Weekly Outlook: Dec 21 — Dec 25: US Pandemic Aid Package Agreed, Brexit Still In Focus

This week we do not have much on the economic calendar, due to the festive season in most of the countries across the globe. US will deliver some of its regular weekly data, together with the final QoQ GDP numbers for Q3. Brexit negotiations continue, as the two sides cannot resolve their differences.

Monday will be a relatively quiet day in terms of economic data releases. The only worthwhile information is the one we already received this morning, it came out of China, where the People’s Bank of China decided on their interest rate. The PBoC left the rate unchanged, at +3.85%.

The main focus might still fall on the political situation in the US and Europe. In the US, investors will continue monitoring the situation surrounding the government aid package for the COVID-19-battered economy, which was reached on Sunday. The package is for $900bln, which will be the first new aid after several months since the previous one delivered earlier this year. The US lawmakers are expected to vote on it today.

In Europe, all eyes will be on the ongoing Brexit negotiations, which might be one of the main subjects in the days leading up to Christmas, or even up until New Year. If some sort of an agreement is reached, the UK Parliament would still need to approve the deal. But because the UK lawmakers are breaking up for their holiday recess, which is between December 25th and January 5th, time is running short. Although it would still be possible to gather all lawmakers together for an urgent session, that would still require giving them a 48-hour notice, which must be considered by the Brexit negotiators. One of the main problems of reaching a deal remain the fishing rights.

Tuesday will kick off with Australia’s retail sales figures on a MoM basis. Currently, there is no forecast available, but according to the previous figures, we can see that the numbers started slowly picking up again and moving higher.

During the European morning, Britain will be presenting its final GDP figures of Q3 on a QoQ and YoY basis. The current expectation is for the numbers to have declined again. The biggest fall is expected in final QoQ reading, which is believed to have gone from the preliminary reading of +15.5% to -20.4%. If so, that would bring the number back to the one we received during the release of the preliminary Q2 figure. That figure showed up at -20.4%, which is the available all-time historic low. If the QoQ number comes out as expected, or below the forecast, this could be seen as a big disappointment for the UK economy. This is something that the Bank of England will monitor carefully, as it is prepared to take actions if necessary. Also, the BoE will continue watching the Brexit saga and what will be the outcome from the negotiations, as the Bank is ready to cut rates, if the UK and the EU come up with no deal on January 1st.

From Scandinavia, we will receive Norway’s unemployment rate for the month of October. The figure is believed to have stayed the same, at 5.2%. Sweden will deliver their retail sales numbers on a QoQ and YoY basis for November. Also, the country’s consumer and manufacturing confidence figures will be released. For, none of the above-mentioned indicators we have available forecasts.

Later on, from the US, we will get the country’s Q3 QoQ GDP number, which is expected to have improved drastically. If the previous reading is sat at -31.4%, this actual figure is forecasted to appear at +33.1%.

On Wednesday, the US will deliver its Personal income and spending figures on a MoM basis for the month of November. Although the personal income figure is expected to improve from -0.7% to -0.3%, the spending one is forecasted to have declined from +0.5% to -0.2%. In addition to those readings, the US is set to release its PCE price index on a MoM and YoY basis, both core and headline. There are no expectations for the headline reading, but the core MoM one is believed to have declined slightly, from +0.2% to +0.1%, but the YoY number is expected to rise from +1.4% to +1.5%.

Also, on Wednesday, Canada will deliver its GDP figure on a MoM basis for the month of October. The current reading is for a +0.2%, when the previous is sat at +0.8%.

But still, the main focus will fall on the US initial and continuing jobless claims. The current forecast for the initial claims sits at 900k, which is above the previous number of 885k. The continuing claims are also believed to have increased from 5508k to 5598k. If the actual readings come out as expected, or even worse, this could have a negative implication on the US equity market.

On Thursday, some major bourses, like the German one, will be closed because of the Christmas EVE celebration. Other country bourses will have an early close, like the UK and US ones. No major data releases are scheduled.

Friday is a quiet day for most of the major markets across the globe, as the majority of bourses will be closed due to Christmas. But the main focus might still remain on the political situation between Europe and UK over the Brexit issue.

But from the economic data side, Japan is set to deliver a bunch of information on the state of their economy. Tokyo core and headline CPIs for the month of December are coming out. There is currently no forecast available on the headline figure, but the core is believed to have declined from -0.7% to -0.8%. Japan’s unemployment for November is forecasted to have stayed the same, at 3.1%, but the retail sales are believed to have fallen from +11.9% to +1.7% for the same month.

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