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Global Markets (Key Data & Events)


The marginal decline in the Conference Board consumer confidence index in October might be a sign that either the latest wave of coronavirus cases or uncertainty about the upcoming election is weighing on consumers. However, it may also just represent some payback after a big rise in confidence in the previous month. In any case, the 1.9% m/m rise in durable goods orders in September demonstrates that the economic recovery is not entirely dependent on consumers, with business equipment investment recording a swift bounce back to pre-pandemic levels. We expect data due on Thursday to reveal that GDP rebounded by 30% annualized in the third quarter. (Andrew Hunter)


Data released on Tuesday showed that annual growth in lending to both non-financial companies and households in the euro-zone was broadly unchanged in September. That said, the separate ECB’s Bank Lending Survey showed that lending conditions tightened in Q3, and banks expect to tighten conditions for corporate loans further in Q4 also. That suggests to us there is a growing risk that tighter bank lending standards exacerbate the economic slowdown over the coming months.

We expect the publication of Sweden’s Economic Tendency Indicator for October to suggest that the country’s economy made a poor start to Q4, weighed down by weaker activity elsewhere in Europe.

With new virus cases continuing to climb, regional containment restrictions in the UK are becoming more widespread, with Warrington and Nottingham the latest areas to be placed under the highest restrictions, which involve many consumer services venues having to close. We have been arguing that prior tightening in restrictions would mean that GDP will not rise at all in October, November and December. But there is clearly now a risk that tighter and more widespread restrictions cause the economy to shrink again. (Melanie Debono & Ruth Gregory)

Other Developed Markets

New restrictions imposed this month to prevent the spread of COVID-19 suggest that the Bank of Canada will stick to its very dovish script on Wednesday. We expect the Bank to keep its policy rate unchanged at 0.25% and reiterate that there is little prospect of rate hikes within the next couple of years. The Bank may also outline the policy tools at its disposal if the downside risks to growth from the second wave of COVID-19 materialise. We are skeptical that Governor Tiff Macklem would consider negative interest rates at this stage, and instead think that the Bank would first raise the pace of its asset purchases if further support were required. (Stephen Brown)

Other Emerging Markets

In Emerging Asia, Korea’s GDP rebounded by 1.9% q/q in Q3, as its exports bounced back strongly. With the impact of the second wave of the virus on the economy fading and exports picking up further since then, we expect Korea’s recovery to continue over the coming quarters.

In Latin America, we think that Brazil’s central bank will keep its policy interest rate on hold at 2.00% when it meets on Wednesday evening. And despite the recent jump in inflation, we expect the tone of the accompanying communications to remain dovish.

In sub-Saharan Africa, we expect data due on Wednesday to show that South Africa’s inflation was broadly unchanged in September. We expect inflation to remain near the bottom of the central bank’s 3-6% target range at least the next few years, allowing the bank to keep its policy rate at the current record low of 3.50%. (Alex Holmes & William Jackson)

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