US EARLY MORNING: Index futures slightly higher, Treasuries little changed; Waller comfortable with 50bps in Dec

SNAPSHOT: APAC stocks traded mostly lower following a downbeat lead from Wall Street; European equities start Thursday’s cash trading session on a flat/higher footing ahead of the UK’s Autumn Statement and final Eurozone inflation data; US index futures are rallying by 0.3-0.6%, with the tech heavy/growth sensitive Nasdaq-100 leading gains; traders cite a slight easing in geopolitical tensions after the international community agreed that Russia did not fire a missile that landed in NATO member Poland’s territory. Additionally, comments from the Fed’s Waller were being framed as more dovish than his typical hawkish refrain, arguing that recent data has made him more comfortable with the prospects of a 50bps rate rise at the December FOMC, rather than a jumbo 75bps move; Waller offered the usual data-dependent caveats – and will be watching the next PCE and jobs data in particular – as he doesn’t want to be ‘head faked’ by the data. Treasury yields are little changed, the Dollar Index is a little lower.

GS OUTLOOK: In its global macro outlook for 2023, Goldman Sachs told its clients that this cycle is different. It noted that global growth slowed over the course of 2022 due to a diminishing reopening boost, fiscal and monetary tightening, as well as China’s Covid restrictions and property woes, while the Russia-Ukraine war was also a drag. Looking to 2023, GS forecasts global growth of a little under 1.8%; the bank thinks that the US’ resilience will contrast with a European recession, and China’s reopening process will be bumpy. “The US should narrowly avoid recession as core PCE inflation slows from 5% now to 3% in late 2023 with a 0.5ppt rise in the unemployment rate,” the bank writes, “the Eurozone and UK are probably in recession, mainly because of the real income hit from surging energy bills,” and “China is likely to grow slowly in H1 as an April reopening initially triggers an increase in Covid cases, but should accelerate sharply in 2H on a reopening boost.”

DAY AHEAD: The highlight of the day is the UK Autumn Statement, as the new administration attempts to restore domestic and international economic credibility; a link to our preview is below. Final Eurozone inflation data for October is expected to show the annual rate confirmed at 10.7% Y/Y. The US Day sees weekly initial jobless claims data, housing starts and building permits for October, the Philly Fed regional manufacturing survey for November (recall, the Empire Fed equivalent was a positive surprise this week). The Fed speakers’ slate is busy, with voters Bullard, Bowman, Mester to speak, as well as 2023 voter Kashkari and 2024 voter Bostic; SNB’s Maechler will deliver remarks which will have traders on edge after SNB Chair Jordan’s warnings on FX last week incited a macro response. Elsewhere, BoE chief economist Pill will speak in wake of the government’s UK Autumn Statement. Our full Day Ahead sheet can be accessed here.

PREVIEW - UK AUTUMN STATEMENT (11:30GMT/06:30EST): After the disastrous “mini-budget” in September and the subsequent removal of PM Truss and Chancellor Kwarteng, Chancellor Hunt will be presenting a full Autumn Statement on November 17th. Despite short-term UK borrowing costs stabilising since the bloodbath seen in late September and early October, the Chancellor will need to present plans to address the GBP 50bln “black hole” in its finances. Accordingly, Chancellor Hunt will need to embark on a programme of tax hikes and spending reductions. In terms of the split between spending and taxation, reporting from the FT (7th Nov) stated that the Chancellor currently intends to cut GBP 33bln from public spending while raising taxes by about GBP 21bln. Our full preview can be accessed here.

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17 Nov 2022 - 09:30- EquitiesData- Source: Newsquawk

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