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Livesquawk - US Briefing - Tuesday 23.11
US Briefing - Tuesday 23.11
Headlines
  • Biden Announces Release Of 50M Barrels From Strategic Petroleum Reserve
  • EU PMI Upbeat Ahead Of Virus Resurgence, More Inflation Warnings
  • ECB’s Schnabel Sees Inflation Risks ‘Skewed To The Upside’
  • ECB’s Knot: New Lockdowns Won’t Delay Stimulus Wind-Down
  • German Business Activity Up In November, Price Pressures Record High
  • Germany Tells U.K. To ‘Come To Your Senses’ On Northern Ireland
  • French Business Activity Stronger Than Forecast In Nov Flash PMI
  • UK PMIs Show Record Inflation And ‘Green Light’ For BoE Hike
  • Japan Allocates $5.2B To Fund Chip Plants By TSMC And Others
  • Treasury Yields Fall As Investors Digest Powell Renomination
  • Dollar Stands Tall As Powell Reappointment Firms Hawkish Fed Bets
  • Lira Losses Snowball In Turkey’s Worst Streak In 20 Years
  • Oil Slips On Plans To Tap Emergency Crude Reserves
  • No News On OPEC+ Officials About "Changing" Their Production
  • European Shares Skid To 3-Week Lows On COVID Surge, Rate Hike Fears
Commentary
Eurozone PMI Up Ahead Of Virus Resurgence, More Inflation Warnings

The better than expected PMI shows that the eurozone economy has continued on its path of quick recovery at the beginning of the fourth quarter. Of course the growth pace is slowing, but nevertheless it is encouraging that the mounting headwinds of supply chain problems and rising prices have not kept the economy from maintaining a decent growth pace. With the survey conducted before the resurgence of the coronavirus became particularly troubling, it mainly paints a picture of a healthy economy before new virus related restrictions will curb the growth rate.

 

The PMI shows a service sector picking up the growth pace with the best services PMI reading in three months. This momentum will no doubt be hurt by new restrictive measures once they come in place to curb the virus. The manufacturing sector also saw output grow, but continued to be troubled by auto sector contraction on the back of chip shortages. (Continue Reading – ING)

ECB’s Schnabel Sees Inflation Risks ‘Skewed To The Upside’

European Central Bank Executive Board member Isabel Schnabel said there’s an increasing threat of inflation taking hold, as she played down the danger that resurgent coronavirus infections might impede the euro zone’s recovery.

 

Investors resumed bets on an interest-rate increase next year after her comments in an interview in Frankfurt on Monday, just weeks before a crucial decision on stimulus.

 

The German-born official responsible for market operations went on to suggest that an emergency contingency will still be needed even as the future focus of monetary policy possibly shifts away from asset purchases. (Continue Reading – Bloomberg)

German Business Confidence Faces Fifth Straight Decline

Economists say German managers are likely to yet again express less optimism about Europe’s largest economy this month as supply problems continue to hit manufacturers and the rise in Covid-19 cases has tightened restrictions at home and in neighbouring countries.

 

The results of an economists’ poll anticipate that the headline business confidence index from Germany’s Ifo Institute will fall for the fifth straight month with a drop to 96.6 points from last October’s mark of 97.7.

 

 The expectations component of the index is seen lower at 94.6 versus 95.4 last month, and the current assessment measure is projected to decline to 99.0 from 100.1.

 

But news on Tuesday suggested possible improvements. German flash purchasing managers’ indices (PMIs) for this month were better than expected, with both the composite and services readings moving higher even though economists had predicted declines. The manufacturing index slipped less than forecast. (Continue Reading – LiveSquawk)

Hawkish RBNZ Poised To Help Boost Growth & Economic Recovery

Last month’s Reserve Bank of New Zealand interest rate hike – the first in seven years – added 25 basis points and raised the benchmark rate to 0.50%, and economists say at least another 25bps will likely be added on Wednesday as policymakers attempt to mute inflation. However, there is also those monetary policy mavens noting the chance of a 50bp increase.

 

The market consensus for a minimum 25bp hike comes at a time when inflation is at 4.9%, its fastest pace since 2011, and consumer prices been consistently outpacing the RBNZ’s peak forecast of 4%. Going forward, state owned Kiwibank said it expects inflation to peak at just under 6% in the March quarter of next year.

 

In tandem with this data comes recent labour market statistics that displayed sharp declines in unemployment and underutilisation. The latest labour market report from Stats NZ said the jobless rate fell sharply to 3.4% in the three-months to September, which also beat RBNZ expectations of 3.8%. (Continue Reading – LiveSquawk)

 

BlackRock: Time To Buy China Stocks And Trim India Exposure

BlackRock Inc. is trimming its investments in Indian equities and becoming more optimistic on China on attractive valuations amid expectations that policy hurdles will ease next year.

 

“Valuations are key right now,” Belinda Boa, head of active investments for Asia Pacific at the world’s biggest asset manager, said at a briefing. “Because of the outperformance we’ve seen in India this year, on a relative basis, we are starting to take profits” and becoming more positive on Chinese growth stocks, she said.

 

After a world-beating rally, sentiment on Indian shares has soured due to broker downgrades and concerns about tightening liquidity, worsened by a poor showing for the nation’s biggest initial public offering. By contrast, there is growing belief among investors that Chinese stocks could bounce back as the worst is probably over for Beijing’s regulatory scrutiny of private enterprises. (Continue Reading – Bloomberg)

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