Key events in developed markets next week

The data focus next week will be US housing numbers which will continue to show this sector as a key growth driver. Record low mortgage rates are driving the recovery while the prospect of a structural shift towards more homeworking is also helping to fuel buyer interest, particularly for second homes or vacation homes. After all, the average age of a US homebuyer is late 40s so they have good employment records and decent credit history. This is positive for other sectors in that it typically correlates with stronger spending on home furnishings and furniture/garden equipment and building supplies as buyers look to kit out their new property.

Other than that we will be looking at the number of Covid cases given rising anxiety at what is happening in Europe – more hospitalisations forcing the reintroduction of Covid containment measures – could happen on this side of the Atlantic too. We will also be listening for positive news on another fiscal stimulus, but given the proximity to the elections that isn't looking probable right now.

Initial claims numbers will also be a focus given the surprise rise last week, which underlines concerns about ongoing strains in the jobs market.

The European Council, as well as the UK’s mid-October deal deadline, have now both been and gone.

But despite plenty of noise emerging (expect more next week…) from negotiations, the general feeling is that a deal is still more likely than not, albeit perhaps we might not see it until early-mid November. None of the core issues look totally insurmountable, but as ever it comes back to the politics, and in particular whether prime minister Boris Johnson can gain approval within his party for a compromise. The answer is most likely ‘yes’, although, despite the government’s strong majority in the House of Commons, there have been increasing signs of dissent among Conservative MPs.

Separately, next week we’ll get the latest inflation numbers which should bounce-back after the figures were distorted by the ‘Eat Out to Help Out’ discount scheme in August. Volatility aside, inflationary pressures are unlikely to grow over coming months given the deteriorating jobs market backdrop.