Important day with OPEC+, NFP taking centre stage

Market movers today

  • Today, we have a numbers of important data releases on both sides of the Atlantic, starting with the US job reports for November, where we estimate non-farm payrolls rose around the current trend of 190,000. More importantly, we expect that average hourly earnings rose +0.3% m/m due to a continued tighter labour market.

  • On the euro side, the euro area Q3 wage growth numbers are due. The numbers are of special interest, as positive numbers are likely to boost the ECB's confidence in its inflation outlook at next week's important general council meeting.

  • The so-called OPEC+ is scheduled to meet today. The meeting proves even more important now as the original OPEC meeting yesterday failed to deliver any final deal on production cuts (see below). A press conference is tentatively scheduled for 13:00 CET, but history shows this could well be postponed if negotiations prove difficult.

  • In German politics , the CDU is starting its party congress to find a replacement for Angela Merkel as party leader today. A vote come in the late afternoon (after 15:00 CET) but the agenda is not yet finalised.

  • In Scandi markets, industrial production data is due to be released in Norway.

 

Selected market news

Risk sentiment rebounded strongly in late US trading, with Nasdaq managing to end the day in the green while S&P500 limited losses to only 0.15% in a remarkable late trading comeback, see chart (source: Bloomberg). Also, the 10Y Treasury erased most of its gains with the 10Y yield rebounding from as low as 2.83% to a current 2.89%. This morning, most major Asian equity indices posted modest gains.

An important explanation for the rebound was stronger-than-expected US data and dovish comments from various FOMC members, which triggered a softer repricing of Fed monetary policy. Markets are only pricing in roughly a 70% probability of a hike in December and only one additional 25bp hike for the whole of 2019.

Trade deal developments between the US and China have been important market drivers this week, with the most noteworthy being Saturday's truce and yesterday's arrest of Huawei's CFO. The White House has said that Trump was not aware of the arrest, which took place on Saturday, ahead of the dinner with Jinping. Today, CFO Meng Wanzhou will face a bail hearing. Meanwhile, Chinese authorities demanded her release (see FT story ).

Brent crude traded in a volatile fashion in the USD58-62/bbl range yesterday as the market remained nervous during the OPEC meeting. We still expect a comprehensive deal (>1MB) including Russian cuts, due to be announced today at the OPEC+ gathering.

The US Congress has passed a so-called stop-gap bill to postpone a government shutdown until 21 December. Key to the postponement are Donald Trump's demands for the new funding bill for the fiscal year ending 30 September 2019 to include USD5bn for building a wall at the Mexican border to keep out illegal immigrants and drugs.

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