Yesterday’s inflation data from the UK showed that consumer prices held steady at 3% in October after hitting a 5-year high last month, putting pressure on families hit by the real wage squeeze.
The consumer price index rose by 3% in October, flatlining versus September’s reading and 0.1% below what analysts had been expecting. A rise in food price inflation has been a driving force as it hit 4.1% in October.
Some economists believe that this is the point where inflation will peak but until wages rise, the squeeze on the cost of living will continue.
Later in the day Mark Carney of the Bank of England echoed previous remarks by saying that the U.K. is in “exceptional circumstances” because of Brexit and that real incomes have taken a hit. His comments also suggested that there is a limit to what the central bank can do in light of the inflation overshoot, hence the one and done interest rate rise this month.
He also said that future interest rate moves aren’t set in stone as future policy hangs on how Brexit unravels.
Today’s data sees the release of UK labour data at 9.30 this morning.
Inflation pressures may be building in the US as a gauge of business prices aka producer prices rose at a steady pace in October.
The PPI increased by 0.4% in October from a month earlier and from a year earlier, overall prices grew 2.8% which was the largest increase since February 2012. The US Central Bank, the Federal Reserve, is closely monitoring inflation as it gears up for another interest rate rise by the end of the year.
The market continues to wait for any signs of compromise on U.S. tax reform after Republicans unveiled a plan that would cut corporate taxes a year later than a rival House of Representatives bill.
Today’s data from the USA includes Retail sales and inflation for the month of October. Both are due for release at 1.30 pm.
Preliminary GDP data for the Eurozone showed continued expansion at the same level seen in the previous quarter data from Eurostat showed.
Gross domestic product is expected to have grown at 0.6% percent in the third quarter and 2.5% on an annual basis.
At a micro level the data shows steady growth from Germany, Spain, France and Italy.
The only data from the Eurozone today is Trade Balance data at 10.00 am.
9.00 am – ECB Vice President Vitor Constancio speech
7.00 am – Germany GDP (Q3, flash): Forecast to rise to 2.2% from 2.1% YoY and remain at 0.6% MoM. ACTUAL 2.3% YoY & 0.8% MoM.
9.00 am – ECB Member Speech
9.30 am – UK CPI (October): Expected to rise 0.2% MoM and 3.1% YoY from 0.3% and 3.0% respectively. ACTUAL 3% YoY & 0.1 MoM
10.00 am – Eurozone GDP (Q3, 2nd estimate): Growth expected to be 0.6% QoQ and 2.5% YoY. ACTUAL 0.6% and 2.5% as expected
10.00 am – FED Janet Yellen Speech
10.00 am – BoE Mark Carney Speech
5.30 pm – MPC Member Speech
9.30 am – UK labour data: Unemployment rate expected to remain at 4.3% and average hourly earnings rise 2.2% from 2.1% previously
10.00 am and 1.00 pm – MPC Member Speeches
1.30 pm – US CPI & retail sales (October): CPI expected to be 2% YoY and 0.1% MoM, from 2.2% and 0.5% respectively. Retail sales forecast to rise 0.1% MoM in October from 1.6% in September
9.30 am – UK retail sales (October): forecast to have flatlined from -0.8% MoM in September and fall 0.8% from 1.2% YoY
10.00 am – Eurozone inflation (October): expected to rise 0.1% MoM from 0.4% and remain at 1.4% YoY
17.30 and 20.45 – FOMC Member Speeches
08.30 am – ECB President Mario Draghi Speech