The US Unemployment rate posted better than expected with a 16 year low on Friday, at 4.2%. Despite this, the Non-Farm Payroll figure posted a bearish -33k, down from the expected 80k. This is the first time in seven years the US economy has posted a negative NFP reading, as the hurricanes which hit the south coast of America skewed the data. Restaurants and bars recorded a drop of 105,000 in payroll, however as an industry which normally requires the employees to show up for work in order for them to get paid, this is an example of how the harsh weather could have skewed the data. FOMC member, Robert Kaplan, spoke after the data release explaining how he saw these loss of jobs as temporary and mentioned how they knew the hurricanes would have affected the data. Kaplan continued to say the labour markets are tightening and he is still open-minded on a December rate hike as the economy is not there yet, reinforcing the idea that the Fed can afford to be patient. The mixture of bullish and bearish data resulted in the Greenback remaining relatively unmoved.
With Brexit negotiations set to enter the fifth round of talks this week, UK Prime Minister, Theresa May is set to warn MPs in the House of Commons today not to listen to the ‘doomsayers’ who have been complaining about the rate of progress so far. This week’s discussions are the last before the EU leaders meet on 19th October at the EU Summit to discuss whether Britain has done enough to progress talks. The speech to the House of Commons comes after May’s disastrous Tory conference speech last week and the news that 30 rebels have privately agreed she needs to resign. May threatened over the weekend a potential reshuffle in her cabinet after the EU summit, potentially putting Boris Johnston’s job at risk as tensions continue to raise between them. The uncertainty within the House of Commons has seen the Pound continue to fall.
Quiet start to the week with no high tier data on the economic docket as the US markets are closed in observance of Columbus Day and Canada is closed for Thanksgiving.
Tuesday will start with the release of the Manufacturing Production Figure from the UK, expected to post 0.3%, as well as the Goods Trade Balance, forecasted at -11.2b. In the Eurozone, the Economic and Financial Affairs Council will be meeting in Brussels and are set to discuss taxation issues. Across the pond, FOMC member Neel Kashkari will be delivering the opening remarks at the Regional Economic Conditions Conference.
The focus will remain with the US on Wednesday, as FOMC member Robert Kaplan will be speaking about the economic outlook at the Stanford Institute for Economic Policy Research, with questions from the audience expected. The US will also be releasing the JOLTS Job Openings Figure, expected to post 6.06m and the FOMC meeting minutes from September’s meeting.
On Thursday, the Bank of England will be releasing their credit conditions survey. Across the pond, the PPI figure and Weekly Unemployment Claims will be released from the US. Two FOMC members will be speaking in the afternoon. Jerome Powell will be delivering a speech title ‘prospects for emerging market economies in a normalising global economy’. Lael Brainard will be participating in a panel discussion about monetary policy at the Peterson Institute for International Economics alongside ECB President Mario Draghi.
The US will remain the focus on Friday, with the release of the core CPI and Retail Sales figures, expected to post 0.2% and 0.9%. The prelim University of Michigan Consumer Sentiment will also be released, forecasted to post 95.5. The week will end with FOMC members Charles Evans and Robert Kaplan delivering speeches about the economy and monetary policy.