Market movers ahead
Next week, the primary focus will remain on the Donald Trump win and any news on what to expect from the new Trump administration next year. Following the initial sell-off in financial markets, markets have recovered since Trump's victory speech, when he struck a more reconciling tone. We still need more information on what Trump actually plans to do in his first period as president to get a firmer grip of the implications of his win on economics.
On the US data front, we are set to receive a range of important releases, which should give us further insight on the state of the economy. Among the most important releases are retail sales, CPI inflation, manufacturing production, regional manufacturing indices and housing market statistics. Also, we are due a range of Fed speeches, in which we expect the focus to be on the implications of the presidential election and the rate hike outlook for December and 2017.
In the UK, there are many important data releases next week. The most important is the release of CPI inflation for October on Tuesday. We estimate total CPI inflation rose to 1.1% y/y in October, from 1.0% in September, due mainly to higher fuel and food prices.
Chinese industrial production has seen a small lift this year but not fully reflecting the strength we have seen in other indicators such as PMI and electricity production: we expect a small increase this week.
Next week is a busy week in Scandinavia, with the most important releases being Swedish inflation and Norwegian Q3 GDP. In Denmark, the statistical office publishes its new GDP indicator for Q3, which is intended to give an early indication of economic activity.
Global macro and market themes
Trump will have a strong mandate to implement his policy agenda following his sweeping victory.
Large infrastructure spending and tax cuts in the US are in the pipeline.
Fixed income markets are set to come under pressure from rising inflation expectations.
On equities, we are bullish on US markets and underweight Europe and the Nordic markets.
In our view, the Trump win spells trouble for emerging markets.
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