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Market insight 07.11.2019

BoE on hold, with dovish statement; German production still deeply negative

BoE on hold, with dovish statement; German production still deeply negative

US: Initial jobless claims (Nov.2): 211k vs 215k expected (prior: 219k revised from 218k)

  • Continuing claims: 1689 k after 1692 k past week.

 

Germany: Industrial production (Sept.): -0.6% m/m vs -0.4% expected (prior: 0.4% revised from 0.3%)

  • Except energy and construction, production in all other sectors was down over the month; manufacturing production was down by 1.3% m/m after the past month rebound of 0.8% m/m. Yearly trend remained sharply negative, down by 4.3% y/y.

  • The recent improvement seen in sentiment indicators should lead to less negative data in the months to come, but the recovery will take some time.

 

UK: BoE has not changed its key rates (0.75%).

  • Purchases of assets have not changed (GBP 10 bn on corporate bonds; GBP 435 bn for government bonds).

  • Growth and inflation scenario has been slightly revised down, but made under orderly Brexit transition and easier future fiscal policy assumptions. Nevertheless, uncertainties remain in place related to global growth and Brexit/elections developments, and the BoE is ready to adjust its policy accordingly, opening the door to an easy bias on rates.

  • Two governors have dissented, voting in favor of a 25 bp rate cut.

 

Norway: Industrial production (Sept.): -0.5% m/m (prior: -2.1%)

  • While activity on oil was down by 2% m/m, manufacturing production was up by 0.8% m/m, driven by electricity, machinery and basic metals.

  • Yearly trend in total production stayed negative (-8.1% y/y), while it continued to accelerate in manufacturing, from 1.7% y/y to 2.9% y/y.

 

Brazil: CPI (Oct.): 0.1% m/m vs 0.07% expected (prior: -0.04%)

  • On IPCA index, inflation has regained on clothes, and transport after moderate or flat change past month.

  • The yearly trend has eased from 2.89% y/y past month to 2.54% y/y.


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Market insight 11.11.2019

UK growth firmer in Q3, but still signs of fragilities

UK: GDP (Q3-19): 0.3% q/q vs 0.4% expected (prior: -0.2%)

  • Growth has recovered after a Q2 contraction, but slightly less than expected; consumption was on stable pace, up by 0.4% q/q and net exports have contributed positively to the growth.

  • Over the quarter, services and construction have shown some rebound after flat or contraction in Q2.

  • Separately, monthly estimates of GDP have shown a strong rebound in July (0.3% m/m), followed by some contraction in Aug. (-0.2% m/m) and in Sept. (-0.1% m/m).

  • Growth could remain moderate and fragile, as long as no visibility emerges from Brexit/elections, but a recession could be avoided.

 

UK: Industrial production (Sept.): -0.3% m/m vs -0.1% expected (prior: -0.7% revised from -0.6%)

  • Manufacturing production was down by 0.4% m/m after -0.7% m/m the prior month. Activity in oil and mining sectors has rebounded over the month.

 

Norway: CPI (Oct.): 0.2% m/m (prior: 0.5%)

  • Inflation has slightly increased from 1.5% y/y to 1.8% y/y. Core inflation was flat over the month and stable on a yearly basis (2.2% y/y).

 

Italy: Industrial production (Sept.): -0.4% m/m as expected (prior: 0.4% revised from 0.3%)

  • Production of non-durable consumer goods and capital goods was up over the month; the yearly trend has deteriorated further from -1.7% y/y the prior month to -2.1% y/y.

Market insight 08.11.2019

Improving US consumer confidence; modest rebound in French industrial production

US: Consumer confidence (Michigan) (Nov.): 95.7 vs 95.5 expected (prior: 95.5)

  • Sentiment has slightly increased from past month in first estimates.

  • Sentiment has eased on current conditions, back to previous month’s level; sentiment on future conditions has slightly increased, being on a rebuilding process since past Aug.

