Danske Research Team
Danske Bank A/S
Market Movers
In the US monthly PCE inflation data for November are due. We estimate PCE core inflation was 0.1% m/m in November, taking the annual growth rate to 1.4%, although we admit it is a close call between 1.3% and 1.4%. We estimate headline PCE inflation was +0.1% m/m (0.5% y/y). There is no doubt the Fed would still very much like PCE core inflation to move higher and we believe this is an important reason why the Fed would like to hike slowly.
In the UK, the third estimate of GDP growth in Q3 is due and we do not expect any revisions. The unit labour cost figures could attract some attention due to the Bank of England’s focus on wage pressure.
In Canada we get numbers for retail sales and GDP for October.
Selected Market News
Both US and Asian equity markets ticked higher overnight, despite mixed US data. The S&P closed 0.9% higher, while the Hong Kong Han Seng is up 1%. In the US, Q3 GDP was revised down by 0.1pp lower to growth of 2%, showing relatively strong private domestic demand. Meanwhile home sales dropped 10.5% during November, which is the biggest decline since July 2010, when the effects of the government homebuyer tax credit waned.
The oil price rose slightly overnight ahead of US crude production and inventory data and optimism about Chinese and US growth. The West Texas Intermediate (WTI) traded close to parity with Brent, on speculation that the US decision this month to end the nation’s 40-year old export ban may ease the nation’s oversupply. Brent touched a 11-year low before rising slightly.
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