UPCOMING
EVENTS:

• Monday: Australia Retail Sales, China Caixin
  Manufacturing PMI, Switzerland Retail Sales, Switzerland Manufacturing
  PMI, Eurozone Unemployment Rate, Canada Manufacturing PMI, US ISM
  Manufacturing PMI, Fed’s Waller.
• Tuesday: Switzerland CPI, US Job Openings.
• Wednesday: Australia Q3 GDP, China Caixin Services PMI,
  Eurozone PPI, US ADP, Canada Services PMI, US ISM Services PMI, Fed Chair
  Powell.
• Thursday: Switzerland Unemployment Rate, Eurozone Retail
  Sales, US Jobless Claims, OPEC.
• Friday: Japan Average Cash Earnings, Canada Labour
  Market report, US NFP, US University of Michigan Consumer Sentiment.

Monday

The US ISM
Manufacturing PMI is expected at 47.5 vs. 46.5 prior. The S&P Global Manufacturing PMI came in as expected but the details showed once again
an improvement and a much better future outlook.

In fact, the manufacturing
sector optimism hit a 31-month high amid improved sentiment due to reduced
political uncertainty following the US Presidential Election. Moreover, expectations
of lower interest rates, lower inflation, and better economic conditions
contributed to positive outlooks, as well as a more business-friendly incoming
administration.

Tuesday

The Switzerland
CPI Y/Y is expected at 0.8% vs. 0.6% prior. Inflation in Switzerland has been falling
pretty fast but despite that, the SNB kept on cutting rates by just 25 bps. The
Swiss Franc is still relatively strong, and it’s been hurting Swiss exporters.
The market is pricing a 72% chance of another 25 bps cut in December with the
remaining probability for a 50 bps move.

Recently, SNB’s Chairman Schlegel said that they might reintroduce negative interest
rates if necessary. Schlegel took charge in October, and it sounds like he’s
not afraid of taking more aggressive actions be it larger rate cuts or strong
interventions.

The US Job
Openings are expected at 7.480M vs. 7.443M prior. The last report surprised to the downside with the quits rate ticking
slightly lower and the hiring and layoffs rates remaining relatively stable.
It’s a labour market where at the moment it’s hard to find a job but there’s
also low risk of losing one. There’s a good chance that things will improve
next year though and there have been some positive signs already.

Wednesday

The US ADP is
expected at 150K vs. 233K prior. The last report surprised to the upside triggering a hawkish
repricing in interest rates expectations. Although the ADP has a poor track
record in predicting the NFP, the recent market’s sensitivity to labour market
data makes it a market moving event. I don’t see the market repricing the rate
cuts expectations further based on labour market data though. The main event
this month will be the US CPI on the 11^th of December.

The US ISM
Services PMI is expected at 55.6 vs. 56.0 prior. This survey hasn’t been giving
any clear signal in the past couple of years as it’s just been ranging since
2022. The last report though jumped to a new cycle high, which highlights the
pick up in economic activity with the expected rate cuts and now a more
business-friendly incoming administration, with expectations of looser
regulations, tax cuts and so on.

Thursday

The US Jobless
Claims continues to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing Claims continue
to hover around the cycle highs.

This week Initial
Claims are expected at 215K vs. 213K prior, while there’s no consensus for Continuing
Claims at the time of writing although the prior release saw a decrease to
1907K vs. 1908K prior.

Friday

The Japanese
Average Cash Earnings Y/Y is expected at 2.6% vs. 2.8% prior. The Tokyo CPI recently accelerated giving the JPY a boost as the market sees good
chances of a rate hike in December.

The commentary
from BoJ officials has been mixed but leaning into a slightly hawkish stance.
The probability for a 25 bps hike in December stand at 56% but an upside
surprise in the wage data could see those probabilities tick higher.

The Canadian
Labour Market report is expected to show 27.5K jobs added in November vs. 14.5K
in October and the Unemployment Rate to tick higher to 6.6% vs. 6.5% prior. The
BoC is now focused on growth as they met their inflation target.

Following Friday’s
Canadian GDP report, the market increased the probabilities for a
50 bps cut in December to 52%. Better than expected jobs data will likely see
the 25 bps cut getting back in favour.

The US NFP report
is expected to show 195K jobs added in November vs. 12K in October and the
Unemployment Rate to tick higher to 4.2% vs. 4.1% prior. The Average Hourly
Earnings Y/Y are seen at 3.9% vs. 4.0% prior, while the M/M measure is seen at
0.3% vs. 0.4% prior.

The last report
was negatively impacted by strike activity and hurricanes, so the market just
ignored it, especially since the focus was on the US Presidential Election. The
labour market data throughout November has been positive, so the expectations
going into this NFP report are skewed to the upside.

As previously
mentioned, I don’t see the market repricing the rate cuts expectations further
based on labour market data. The main event this month will be the US CPI on
the 11^th of December. In my opinion, the Fed is going to cut by 25
bps anyway but revise the dot plot to show just two rate cuts in 2025 (in line
with the market’s pricing) and communicate a pause to gather more information.