Key events in developed markets

The Thanksgiving holiday means it is a short week in the US with regional manufacturing surveys and durable goods orders likely to be the highlight given that 3Q GDP is unlikely to be revised in a meaningful way. Business surveys continue to reflect the problems in the manufacturing sector – a global economic slowdown, a strong dollar that is hurting international competitiveness and uncertainty relating to US-China trade tensions. The lack of a US-China trade deal five weeks on from President Trump’s positive assessment is leading to some doubt as to whether it will actually come to fruition. As such, we see little reason for any meaningful turnaround in the newsflow from the sector.

In Canada, the highlight will be 3Q GDP with a sharp slowdown expected. Markets are pricing only around a 13% chance of a rate cut in December, but if we do indeed get a marked deceleration in growth, the odds of an early move will shorten. After all, the Bank of Canada has said the outcome of the GDP release will be the “determinant” of action on 4 December to provide some protection to the economy. Given Canada’s exposure to the global economy and the fact that it has the highest interest rates amongst major economies, which is keeping the Canadian dollar relatively firm, we expect to see a rate cut in January if there is no move in December.

Focus in the eurozone will turn to inflation next week, although expectations are for a rather dull reading. Still subdued by energy price effects, the headline rate will likely remain below 1%. Keep an eye on core inflation though, which has been rising recently. There's not a lot which points to significant sustainable increases, although negotiated wages did increase again in 3Q. Other than that it will likely be a week of reminiscing as the Von der Leyen Commission is on track to start 1 December, making next week Jean Claude Juncker’s last.