Weekly Outlook: Dec 28 — Jan 01: Markets to End the Year on a Quiet Note

This week, the calendar is nearly empty, with the only releases on the agenda worth mentioning being the US pending home sales for November, due out on Wednesday, and China’s official PMIs for December, set to be released on Thursday. Friday is New Year’s Day, and thus, markets will stay closed.

Because the 26th of December was on Saturday this year, Monday is Boxing Day in the UK, Canada, Australia, and New Zealand, with the respective markets staying closed.

With regards to the data, we already got BoJ’s summary of opinions from the latest monetary policy meeting, and Japan’s preliminary industrial production for November. The summary of opinions revealed that the Bank is considering a comprehensive review of its framework, with the March meeting perhaps being the one at which it will lay out its findings. Officials also said that they must continue to keep an eye on risks including abrupt moves in the FX market, which means that they will not hesitate to intervene if the yen strengthens too much. Thus, it would be interesting to pay attention to any speeches ahead of the March meeting, for clues as to whether officials are planning to expand (or not) their stimulative efforts then, and if so, how will they do it. As for the industrial production, its preliminary figure pointed to stagnation after a 4.0% mom rise in October.

There is no other worth mentioning data during the rest of the day, and thus, market participants may keep attention on the US political scene. Last week, the US Congress voted in favor of a USD 2.3trln spending package, which includes a USD 892bln coronavirus-aid bill, but President Trump refused to sign the proposal into a law, insisting that it did not do enough to help everyday people. The emergency employment benefits expired on Saturday, while on Tuesday, a partial government shutdown was set to begin, putting millions of government workers’ incomes at risk. Nonetheless, on Sunday, the US President signed the pandemic aid and spending package, restoring employment benefits to millions of Americans and averting a government shutdown. Asian indices traded in the green today, with the upbeat investor morale rolling into the European session.

On Tuesday, we only get the US Conference Board consumer confidence index for December and the API (American Petroleum Institute) report on crude oil inventories for last week. The CB index is forecast to have risen to 97.0 from 96.1, while, as it is always the case, no forecast is available for the API report.

On Wednesday, the only top tier indicators on the schedule are the US pending home sales for November, and the EIA (Energy Information Administration) weekly report on crude oil inventories. Pending home sales are expected to have rebounded 0.2% mom, after tumbling 1.1% in October, while no forecast is available for the EIA report yet.

Thursday is New Year’s Eve, and thus, several markets of those under our radar will be closed, while others will close early. On the data front, we get China’s official PMIs for December, and the US initial jobless claims for last week. With regards to the Chinese data, the manufacturing PMI is expected to have ticked up to 52.2 from 52.1, while no forecast is available for the non-manufacturing index. Following February’s tumble due to the economic damages caused by the coronavirus, both indices have been consistently within the expansionary territory, signaling that the world’s second largest economy continues to recover and perform well, despite other economies around the globe still feeling the effects of the fast-spreading virus. As for the initial jobless claims, they are expected to have increased somewhat, to 835k from 803k the week before.

Finally, on Friday, it is New Year’s Day and thus, all markets under our radar will stay closed.


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