Key events in developed markets next week

There is clearly optimism that a vaccine is firmly on the horizon, but that leaves potentially quite a long window before there is an inoculation programme and the economy can be fully reopened. Moreover, with Covid cases spiking higher in the US there is a sense that it won’t be long before stricter containment measures are re-introduced – most likely soon after Thanksgiving. At the same time, the political backdrop remains a source of uncertainty with vote recounts, legal cases and claims of fraud bubbling away in the background. This is fue[lling political animosity and we are concerned that any fiscal support to help mitigate some of the economic damage from restrictions may be slow in coming as a result. As such, the Federal Reserve could yet be forced to step in and shore up confidence with more asset purchases.

Data wise, industrial production and retail sales numbers for October should post decent gains. However the clear risk is that both reverse again in December if we do see Covid containment return. We are now forecasting negative 1Q 2021 GDP growth.

We've been writing for weeks in our weekly calendar that things have been looking a bit bright for Brexit. But as another week of negotiations has come and gone, it’s clear we’re not there yet, and the same set of core issues that have divided talks for much of this year remain, for the time being, unresolved.

But the odds still appear stacked in favour of a deal being done, although there are no guarantees. As we wrote separately in more detail, the compromises involved in securing a free trade agreement will not be popular among some Conservative MPs.

Time is not on anyone's side either, and the feeling is a deal needs to come in days, not weeks, if it's going to be ratified in time by Parliaments in both London and Brussels.