  • Financial situation is a source of concern, but business expectations have improved. Willingness to buy large items has moderated from past month high level, and was back to levels seen in Q2.

 

Switzerland: Unemployment rate (sa) (Oct.): 2.3% as expected (prior: 2.3%)

  • Unemployment stayed at a low level.

 

Germany: Trade Balance (Sept.): 21.1bn EUR vs 19.5bn expected (prior: 16.4bn revised from 16.2bn)

  • Current account surplus: EUR 25.5 bn after 17.3 bn prior month.

  • Exports were up by 1.5% m/m, and imports up by 1.3% m/m.

 

France: Industrial production (Sept.): 0.3% m/m vs 0.4% expected (prior: -0.9%)

  • Manufacturing production was up by 0.6% m/m after -0.8% m/m the prior month.

  • By sector, production has rebounded in food, utility and construction, but has contracted further in the other sectors including autos.

Market insight 06.11.2019

Weak US productivity in Q3; firmer than expected services PMI in eurozone

US: Nonfarm productivity (Q3-19): -0.3% q/q vs 0.9% expected (prior: 2.5% revised from 2.3%)

  • As activity has weakened from Q2 and compensation remained on still sustained trend (3.3% after 5% q/q in Q2), productivity has declined over the quarter.

  • Unit labor cost has consequently rebounded from 2.4% q/q in Q2 to 3.6% q/q.

 

Eurozone: PMI Services (Oct.): 52.2 vs 51.8 expected (prior: 51.6)

  • Sentiment has globally rebounded stronger than expected; on major countries, survey was firmer than expected in Germany and Italy; in France, the index has rebounded in line with expectations; on the opposite, sentiment has weakened in Spain (from 53.3 to 52.7).

 

Eurozone: Retail sales (Sept.): 0.1% m/m vs 0% expected (prior: 0.6% revised from 0.3%)

  • After stronger rebound than initially estimated prior month, sales were quasi flat over the month; food, computer, clothes and furniture have reverted after past month rebound.

  • The yearly trend has improved from 2.7% y/y the prior month to 3.1% y/y.

 

Germany: Factory orders (Sept.): 1.3% m/m vs 0.1% expected (prior: -0.4% revised from -0.6%)

  • After four months of contraction, orders have rebounded, notably driven by a 3.1% m/m rise in capital goods orders. The rebound was moderate for consumer goods (0.8% m/m after 4 months contraction).

  • This rebound was driven in parallel by both improvements in domestic and foreign orders.

 

Spain: Industrial production (Sept.): -0.8% m/m vs -0.7% expected (prior: 0.6% revised from 0.9%)

  • Production was weak over the month for all major sectors, except durable consumer goods (1.3% m/m).

  • The yearly trend has moderated further from 1.4% y/y the prior month to 0.8% y/y.

 

Russia: PMI Services (Oct.): 55.8 vs 52.8 expected (prior: 53.6)

  • A strong rebound in new orders.

 

Russia: CPI (Oct.): 0.1% m/m vs 0..2% expected (prior: -0.2%)

  • Yearly trend has moderated from 4% y/y the prior month to 3.8% y/y.

Further reading

Market insight 12.11.2019

Rising business sentiment in the US (small firms) and strong rebound in German ZEW expectations

US: NFIB Small Business optimism (Oct.): 102.4 vs 105 expected (prior: 101.8)

  • Sentiment has slightly regained from past month low level, but the index level remains below Q2-19 and 2018 levels.

  • Sentiment has slightly increased on capital spending, improving economy and sales, and on net compensation.

  • Plan to hire index has marginally regained after the fall past month.

 

UK: Unemployment rate (ILO) (Sept.): 3.8% vs 3.9% expected (prior: 3.9%)

  • Claimant count: 3.4% after 3.3% the prior month; jobless claims: 33 k after 13.5 k prior month (revised from 21.1 k).

  • While unemployed has slightly decreased (more full time workers, less part time), the claimant count is on a regular rising trend over the past two years.

