‘Super Friday’ Unlikely To Shift ECB Policy Thoughts

More GDP than you can shake a stick at

Recent events that have been deemed ‘super’ by markets have routinely disappointed; the past two ‘Super Thursday’ policy announcements from the Bank of England being a prime example. Today however is ‘Super Friday’ due to the number of GDP releases from European Union members today.

Through the next few hours we will receive the latest GDP announcements from France, Romania, Germany, the Czech Republic, Hungary, Slovakia, the Netherlands, Bulgaria, Poland, Italy, Portugal, Greece, Cyprus and the Eurozone as a whole.

I tend to think that Fridays are pretty super without all of that lovely economic data to be honest.

Germany and France even yet not

France’s and Germany’s figures are already with us at the time of writing and remain lacklustre. Both France and Germany have managed to expand by 0.3% through Q3 with that seen as a success and a failure respectively.

Near term risks to the German economy are exactly what you think they would be – export softness in a world where aggregate demand remains uncertain and a consumer base happier to save gains afforded to them via stagnant inflation levels than spend them. These risks remain but I personally think that recent improvements in labour markets as well as a migrant driven increase in consumption will eventually be felt.

France’s picture is a lot more muddled and it remains to be seen whether this bright spot in growth can be sustained.

In the very near term, and viewing both of these announcements through the eyes of a market hopped on stimulus expectations like a sugar-crazed four year old, there is little to smooth out thoughts of an increase in asset purchases or a deposit rate cut at the European Central Bank’s meeting on December 3rd.

US still tilted towards December hike

Dollar has calmed noticeably following a volatile day yesterday, hurt and helped by speeches and comments from no less than five members of the Federal Reserve’s Federal Open Markets Committee.

Regional Fed Presidents Dudley and Bullard as well as Deputy Governor Stanley Fischer all made comments interpreted hawkishly by the markets although nobody apart from arch-hawk Bullard was willing to really tip their hand as to how they would vote in December.

US retail sales expected to slow

In what has been a very data-light week for most economies, this afternoon’s retail sales announcement from the US is the only thing that we can cling on to for an accurate read of US consumption for a while.

Last week’s ISM reading from the services sector was a blockbuster and set up the substantive gains in last Friday’s payrolls announcement. This week we have seen Walmart (N:WMT), the largest retailer in the US by some margin, cut its Thanksgiving and Christmas guidance as well as its expectations for the entirety of next year.

Without the consumer the US economy is not going to be able to sustain interest rate rises in the coming years.