With the delayed September jobs report in the rearview mirror, market participants will have to digest several high-profile data releases on Tuesday and Wednesday before Thursday’s Thanksgiving holiday. The November employment report will be released on 16 December, along with the Establishment Survey portion of the October employment report. November CPI will be released on 18 December. In US macro data this week, September PPI and retail sales data will be the highlights. From FOMC point of view, it is a divided house currently. The October meeting minutes were hawkish, with a greater number of officials favoring a December pause. There seems to be 2 major points of contention: 1) the udnerlying trend of inflation excluding tariffs 2) the restrictiveness of the current policy stance. In US macro data last week, NFP came higher than any market estimates but unemployment rate inched higher due to higher labor force participation rate. But September’s strong NFP reading is likely more reliable than usual, due to a longer data collection period. The response rate for September was 80.2%, the highest since December 2019, likely reducing the risk of substantial revisions in the upcoming October/November report. In our view, Dec looks like a dovish hold purely due to absence of macro data. Multiple dissents are likely regardless of the outcome, but given the alignment of voters, it appears Powell could forge a larger consensus for a dovish hold. In dated USTs supply this week, we have $69bn of 2yr auction on Monday, $70bn of 5yr auction on Tuesday & $44bn of 7yr auction on Wednesday. In RoW events, UK budget will be closely watched on Wednesday for the assumed fiscal hole and efforts on tax increases. Our own view is total fiscal hole might be around 20 BN GBP with tax increases likely around 5-10 BN GBP. Incremental gilts supply should be 6BN GBP. This should augur well for BOE to cut rates by 25 bps each in Dec & April meetings. Canada has Q3 GDP data on Friday which might come a tad strong at .5%. Tokyo CPI on Friday might stay elevated but wont push BOJ for a 25 bps hike in it's 19th Dec meeting due to Takaichi's expansionary policies. We might soon see JPY testing 160 where we expect MoF to finally intervene.