 

UK: Average earnings incl. Bonus (Sept.): 3.6% y/y vs 3.8% expected (prior: 3.7% revised from 3.8%)

  • Wage growth has slightly eased over the past two months, peaking from July (3.9% y/y). The trend has eased for wage growth in both public and service sectors.

 

Norway: GDP Mainland (Q3-19): 0.7% q/q vs 0.8% expected (prior: 0.7%)

  • While net trade was negative, public consumption and investment were relatively strong; consumption stayed on a quite stable growth trend, up by 0.4% q/q.

 

France: Business sentiment (Bank of France) (Oct.): 98 vs 97 expected (prior: 96)

  • Sentiment has increased as opinions on production and orders have strongly rebounded from prior month.

  • Sentiment is forming a bottom, but its level of index remains below 2017 levels.

 

Germany: Zew (Nov.): -2.1 vs -13 expected (prior: -22.8)

  • A strong rebound in confidence after several months of regular falls.

 

Turkey: Current account (Sept.): 2.48bn USD vs 2.15bn expected (prior: 2.68bn revised from 2.6bn)

  • Trade deficit has moderated, but surplus in services has decreased from past month.

Market insight 11.11.2019

UK growth firmer in Q3, but still signs of fragilities

UK: GDP (Q3-19): 0.3% q/q vs 0.4% expected (prior: -0.2%)

  • Growth has recovered after a Q2 contraction, but slightly less than expected; consumption was on stable pace, up by 0.4% q/q and net exports have contributed positively to the growth.

  • Over the quarter, services and construction have shown some rebound after flat or contraction in Q2.

  • Separately, monthly estimates of GDP have shown a strong rebound in July (0.3% m/m), followed by some contraction in Aug. (-0.2% m/m) and in Sept. (-0.1% m/m).

  • Growth could remain moderate and fragile, as long as no visibility emerges from Brexit/elections, but a recession could be avoided.

 

UK: Industrial production (Sept.): -0.3% m/m vs -0.1% expected (prior: -0.7% revised from -0.6%)

  • Manufacturing production was down by 0.4% m/m after -0.7% m/m the prior month. Activity in oil and mining sectors has rebounded over the month.

 

Norway: CPI (Oct.): 0.2% m/m (prior: 0.5%)

  • Inflation has slightly increased from 1.5% y/y to 1.8% y/y. Core inflation was flat over the month and stable on a yearly basis (2.2% y/y).

 

Italy: Industrial production (Sept.): -0.4% m/m as expected (prior: 0.4% revised from 0.3%)

  • Production of non-durable consumer goods and capital goods was up over the month; the yearly trend has deteriorated further from -1.7% y/y the prior month to -2.1% y/y.

Market insight 08.11.2019

Improving US consumer confidence; modest rebound in French industrial production

US: Consumer confidence (Michigan) (Nov.): 95.7 vs 95.5 expected (prior: 95.5)

  • Sentiment has slightly increased from past month in first estimates.

  • Sentiment has eased on current conditions, back to previous month’s level; sentiment on future conditions has slightly increased, being on a rebuilding process since past Aug.

  • Financial situation is a source of concern, but business expectations have improved. Willingness to buy large items has moderated from past month high level, and was back to levels seen in Q2.

 

Switzerland: Unemployment rate (sa) (Oct.): 2.3% as expected (prior: 2.3%)

  • Unemployment stayed at a low level.

 

Germany: Trade Balance (Sept.): 21.1bn EUR vs 19.5bn expected (prior: 16.4bn revised from 16.2bn)

  • Current account surplus: EUR 25.5 bn after 17.3 bn prior month.

  • Exports were up by 1.5% m/m, and imports up by 1.3% m/m.

 

France: Industrial production (Sept.): 0.3% m/m vs 0.4% expected (prior: -0.9%)

  • Manufacturing production was up by 0.6% m/m after -0.8% m/m the prior month.

  • By sector, production has rebounded in food, utility and construction, but has contracted further in the other sectors including autos.