04 Nov 2019

UK this week

With the 12th December UK general election having been made official last week, campaigning is set to step up a gear this week after Parliament is dissolved on Wednesday. 

In terms of the latest polls, three polls over the weekend continued to put the Tory Party ahead, but by varying degrees. A poll by Opinium gave the Tories the largest lead of 16pts, the party gaining 2pts to 42%. At the same time, a YouGov/ Sunday Times poll showed the Labour party gaining 6pts to 27%, although it still gave the Tories a 12pt lead at 39%. The last poll (ORB/ Telegraph) gave the Tories the smallest lead at 8pts, with Labour on 28% and the Tories on 36%. 

The weekend’s other news followed in the wake of Thursday’s Brexit Party conference, where it was announced that they would challenge all seats in the election, rather than a targeted 20-30 leave leaning Labour seats as had been touted earlier in the week. Meanwhile, Brexit Party leader Nigel Farage announced that he would not stand in the election, instead suggesting his talents were better used on a national basis. Mr Farage had also given PM Boris Johnson until the 14 November to decide whether any electoral pact could be done between the two parties, an offer which has been flatly rejected by the PM. 

Away from politics, much of the focus will be on Thursday’s MPC decision and the newly labelled Monetary Policy Report (ie. Inflation Report). We don’t anticipate any changes from the BoE, with Bank rate remaining at 0.75% and the level of QE maintained at £435bn.

US this week

The week begins with a hint of fresh optimism on the US-China trade dispute. US Commerce secretary Wilbur Ross, said he was “quite optimistic” that current stumbling blocks with the so-called ‘phase one’ deal could be overcome. Presidents Trump and Xi are still planning to meet this month despite the cancelled APEC summit that was due to be hosted in Chile. Mr Ross acknowledged that finding a new venue was still a work in progress, but some potential venues have been touted; Iowa and Alaska in the US, whilst some countries in Asia are also being considered. 

One sticking point that does remain however is Huawei, the Chinese tech giant. Trump’s administration is pushing for the Taiwan Semiconductor Manufacturing Company to stop producing for Huawei, as Huawei is still seen as a security threat by US officials. Despite the lack of progress on Huawei, markets in Asia have rallied in the morning session on the broader hopes of a trade deal. 

This week’s US data calendar is relatively quiet, but the figure markets will be watching closest is the ISM non-manufacturing index. September’s estimate witnessed a sharp 3.8pt fall to 52.6, raising some questions over whether the manufacturing slowdown was beginning to spill over into the service sector. Next week’s number will therefore be important in determining whether September’s print was an anomaly or if the service sector is witnessing a slowdown.

Europe this week

Within the Euro area, Christine Lagarde will give her first speech since becoming ECB president in Berlin on Tuesday and as such will be followed for any hints on the direction of policy under her leadership. In terms of data points, the main highlights will be industrial production figures from a number of member states including Germany, France and Spain. Meanwhile, final PMI figures are also due. Away from data the other important event will be next Sunday’s (10 November) Spanish general election, where the polls suggest a hung parliament is the most likely outcome.

Economic Releases

UK 14.30 House of Commons speaker election

EU 09.00 Manufacturing PMI

EU 18.30 ECB’s Lagarde speaks in Berlin

US 15.00 Durable goods orders