- Japan's Abenomics appears to have hit a problem. The hope was inflation expectations would stimulate consumer demand. The third quarter GDP was (unexpectedly) negative at -1.6% annualised, with weak consumption a key part of the disappointment.
- We believe that the proposed second increase in the consumption tax in Japan will be postponed as a result of the weak economic data (by around eighteen months). That decision may also prompt an early general election. The BoJ meets this week too.
- In the Euro area we have testimony from ECB president Draghi - with reports of division on the governing council widespread, and disagreement with the German government over policy also apparent, this is likely to be a focus.
- US consumers have demonstrated their support for the economy with the retail sales figures. Now it is down to the manufacturing sector to prove that they are at least supplying some of the components for the products that are demanded. We see a strong 0.3% industrial production figure today.
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