Macroeconomics: The Day Ahead – 10 November 2020

Good Morning: The Long & the Short of it and The Bigger Picture

Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist

  • Vaccine euphoria and reality rides roughshod over macro schedule; digesting China CPI/PPI, UK and French labour data, awaiting German ZEW, US NFIB survey & JOLTs Openings; EIA & WASDE monthly reports, central bank speakers
  • Covid-19 vaccine trials offer genuine hope, but still plenty of hurdles to clear before any semblance of normality returns
  • US NFIB Small Business Optimism: employment indices suggest modest setback,  rather than expected small again; overall still at very solid levels



The biggest risk in market terms remains the fact the outsized volume of leveraged derivative trades, with the violent swings from risk off to risk on (or vice versa) underlining both the optionality, as well as a total lack of depth, despite all the supposed ‘liquidity’ – it is as such very difficult to avoid a house of cards analogy.

Be that as it may, a relatively busy day for data has China’s inflation data, UK BRC Retail Sales and the Sep/Oct labour data along with French Industrial Production to digest, with Germany’s ZEW survey already superseded by yesterday’s equity market flight to the moon, while the US sees NFIB Small Business Optimism and JOLTS Job Openings. The NFIB Small Business Optimism is expected to edge up to 104.4 from a much stronger than expected 104.0 in September, but the already published Employment indices (Plans to Hire 18 vs 23, Positions Not Able to Fill 33 vs 36) suggest it will drop back, but remain solid on any historical perspective. Central bank speakers are again abundant, with Dallas Fed’s Kaplan making no less than three appearances. The EIA kicks off this week’s run of monthly oil market reports, and for those that ran up oil futures prices yesterday in the wake of the Pfizer/BioNTech vaccine news, all of this week’s reports may be dismissed as ‘historical’ or ‘out of date’, and focus on the numerous keynote speakers at the ADIPEC strategic conference. Saudi Arabia’s Energy Minister was at pains to highlight that oil prices have been stable, despite renewed lockdowns in Europe, and the resumption of Libyan oil output (which will remain erratic, even if the ceasefire holds, as so much is in desperate need of maintenance). He also noted the ‘flexibility of the OPEC+ agreement, while pointing to the risk that due to midstream supply capacity constraints (due to shelved investment), oil supply may not be able to keep up with growth (assuming a full global recovery). Despite yesterday’s price rally, the assumption remains that the Dec OPEC+ meeting will roll over current production caps, rather than raise them as had been planned, primarily due to an expected drop in demand due to rising infection rates and lockdown measures.

Today’s USDA WASDE report will very closely watched for its forecasts for China’s imports of Soy and Corn import as its swine herd has been recovering from the African Swine Fever decimation, with a large upward revision to China Corn Imports expected, reflecting a highly criticized lowball estimate in its prior report, and a near threefold increase in last week’s USDA’s Foreign Agricultural Service estimate.


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