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Daily Macroeconomic Digest

Thursday 29 October
US: sharp rebound in Q3 GDP; rising expectations of a large ECB’s easing in Dec.

US: Initial jobless claims (Oct.24): 751k vs 770k expected (prior: 787k)

  • Continuing claims: 7756 k after 8373 k the prior week.


US: GDP (Q3-20): 33.1% q/q vs 32% expected (prior: -31.4%)

  • A sustained rebound, even firmer than expected, driven by consumption, equipment spending and residential.
  • Consumption was up by a strong 40.7% q/q saar; it was sustained in all segments and particularly strong for durable goods (82% q/q).
  • Investment was mixed as structures and R&D stayed under contraction but spending on equipment was up by 70%q/q (-35% q/q in Q2).
  • Residential investment was up by 59.3% q/q after -35.9%q/q in Q2.
  • There was a strong rebound in both exports and imports, but net trade has negatively contributed to GDP (-3 pp); public consumption was down by 4.5% q/q due to the end of support program (-0.7 pp net contribution to GDP).
  • Inventories were less negative, adding 6 pp to Q3 GDP change.
  • The rebound was mainly driven by sustained domestic demand; Q4 GDP is expected on a slower pace, while uncertainties on public consumption contribution remained in place.


US: Pending home sales (Sept.): -2.2% m/m vs 2.9% expected (prior: 8.8%)

  • A decline in three of 4 districts after sustained upward trend in the past months; low inventories and rising prices could weigh on sales despite remaining sustained demand.


ECB meeting: more accommodation in the pipeline

  • Very dovish statement on economic conditions with rising concerns related to pandemic should support more actions in the next Dec. meeting, already announced by Ms Lagarde.
  • All members agreed that is necessary to act; probably there is not yet a large consensus on the instruments to be used and the magnitude of the changes, giving time to take more information and to reach a larger consensus.
  • Lagarde mentioned implicitly that the ECB is expecting downwards revisions to GDP outlook in Dec. and is ready to take a broad-based action.
  • Lagarde mentioned explicitly that all instruments could be re-calibrated to fit to the new economic environment and pandemic situation to reach ECB’s targets on accommodative financial conditions and inflation.
  • Future action should not only be centred on amount or duration of PEPP, but to associate TLTROs and to combine other available instruments; this should increase expectations on markets and open to door to a Lagarde’s “whatever it takes”.


Eurozone: Business climate (Oct.): -9.6 vs -10.9 expected (prior: -11.4 revised from -11.1)

  • Business confidence was less negative and better than expected over the month.
  • Sentiment was less negative on orders, exports, past production and employment; on the opposite, views on future production have declined over the month.
  • As seen in preliminary PMI, sentiment has relatively improved over the past month; the challenge is to keep this momentum going on while renewed partial lockdown is in place in several countries. 


Eurozone: Service confidence (Oct.): -11.8 vs -14 expected (prior: -11.2 revised from -11.1)

  • Confidence has slightly decreased and was still resilient compared to consensus expectations, but clearly downside risks should intensify next month due to renewed lockdown weighing on services.
  • Over the month, modest improvement was seen in future demand and employment, and opinions were less negative in construction and in retail; a sharp new deterioration should be seen in Nov. in retail under renewed lockdown.


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

  • Sentiment has declined from the previous month; opinions have deteriorated on current situation and expectations have also decreased on future economic situation, employment and willingness to buy.
  • Expectations were back to their June level, in line with renewed lockdown announced in several countries.


Germany: Unemployment rate (Oct.): 6.2% as expected (prior: 6.3%)

  • Unemployed was down by 35 k after -10 k the prior month.
  • On ILO definition, the unemployment ratio remained stable at 4.5%.


Italy: Consumer confidence (Oct.): 102 as expected (prior: 103.3 revised from 103.4)

  • Confidence has eased on declining views on future economic situation and rising unemployment.


Italy: Manufacturing confidence (Oct.): 95.6 vs 91.8 expected (prior: 92.6 revised from 92.1)

  • Business sentiment has increased more than expected from the prior month; opinions have improved on current production, orders and economic situation.
  • Expectations on future production and orders were more cautious after a rebound the prior month.


Spain: CPI (Oct.): 0.3% m/m vs 0.5% expected (prior: 0.4%)

  • Preliminary data have shown more stable trend in monthly prices, while yearly trend has declined further, from -0.6% y/y the prior month to -1% y/y.


Germany: CPI (Oct.): 0% m/m as expected (prior: -0.4%)

  • Preliminary data have pointed toward remaining low inflation; the rises in clothes and energy prices have been more than compensated by lower prices in services.
  • Yearly trend has declined further, from -0.4% y/y the prior month to -0.5% y/y.


UK: M4 (Sept.): 12.3% y/y (prior: 12.1%)

  • M4 ex-OFC has slightly increased over the month (0.4% m/m after 0% m/m the prior month).
  • M4 lending was up by 4.3% y/y after 4.4% y/y the prior month; lending to business has slowed down (from 9.7% y/y the prior month to 8.4% y/y), but lending to SMEs has accelerated further (from 21.9% y/y to 23% y/y).
  • Credit consumer was down by 4.6% y/y (from -3.9% y/y the prior month), as consumers repaid debt; on the opposite, mortgage approvals stayed dynamic.
Wednesday 28 October
France: modest easing in consumer confidence in October

US: Wholesale inventories (Sept.): -0.1% m/m vs 0.4% expected (prior: 0.3% revised from 0.4%)

  • Inventories in the retail sector have increased by 1.6% m/m after 0.5% m/m the previous month. Inventories have contracted in other sectors.


