After yesterday’s falls in global equities which seemed to be prompted by concerns about protests in China, most Asian equity markets are up this morning. The moves have been led by a substantial rebound in Chinese market indices as China’s National Health Commission announced that there would be a press briefing this morning on Covid-related restrictions. However, initial indications are that there is no substantive change in Covid policy. Some US Federal Reserve policymakers cautioned yesterday that hopes of an early end to interest rate rises may be premature. Richmond Fed President Barkin said he favoured a rate path that was “probably longer and potentially higher”.
In the UK, October money supply and bank lending data will provide an indication of the impact of recent rises in interest rates. In particular, a decline in mortgage approvals and secured lending seems likely as the data covers the period immediately after the mini-Budget when mortgage rates were at a recent peak.
In the Eurozone, both the manufacturing and service sectors have seen sharp falls in business confidence this year and the European Commission measures both hit new 2022 lows in October. They are forecast to have stayed close to those lows in November but the recent easing in energy price inflation makes it slightly more likely that the energy-intensive manufacturing sector may see a modest rebound.
Also in the Eurozone, November CPI data for Spain and Germany may provide hints on tomorrow’s inflation outturn for the Eurozone as a whole. Last month, Spanish inflation slipped while price rises in Germany accelerated.
In the US, the Conference Board measure of consumer confidence is predicted to have fallen for the second month in a row. Meanwhile, house prices indices for September are expected to record a fall reflecting the recent slump in the housing market.
Bank of England Governor Bailey is scheduled to testify to a House of Lords Committee this afternoon. So far, BoE policymakers have stayed quiet on whether the recent budget will have had any real impact on the BoE’s plans for interest rates, so one thing markets will be looking for today is whether Bailey has anything to say on this.
Early Wednesday, the November reading of the Lloyds Business Barometer will show whether business confidence has fallen again. In October it slipped, albeit only marginally, for the fourth time out of the last five months.
Bond yields in both the UK and the US initially slipped yesterday as ‘risk off’ sentiment in markets was further fuelled by protests in China. However, yields then rebounded and ended the day little changed. In currency markets, the US dollar picked up against both the euro and sterling.
