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Daily Macroeconomic Digest

Friday 23 October
Rising business sentiment in manufacturing, but diverging trend between US and Europe in services

US: Markit Manufacturing PMI (Oct.): 53.3 vs 53.5 expected (prior: 53.2)

  • The index has increased less than expected from the prior month.
  • Sentiment has improved on production and domestic orders, while new export orders were weak. Costs have increased further.


US: Markit Services PMI (Oct.): 56 vs 54.6 expected (prior: 54.6)

  • The big surprise came from a strong rebound in sentiment in services, diverging from the gloomy environment in services in Europe.
  • Sentiment on new business and future activity beyond elections has increased; but sentiment on new orders has slightly decreased.
  • Global optimism on next year seems responsible for the rebound in sentiment.


Eurozone: PMI Manufacturing (Oct.): 54.4 vs 53 expected (prior: 53.7)

  • Sentiment has increased further in manufacturing contrary to expectations; first estimate of PMI was stable in France from the prior month, while it has increased sharply in Germany (index at 58 vs 55 expected, close to the highs seen in 2018).
  • Momentum in manufacturing remained positive, but if demand weakens, some slowdown in the index could be seen in the coming months.


Eurozone: PMI Services (Oct.): 46.2 vs 47 expected (prior: 48)

  • A sharp slowdown in confidence in services reflecting rising concerns due to renewed lockdown and curfews in some regions. French PMI has significantly fallen in this first estimate, while it decreased moderately in Germany; a significant fall is also expected in Spain, to be published in final data in the coming weeks.
  • Hospitality, accommodation and tourism will be negatively impacted by the new measures adopted in different countries; these sectors are important, but their share of GDP remained below 20% on average.


Poland: Unemployment rate (Sept.): 6.1% as expected (prior: 6.1%)

  • The unemployment rate remained stable over the past months, after significant rise in Q2.
  • Unemployed has marginally decreased over the past month, but the ratio remained unchanged.


UK: GFK consumer confidence (Oct.): -31 vs -28 expected (prior: -25)

  • A sharp decline in confidence, due to deteriorating opinions on future economic situation, and also on personal financial situation.
  • Brexit, COVID and new restrictions should weigh done on confidence and activity n Q4.


UK: Retail sales (Sept.): 1.6% m/m vs 0.5% expected (prior: 0.6%)

  • A strong rebound in sales which was broad based, with back to school season and discounts.


UK: PMI Manufacturing (Oct.): 53.3 vs 53.1 expected (prior: 54.1)

  • A more modest decline in business sentiment than expected. Sentiment on production remained well behaved, due to rebuilding orders and inventories ahead of the Brexit and risks on the supply chain.


UK: PMI Services (Oct.): 52.3 vs 53.9 expected (prior: 56.1)

  • A sharp decline in sentiment with renewed constraints on social measures and rising contagions; nevertheless, the index remained above the 50 level.


Brazil: Consumer confidence (Oct.): 82.4 (prior: 83.4)

  • Confidence has eroded on both expectations and current situation.
Thursday 22 October
Booming US existing home sales; weakening consumer confidence in the eurozone

US: Initial jobless claims (Oct.17): 787k vs 870k expected (prior: 842k revised from 898k)

  • Continuing claims: 8373 k after 9397 k the previous week.
  • Momentum has significantly improved from the previous weeks.


US: Existing home sales (Sept.): 6.54M vs 5.3M expected (prior: 5.98M revised from 6M)

  • Sales of existing homes have reached new high levels; a strong rise has been seen in single-family houses, while sales of condos were also on the rise but at a slower pace.
  • Inventories for both categories have decreased and settled below 3 months; prices remained on a rising trend for both single-family houses and condos.


France: Business confidence (Oct.): 90 vs 92 expected (prior: 92)

  • Business confidence has decreased over the month; in the manufacturing sector, confidence has declined from the prior month, which was also revised down.
  • Sentiment on past production and inventories has increased further, but sentiment on new orders and future own production has fallen significantly over the month.
  • Separately, sentiment in services has fallen dramatically and the index was back to its July level, pointing towards weak activity in the month to come.


Germany: GFK consumer confidence (Nov.): -3.1 vs -3 expected (prior: -1.7 revised from -1.6)

  • Preliminary data have pointed towards deteriorating confidence related to rising concerns on pandemic and local restrictions.


Eurozone: Consumer confidence (Oct.): -15.5 vs .15 expected (prior: -13.9)

  • Preliminary data have shown declining sentiment in consumers; the index was back to its June level.
  • Downside risks on Q4 growth are building in the Eurozone.


Norway: Unemployment rate (Aug.): 5.3% vs 5.1% expected (prior: 5.2%)

  • The unemployment rate continues to trend higher over the past quarters.


