Next week is looking like one of the quieter in terms of major economic events, although Wednesday should have plenty to offer with the UK Autumn statement and Federal Reserve minutes being of particular interest.
The Autumn statement will give us our first insight into the UK Governments response to the Brexit vote back in June. There has been a lot of speculation about how much the new Chancellor will loosen the purse strings in order to help the UK weather the Brexit storm. The recent reports suggest Philip Hammond will be a little conservative with his spending given that the post-Brexit reality has been more of a cloudy affair than the storm that many expected. While I expect we will see some spending initiatives announced, we may see Chancellor save some of the bigger announcements for the annual budget in the spring when the economy is looking a little more vulnerable.
While a December rate hike from the Fed looks very likely, the minutes on Wednesday may offer some insight into whether there is any reluctance from policy makers that could throw it into doubt. With markets pricing a rate hike in so much now, they are very vulnerable to the Fed opting to hold off next month, which would not exactly be out of character given that they originally intended to raise rates four times this year. It is worth noting though that the meeting took place just under a week before the election and so, in theory, a lot has changed since the meeting that could influence policy makers thinking in December which could mean the minutes themselves are a little outdated. It could therefore take something significant in them to rattle traders.
It is looking like a quieter week on the economic data side though, with manufacturing and services PMIs from the eurozone and durable goods orders from the US standing out on Wednesday and the first revision to third quarter UK GDP on Friday. We’re expecting no change to the latter, with the economy having grown 0.5% according to the preliminary reading. It seems we’ll have to wait a little longer for the data to truly start to reflect the negative implications of Brexit, with the UK consumer being key.
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