France: Consumer confidence (Oct.): 94 vs 93 expected (prior: 95)

  • Consumer confidence eased less than expected; while sentiment on current situation was quite stable, expectations on personal situation, standard of living and unemployment have declined from the prior month.
  • New restrictive measures and renewed lockdown to be announced should deteriorate further the confidence.


Italy: PPI (Sept.): 0.3% m/m (prior: 0.1%)

  • PPIs were firmer for consumer goods and energy over the month; yearly trend was less negative, from -4% y/y the prior month to -3.8% y/y.


Spain: Retail sales (real) (Sept.): -3.3% y/y vs -3.4% expected (prior: -2.9% revised from -2.4%)

  • Sales were down by 0.3% m/m; the fall was broad based, except for personal goods which remained on the rise.


Sweden: Retail sales (Sept.): 0.8% m/m (prior: -0.2% revised from -0.3%)

  • Retail sales rebounded in Aug, up by 3.9% y/y


Sweden: Manufacturing confidence (Oct.): 106.8 vs 107 expected (prior: 105.5 revised from 105.8)

  • Confidence has regained but less than expected; in parallel, confidence has also increased in construction and in services from the prior month.


Sweden: Consumer confidence (Oct.): 90 vs 88.5 expected (prior: 88.4 revised from 88.3)

  • Consumer confidence has increased slightly more than expected.
  • Rising confidence on future economic situation, but cautiousness on current and future personal situation.


Norway: Retail sales (Sept.): 0.3% m/m vs 1.2% expected (prior: -4.9%)

  • More volatile data over the past month, due to changing consumer habits; the rebound remained below expectations.


Tuesday 27 October
US: strong durable goods orders but weakening consumers expectations

US: Durable goods orders (Sept.): 1.9% m/m vs 0.5% expected (prior: 0.4% revised from 0.5%)

  • New orders were more sustained than expected thanks to aircraft and autos; core order (new orders for capital goods non-defense ex aircraft) were up by 1% m/m after upward revisions to past month data (2.1% m/m).
  • Orders have rebounded for transport-autos and metals, while they decreased for electrical and machinery over the month.
  • Shipments were up by 0.3 % m/m (-0.3% m/m the prior month) and inventories were up by 0.4% m/m (-0.1% m/m the prior month).
  • With resuming activity and confidence in the manufacturing sector, durable goods have rebounded pointing towards parallel rebound of private capex in Q3 after large decrease in Q2.


US: Housing prices (FHFA) (Aug.): 1.5% q/q vs 0.7% expected (prior: 1.1% revised from 1%)

  • A sharp rebound over the month and broad-based across districts.


US: S&P CoreLogic CS 20-City (Aug.): 5.18% y/y vs 4.2% expected (prior: 4.12% revised from 3.95%)

  • Prices remained on a regular upward trend (0.47 % m/m); all districts have contributed positively to the rise in prices.


US: Consumer confidence (CB) (Oct.): 100-9 vs 102 expected (prior: 101.3 revised from 101.8)

  • Confidence has eased somewhat from the previous month; sentiment on current conditions has increased further, while expectations have eased (from 102.9 to 98.4).
  • Positive views on current conditions were fuelled by still rising momentum in jobs available and ongoing positive economic environment.
  • Expectations have weakened due to more cautious 6-month views: some moderation is expected in economic activity from today, and a mixed situation expected on labor and income.
  • Willingness to buy in 6-month horizon has eased for cars and large items but increased further for houses.
  • Expectations were volatile during the year and the index is back to levels seen in July-August, period in which contagion cases were high in the US.


US: Richmond Fed manufacturing (Oct.): 29 vs 18 expected (prior: 21)

  • Sentiment on current conditions has strongly rebounded thanks to higher shipments and new orders; 6-month expectations have declined after a strong rebound the prior month, showing a more cautious view on global activity.


Eurozone: M3 (Sept.): 10.4% y/y vs 9.6% expected (prior: 9.5%)

  • M2 (10.3% y/y) and M1 (13.8% y/y) have shown in parallel an accelerating trend over the month.
  • Credit to the private sector has also accelerated further from 4.5% y/y the prior month to 4.7% y/y.


Spain: Unemployment rate (Q3-20): 16.26% vs 16% expected (prior: 15.33%)

  • Despite a rise in employment, unemployed has increased more, and the unemployment ratio has gained further, slightly more than expected.
Monday 26 October
Weakening German IFO; slower new home sales in the US

US: New home sales (Sept.): 959k vs 1025k expected (prior: 994k revised from 1011k)

  • Data have been revised down for past month and have moderated during the month; this moderation was seen over on 3 districts over 4.
  • Inventories have relatively increased, back to past month level, but remained globally tight; prices were on a sustained rising trend after a pause in the previous month. Low rates and rising prices have worked in parallel in past quarters, with sustained demand for housing.


Germany: IFO (Oct.): 92.7 vs 93 expected (prior: 93.2 revised from 93.4)

  • Business sentiment has weakened contrary to expectations from the prior month. Views on current situation have improved further, but expectations have weakened, back to their June-July levels.
  • By sector, the sentiment has reversed in trade and weakened also in construction; it has decreased on services but improved further in manufacturing.
  • IFO pointed towards diverging trend between manufacturing and trade-retail sectors facing new restrictions due to second wave of contagion.


Spain: PPI (Sept.): 0.3% m/m (prior: 0.2%)

  • Prices of energy and basic metals have rebounded over the month.
  • Yearly trend was slightly less negative, from -3.5% y/y the prior month to -3.3% y/y.


Turkey: Industrial confidence (Oct.): 109.7 (prior: 105.7)

  • Sentiment has rebounded on all major sub-components: production, orders and capex; on the contrary, views on exports have eroded from the prior month.
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.
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