Turkey: Consumer confidence (Oct.): 81.9 (prior: 82)

  • Sentiment has eroded from the prior month due to lower confidence on future economic situation and rising unemployment.
Wednesday 21 October
UK: inflation has rebounded after end of support to restaurants

UK: CPI (Sept.): 0.4% m/m vs 0.5% expected (prior: -0.4%)

  • Inflation has rebounded after lower tax and specific help to restaurants have ended.
  • Over the month, prices of food, health and transport have declined, while prices rebounded for clothes and hotels and restaurants after measures expired.
  • Yearly trend has accelerated further from 0.2% y/y the prior month to 0.5% y/y.
    low inflation environment could add pressure on the BoE to ease further.


UK: PPI Input prices (Sept.): 1.1% m/m vs -0.3% expected (prior: -0.2% revised from -0.4%)

  • A broad-based rise in prices over the month, except for oil prices; largest rises were seen in food and metal prices over the month.
  • Yearly trend has turned less negative, from -5.6% y/y the prior month to -3.7% y/y.


UK: PPI Output prices (Sept.): -0.1% m/m vs 0% expected (prior: 0.1% revised from 0%)

  • Prices have contracted further due to sharp decline in oil prices (-2.5%m/m); core PPI were up by 0.2% m/m.
  • Yearly trend remained stable at -0.9% y/y.


Switzerland: M3 (Sept.): 4.1% y/y (prior: 4%)

  • Other monetary aggregates have also shown parallel rising trend (M1: 5.6% y/y; M2 up by 3.2% y/y)


Poland: Retail sales (Sept.): -1.8% m/m vs -2.4% expected (prior: -2.6%)

  • Contraction in sales was less negative than expected thanks to still dynamic purchases of autos, pharma and textile products.
  • Trend in real yearly trend has improved from 0.5 % y/y the prior month to 2.5 %y/y.


Tuesday 20 October
US: strong momentum for single-family houses

US: Housing starts (Sept.): 1415k vs 1465k expected (prior: 1388k revised from 1416k)

  • Starts have rebounded after the fall the prior month, but they remained below their July high levels (1487 k).
  • Trend in single family houses (starts and building permits) continued to rise, while data on multi-family houses have shown a slowdown in starts and permits over the past 3 months.


Switzerland: Trade balance (Sept.): 3.28 Bn CHF (prior: 3.54Bn)

  • Trade surplus has declined from the prior month due to reversal in export performances.
  • Real exports: -2.1% m/m after 3% M7M the prior month, real imports: 2.1% m/m after -0.5% m/m the prior month.


Germany: PPI (Sept.): 0.4% m/m vs -0.1% expected (prior: 0%)

  • Basic good prices were up by 0.4% m/m, due to 1% m/m in energy prices; other prices were flat or slightly down over the month. Core PPI were up by 0.1% m/m.
  • PPIs stayed in negative territory on yearly trend: -1% y/y after -1.2% y/y.


Poland: Industrial production (Sept.): 15.5% m/m vs 13.4% expected (prior: -5.8%)

  • A strong rebound in activity in a traditional highly volatile monthly index; the rebound was centred on the manufacturing sector (17% m/m).
  • Yearly trend has rebounded from 1.5% y/y the prior month to 5.9% y/y.


Poland: PPI (Sept.): 0.1%m/m as expected (prior: -0.4% revised from -0.3%)

  • Mining prices were up by 1.9% m/m after -0.5% m/m the prior month.
  • Yearly trend has turned more negative, from -1.3% y/y the prior month to -1.6% y/y.
Monday 19 October
Rising optimism in US housing; Chinese Q3 GDP expanding, but below expectations

US: NAHB housing market index (Oct.): 85 vs 83 expected (prior: 83)

  • Sentiment has increased to new highs, with rising current and future sales; index has increased in all except one of the four districts.
  • Low interest rates and healthy labour market continue to support the trend in housing.


China: Q3 GDP pointed to continued recovery: 4.9% y/y vs expected 5.5% (prior: 3.2% y/y).

  • The economy expanded at a faster pace of 4.9% y/y (2.7% SA q/q) in Q3. This was slightly below consensus, but underlying data suggests that the recovery is becoming broader based.
  • Some downside risks to our growth forecast of 2.1% for 2020, which indirectly assumes a 6.5% y/y expansion in Q4. However, better domestic demand, compounded with a favorable base effect in Q1, point to upside risks in 2021. 


China: Sept. industrial production: 6.9% y/y (prior: 5.6%); retail sales: 3.3% y/y (prior: 0.5%); Fixed asset investment: 0.8% YTD y/y (prior: -0.3%)

  • The supply side continued to lead the recovery in the last month of Q3, with industrial production growing at 6.9% y/y and exceeding expectations of 5.8%.
  • Other activity indicators suggested that the recovery is spilling over to the demand side heading into Q4. Retail sales expanded by 3.3% y/y, exceeding expectations of 1.6%. Fixed Asset Investments entered positive territory for the first time since the COVID-19 outbreak, reaching 0.8% YTD y/y vs expectations of 0.8%.
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