Insight Multi-Asset update – week beginning 2 November, 2019


Market and economic review 

With news flow on the signing of a ‘Phase One’ deal between the US and China sparse relative to prior weeks, instead we will mainly focus on this week’s data releases. With Thanksgiving on Thursday, the end of the week was rather quiet with the release of data from the US being brought forward. On the whole it was a pretty mixed picture, which we will go on to discuss in further detail below.

November was a strong month for risk assets with equities performing well again last week. Global government bond yields have generally moved higher, led by US Treasuries. In FX space, developed market currencies have been relatively stable however emerging market currencies, and in particular the Brazilian real, Chilean peso and Colombian peso, have been volatile due to idiosyncratic stories.

A light week for data which included an upward revision to US GDP and a small uptick in European inflation numbers

A raft of data releases came from the US last week. Jobless claims fell to 213,000 from 228,000, below the consensus of 221,000. This enforces the idea that more recent elevated prints may have been in part due to specific occurrences such as the California wildfires. Continuing claims also fell.

Whilst it may be classed as second tier data, the Chicago PMI was an interesting release given the October print (43.2) materially undershot expectations. The expectation was a bounce back to 47, however it printed at 46.3. Lastly from the US, Q3 year-on-year (yoy) GDP growth was revised to 2.1% from 1.9% due to faster inventory-building and a less than expected fall in business investment.

Germany produced a slightly lower than expected inflation print. The expectation was for a small uptick to 1.2% yoy from 1.1%, however it remained at 1.1%. Slightly stronger prints came from France (1.0% yoy, up from 0.8%) and Spain (0.4% yoy, up from 0.1%). These numbers come post a speech from the European Central Bank (ECB) President Christine Lagarde last week, who urged countries to offer fiscal support in order to stimulate the European economy.

President Trump passes the Hong Kong Democracy Act, but it remains unclear whether this will impact negotiations towards the signing of a ‘Phase One’ deal

With trade-related news less prominent than in recent weeks, the main focus was on the implications of President Trump signing legislation that expresses US support for Hong Kong protesters into law. This bill requires an annual review of Hong Kong’s special trade status under American law, and possible sanctions on officials deemed responsible for human rights abuses. The bill had already been passed by the house, and was due to become law if President Trump did not sign or veto it by 3 December regardless.

As expected, this was not received well by officials in China. That said, we have yet to see as much of a response as some would have predicted. What we have heard from the state-run Global Times is that China may consider putting drafters of the bill onto a no-entry list. We should see whether the passing of this bill impacts the signing of a Phase One deal in the weeks that follow.


The coming week brings data releases that should help guide markets into year-end with global PMIs likely to be the focal point. In addition to those, we will also see data on US job reports (non-farm payrolls, unemployment rate, average earnings, etc.) and the ISM print.

Outside of data, we will hear once again from ECB President Lagarde and also the results of various central bank decisions across the globe, including Canada and Australia.

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