Daily Market Report 9th November

Good morning everyone,
 

Today’s Q3 GDP estimate is expected to show that UK economic growth accelerated last quarter. Already released data for July and August point to a sizable gain even if as we suspect monthly growth slowed to 0.1% in September. As a result we forecast a 0.6% rise for Q3, in line with Bank of England expectations and well above most estimates of the ‘sustainable’ rate of UK growth. If confirmed that would be the fastest quarterly growth since Q4 2016. It should be noted, however, that initial indications are that pace has slowed this quarter and the BOE forecast a more modest GDP rise of 0.3% for Q4.

Also of interest will be the breakdown of recent UK activity. The services sector will probably continue to lead output growth but both construction and manufacturing may have picked up after a weak start to the year. On the expenditure side, consumer spending is likely to be a key driver but stagnant business investment may highlight firms’ reluctance to spend in the current uncertain environment.

In the US, producer price data for October will provide an indication of inflationary pressures ahead of the more closely watched CPI due next week. We expect recent oil price rises to have kept the annual headline rate at 2.6%. Meanwhile, the University of Michigan consumer sentiment survey will be watched for signs that recent equity market fluctuations have hit confidence. However, we look for only a modest decline in the initial reading for November.

BREXIT NEWS...

The prime minister’s Cabinet has been invited into a reading room to study what’s been agreed so far. The crucial bit is still missing — how to avoid a hard Irish border without binding the U.K. into European Union customs rules forever. That’s still being negotiated in Brussels, where EU officials are sounding a bit less optimistic than their U.K. counterparts.

Officials on both sides are figuring out what the choreography might look like. Success would probably see Brexit Secretary Dominic Raab — or May herself — visit Brussels to seal the agreement with a handshake. Then a summit of EU leaders would be called. Ian Wishart reports from Brussels that the EU is anxious not to allow too much time to elapse before this meeting. There’s no date yet, but Nov. 18, long penciled into EU diaries, looks like it’s still in play. EU ambassadors are meeting on Friday, a gathering they postponed from yesterday in the hope of having more to talk about.

PM May goes to Brussels tonight for a NATO dinner. She'll then attend a World War One commemorations in Belgium and France, and will have a one on one with French President Emmanuel Macron, a key player in the Brexit process. No doubt the weekend will bring new headlines. 

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