What you need to know before markets open
Main themes:
- The EU and UK negotiators have agreed on a text on how to avoid a hard border on the island of Ireland, which will form part of the Withdrawal Agreement. The UK Cabinet is set to convene on Wednesday to approve the document. For details read Joseph’s Analysis here.
- The UK labor market report saw the unemployment rate ticking up to 4.1% in October while wages rose more than expected. For details read my UK labor market Analysis here.
- Italian government resisted the pressure from the European Commission and decided to keep the budget deficit for next year unchanged at 2.4% of GDP.
- The UK inflation is expected to accelerate slightly, but the boost to Sterling comes from Brexit headlines as UK and EU reached an agreement on Irish border backstop. For further details read my UK inflation Preview.
- The US headline inflation is expected to accelerate while core inflation is seen staying unchanged over the year, exceeding 2% target. For details read Joseph’s Preview here.
Japan
- Japan’s third-quarter GDP fell -0.3% over the quarter, in line with market forecast.
- Industrial production in Japan fell -0.4% m/m in September.
Europe
- German harmonized inflation index is expected to remain unchanged at 2.4% y/y in October while the national CPI is expected to rise 2.5% y/y.
- The ECB executive board member and the chief economist Peter Praet played down his previous remarks that a substantial level of monetary policy is still needed in the euro area. “We always communicate that to reach this inflation path, close to 2% in the medium-term, we need a substantial degree of monetary accommodation," Praet said in a conference in London.
- German ZEW Indicator of the economic sentiment for Germany recorded an increase of 0.6 points in November 2018 to reach -24.1 points as industrial production, retail sales and foreign trade in Germany all point towards a weak development of the German economy.
- German third-quarter GDP is expected to contract by -0.1% over the quarter after rising 0.5% Q/Q in the previous quarter. Over the year German third-quarter GDP is expected to decelerate to 1.3% y/y from 2.0% y/y. For details read Yohay’s Preview here.
- The Eurozone third-quarter GDP is expected to rise 0.2% Q/Q and 1.7% y/y.
UK
- The EU and UK negotiators have agreed on a text on how to avoid a hard border on the island of Ireland, which will form part of the Withdrawal Agreement. The UK Cabinet is expected to meet at 14:00 GMT.
- The UK labor market remains tight even as the unemployment rate ticked up from a four-decade low to 4.1% in October with regular pay accelerating to 3.2% y/y and total pay increasing 3.0% y/y in three months to September. For details read my UK labor market Analysis here.
- The UK inflation is expected to accelerate to 2.5% y/y while core inflation is expected to rise to 2.0% y/y. For further details read my UK inflation Preview.
US
- The US headline inflation is expected to accelerate to 2.5% y/y in October while core inflation is seen dwelling at 2.2% y/y. For details read Joseph’s Preview here.
- Federal Reserve Governor Randal Quarles is scheduled to testify on banking supervision and regulation before the House Financial Services Committee, in Washington DC at 15:00 GMT.
- Fed chairman Jerome Powell speaks in the economic event in Dallas at 23:05 GMT.
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