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Global Economics & Markets Research Summary (November 6, 2017)

Core Content Overview

This report provides a detailed outlook on global economic indicators, central bank meetings, FX markets, equities, US Treasuries, commodities, and market holidays for the week of November 6, 2017. It highlights the key data releases and policy developments across major economies, including the United States, Eurozone, UK, Japan, Australia, New Zealand, and others.

Main Highlights

United States

• Job Market: The U.S. economy added 261,000 jobs in October, with the unemployment rate at 4.1%, slightly below expectations. The jobs report was revised upward from September, which initially showed a decline.
• Economic Indicators:
  • Consumer Credit: September data is expected to be released.
  • JOLTS Report: Released on Tuesday, indicating job openings.
  • Wholesale Trade Survey: Released on Thursday.
  • University of Michigan Consumer Survey: Preliminary November data on Friday.
• US Tax Reform: The House is expected to vote on a final draft of the tax reform bill by the end of the week, while the Senate may release a different version.
• Equities: Wall Street closed at record highs, driven by a sharp rise in Apple shares. The Dow Jones, S&P 500, and Nasdaq all posted record closes.
• US Treasuries:
  • Yields: The 10-year Treasury yield closed at 2.343%, with the yield curve flattening to 71.1 basis points, the narrowest since late 2007.
  • Inflation Concerns: The October jobs report showed no increase in wages, raising concerns about low inflation.
• Commodities:
  • Oil Prices: Rose towards two-year highs, with Brent crude at $61.26/bbl and WTI at $55.01/bbl.
  • Gold: Slid lower after a slight initial boost from weak October jobs data.
• FX Markets:
  • USD: Rose broadly after factory orders and services data beat estimates, closing at 1.3650 against SGD.
  • EUR/USD: Bounced to 1.1690 but fell below 1.1600.
  • USD/JPY: Dipped to 113.64 but rebounded.
  • SGD NEER: Expected to trade between 1.0% and 1.5% above the midpoint, suggesting a USD/SGD range of 1.3600–1.3665.
  • CNY: Closed at 6.6390/USD, with a weaker midpoint forecast of 6.6160/USD for the upcoming week.

Eurozone

• Industrial Production: Germany's September data is released on Tuesday, with Spain and France following on Wednesday and Friday.
• Retail Sales: Italy and the euro area will release September retail sales data.
• Equities: Asian equity indexes ended mixed, with HSI and KOSPI up and SHCOMP down.

United Kingdom

• Data Releases:
  • Retail Sales: Expected to grow 0.6% m/m and 2.4% y/y in September.
  • Trade Data: Released on Thursday.
  • RICS Housing Survey: Released on Thursday.
• Equities: FTSE 100 and FTSE Straits Times Index closed marginally higher.
• Inflation: UK CPIH rose to 2.8% y/y, and the Jpuse Price Index was at 5.0% y/y.

Japan

• Labour Market: The monthly Labour survey on Tuesday may provide insights into wage growth.
• Machinery Orders: September data is expected on Thursday.
• FX: JPY closed at 114.07, with a weak performance against USD.
• GDP: Expected to grow 0.6% q/q and 2.5% annualized.

Australia & New Zealand

• Central Bank Meetings:
  • RBA: Expected to keep policy unchanged on November 7.
  • RBNZ: Grant Spencer's first full statement under the new Labour-led government on November 9.
• Interest Rates:
  • RBA: Maintained a neutral stance.
  • RBNZ: Expected to keep rates on hold until 2019, with inflation expectations rising due to a weaker currency.

Asia-Pacific

• Asia Tour: President Trump's tour of Asia includes Japan, South Korea, China, Vietnam, and the Philippines.
• China:
  • FX Reserves: Expected to rise for the 9th consecutive month.
  • Trade and CPI Data: October data will be released this week.
  • PMI: Caixin China PMI Composite at 51.0 and Services at 51.2.
• Indonesia:
  • GDP: 3Q17 growth is expected to quicken to 5.18% y/y.
• Malaysia:
  • Exports: Grew 14.8% y/y in September, below expectations.
  • Trade Surplus: MYR8.6bn in September, up from MYR10.0bn in August.

Key Economic Indicators

Central Bank Outlook

• RBA: Expected to keep policy unchanged, with a neutral stance in the post-meeting statement.
• RBNZ: First full monetary policy statement under the new Labour-led government, likely to keep rates on hold until 2019.
• Asia-Pacific Central Banks:
  • Thailand (BOT), Malaysia (BNM), Philippines (BSP): All expected to keep rates on hold.
  • Australia (RBA) and New Zealand (RBNZ): Most closely followed, with potential policy shifts expected.

FX Summary

• USD/SGD: Closed at 1.3650, with SGD NEER expected to trade between 1.0% and 1.5% above the midpoint.
• CNY: Closed at 6.6390/USD, with a weaker midpoint forecast of 6.6160/USD.
• EUR/USD: Bounced to 1.1690 before falling below 1.1600.
• GBP: Rose due to better-than-expected service PMI but failed to hold above 1.3100.
• AUD/NZD: Both remained stable, with AUD at 0.7650 and NZD at 0.6907.
• Asian Currencies: KRW and PHP led gains against USD.

Market Holidays/Events

• Japan: Culture Day (Nov 3), Thanksgiving (Nov 23), Christmas Day (Dec 25)
• United States: Thanksgiving (Nov 23), Christmas Day (Dec 25)
• Philippines: Bonifacio Day (Nov 30)
• Malaysia: Birthday of Prophet Muhammad (Dec 1)
• Indonesia: Maulid Nabi Muham (Dec 1)
• Thailand: King's Birthday (Dec 5), Constitution Day (Dec 11)
• South Korea: Election Day (Dec 20)
• Singapore & Malaysia: Christmas Day (Dec 25)

Conclusion

The week is marked by a mix of economic data releases, central bank meetings, and geopolitical events. The U.S. and Asia remain central to the market focus, with potential tax reform and Trump's Asia tour likely to influence investor sentiment. The FX market is expected to remain relatively stable, with CNY and SGD showing notable movements. Overall, the report emphasizes the importance of tracking economic indicators and central bank policies to gauge market direction.