The oil price dropped back yesterday with Brent crude falling temporarily
Market movers today
- The German Ifo expectations survey due for release today should send the same signal as did the PMIs released yesterday. In September, the figure increased to the highest level since the end of 2015, above the level prior to the Brexit vote. The economic survey indicators overall suggest that GDP growth could surprise on the upside in H2, especially as many had expected a negative impact on business sentiment and, hence, investments from the increased political uncertainty following the UK’s decision to leave the EU.
Selected market news
October’s round of flash manufacturing PMIs presented some reason for optimism regarding global manufacturing activity. In the euro area, the index increased to 53.3 from 52.6 in September. The PMI figures are overall likely to be slightly better than the ECB’s previous expectations of ‘a continued moderate but steady recovery’, thereby supporting the hawkish members’ view that more easing is not necessarily needed. However, in our view, this will be secondary as wage growth remains subdued. In the US, the index rose to 53.2 from 51.5. Nearterm though the outlook for the US manufacturing sector is clouded by a rising USD and political uncertainty.
St. Louis Fed’s James Bullard yesterday reiterated his view that only one additional rate hike will be needed in the cycle, thus arguing that the rest of the Federal Open Market Committee are too optimistic on the number of rate hikes it will take for the Fed to achieve its objectives. He did not comment on the timing of the remaining rate hike.
The oil price dropped back yesterday with Brent crude falling temporarily.
Yesterday, the Bank of Canada’s mandate to target inflation at 2% was renewed. Its mandate will be up for review again in five years.
Author
Jens Nærvig Pedersen
Danske Bank A/S
