Global equity markets’ post-election rally continued during the holiday-shortened week. Interest rates rose as the Fed signaled it could hike rates “relatively soon,” which many observers interpreted as December. US economic releases reflected a broadly expanding economy as housing, manufacturing and service sectors grew faster than expected. Markit’s flash November Purchasing Managers’ Indexes (PMI) in manufacturing and services were firmly expansionary, underpinned by rising new orders.
UK economic data continued showing a healthy economy, shaking off post-Brexit fears. The second estimate of Q3 GDP confirmed the initial read of 0.5% q/q (2.3% y/y). Eurozone November flash PMIs were at their highest level in 11 months, as Germany held recent gains and France’s services sector drove faster-than-expected economic expansion.
China reported little economic data. Japan’s data were mixed: October imports and exports fell much faster than expected (-16.5% y/y and -10.3% y/y, respectively)—with exports falling for the 13th consecutive month. In the week ahead, the Fed will likely grab headlines given a heavy speaking schedule.
US economic releases include the Institute for Supply Management’s PMI data, construction spending, pending home sales and Friday’s employment report. Many investors likely focus on initial holiday shopping trends, though we caution against giving any single data point too much credence.
The UK posts manufacturing and construction PMIs, housing prices and money supply, while the eurozone reports producer prices and unemployment. Japan releases retail sales, household spending and industrial production and China releases its PMIs.