Key events in developed markets next week

With Covid cases on the rise across the US, we are seeing more states announce new containment measures. In the likes of Michigan, Wisconsin and California we have seen dine-in restaurants/bars, gyms and places of worship forced to close while other states have introduced curfews/stay at home orders. These measures are likely to spread to other states, but may not be enough to limit the latest wave of the virus if evidence from Europe is anything to go by. Rising hospitalisation rates after next week’s Thanksgiving holiday, historically a time for family gatherings, could hasten more aggressive measures, which would be more economically damaging.

Next week’s data includes both the Conference Board and University of Michigan consumer confidence measures and it will be interesting to see if Covid is prompting concern amongst households or whether new equity market highs and positive vaccine developments can offset that. The election outcome could also play its part, particularly regionally. 3Q GDP is unlikely to be meaningfully revised from the record 33.1% annualised rate, but there is perhaps some downside risk for the October consumer spending number given the recent retail sales figures. A softer start to the fourth quarter coupled with new Covid containment measures would be consistent with our sub-consensus 1.6% annualised 4Q GDP forecast.

Eurozone sentiment data out next week promises to be dismal as the new lockdown measures will be fully captured in these figures. While last month showed a small tick down for most indicators, this one will be a significant decrease. This will be largely due to the service sector, which is where all restrictive measures have been introduced so far, but do expect some second round effects to impact the manufacturing sector.