.9% prior
- (US) Initial Jobless Claims: 313K v 288Ke; Continuing Claims: 2.316M v 2.35Me
- (US) Oct Durable Goods Orders: +0.4% v -0.6%e; Durables Ex Transportation: -0.9% v +0.5%e; Capital Goods Shipments (Non-defense/ex-aircraft): -0.4% v +0.5%e; Capital Goods Orders (Non-defense/ex-aircraft): -1.3% v +1.0%e; Durables Ex-Defense: -0.6% v -1.2% prior
- (US) Oct Personal Income: 0.2% v 0.4%e; Personal Spending: 0.2% v 0.3%e
- (US) Oct PCE Deflator M/M: 0.1% v 0.0%e; Y/Y: 1.4% v 1.4%e
- (US) Oct PCE Core M/M: 0.2% v 0.2%e; Y/Y: 1.6% v 1.5%e
- (MX) Mexico Oct Preliminary Trade Balance: +$0.1B v -$0.8Be
- (US) Nov Chicago Purchasing Manager: 60.8 v 63.0e
- (US) Nov Final University of Michigan Confidence: 88.8 v 90.0e
- (US) Oct Pending Home Sales M/M: -1.1% v 0.5%e; Y/Y: 2.2% v 2.5%e
- (US) Oct New Home Sales: 458K v 470Ke
- (US) DOE Crude: +1.95M v 0Me; Gasoline: +1.83M v +1Me; Distillate: -1.65M v -1Me

The raft of US economic data out this morning was very mixed, with some positive notes and some not so positive parts. In any case, OPEC is pretty much guaranteed not to cut tomorrow after the Saudis poo-pooed the idea and the ECB is teeing up sovereign QE. As of writing, the DJIA and the S&P500 have given up slight gains and are unchanged, while the Nasdaq is still up 0.27%.

October personal income and spending was slightly lower than expected but bounced back from September's flat reading, returning to the steady rate of growth seen over recent months. The PCE data, the Fed's preferred measure of inflation, was pretty much flat in October. Having trended gradually higher for the past month, initial jobless claims rose to their highest level in three months and widely missed expectations. Continuing claims are still at 14-year lows.

The headline October durable goods reading defied expectations for a slight decline returning instead a small increase, driven up by a spike in bookings for military aircraft. Orders for commercial products and business investment were surprisingly weak, however. The core capital goods measure of business investment fell more than 1.0% for the second month in a row in a sign that companies might be paring back toward the end of the year.

The NAR's October m/m pending home sales numbers sagged from the revised higher September results, while the y/y September figure was revised much higher. October new home sales were a bit disappointing as the median price level rose to the highest level on record.

After weeks of anticipation, it appears that OPEC will not be cutting production at the meeting tomorrow. Saudi Arabia Oil Min Ali Al-Naimi came out and simply stated that the Saudis, the US and others should not cut output as the market will stabilize itself. The UAE representative helpfully added that OPEC targets oil market stability rather than price. WTI crude has fallen back to five-year lows seen two weeks ago, around $73/bbl.

Comments out of ECB Vice-President Constancio during the European session are the strongest signal yet that the ECB is preparing to start government bond purchases early next year. Constancio said that if current measures fail to bring inflation back to target, the ECB will have to consider buying other assets, including sovereign bonds. A subsequent FT report said that the ECB would likely pursue steps like buying corporate bonds and changing TLTRO conditions before trying sovereign bond QE. EUR/USD dipped a bit in European trading but as of writing is back around 1.2500, its highest levels since Draghi's jawboning and the Chinese rate cuts late last week.

Deere's fourth-quarter results were stronger expected but declined on a y/y basis, while the initial FY15 outlook was not very positive. The firm warned that farm equipment sales and profits would keep falling in 2015, but on the conference call insisted that next year would represent the trough in the cycle. Deere claimed that US corn planting would come off record levels in 2015, supporting farm profits and aiding its business in the medium term. DE dropped as much as 3.5% before trading a bit higher.

Looking Ahead

- 12:00 (US) Weekly EIA Natural Gas Inventories
- 12:00 (CA) Canada to sell 5-Year Bonds
- 13:00 (US) Treasury to sell 7-Year Notes
- 16:45 (NZ) New Zealand Oct Trade Balance (NZD): -$0.6Be v -$1.4B prior; Exports: N$3.9Be v N$3.6B prior; Imports: N$4.6Be v N$5.0B prior