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Not wound down yet

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Markets are starting the end-of-year wind down, with the normal moderation of volumes. Equities seem to be relatively cheerful into the end of the year, the oil price is rising, and the euro has regained some ground against the US dollar.
  • France is offering producer price inflation data today – following the strength in the German figures earlier this week. Inflation pressures are more likely to be building in Germany than in France given the relative situations of their labor markets. But if European corporate pricing power is improving, this is worth watching.
  • The UK issues public sector finance data, over which a discreet veil should be drawn to avoid spoiling the end-of-year optimism. Slower growth threatens government finances in 2017. Lower immigration threatens government finances longer term. Rising UK inflation is also likely to damage the deficit.
  • Housing data is scheduled from the US - not a major focus right now. But with a shortage of skilled labor in the US and with roughly 80% to 85% of construction labor skilled (or lawyers), the combination of bottlenecks and infrastructure proposals may eventually constrain housing supply further.