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Intesa Sanpaolo : ECB and monetary policy

Intesa Sanpaolo : The ECB president has explicitly indicated that next month’s “recalibration” of monetary policy will focus on PEPP and TLTRO-III.

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Weekly Economic Monitor – 13. November 2020 

Intesa Sanpaolo – Research Department


Brexit: yet another decisive week has arrived. The two possible outcomes are a free trade agreement reduced to a bare minimum, or a no-deal Brexit, with the adoption of standard trade tariffs. In either case, customs controls will be reinstated as of 1st January 2021. A no-deal exit would also imply the risk of legal and commercial reprisals, should the British government insist in pressing forward with the UK Internal Market Bill. However, even if a trade agreement is signed, relations could prove turbulent all the same.

United States. The outcome of the 3 November election has awarded a majority of both the popular vote and of the Electoral College to Biden. The results are not yet certified but are highly likely to be confirmed. Congress will probably be split, with a marginal Republican majority. Voters have pushed the parties towards the centre of the political spectrum, choosing a more moderate president than Trump, while curbing the leftward move of the Democratic Party. Therefore, the baseline scenario envisages a Biden administration with a more moderate plan of action compared to his electoral manifesto, but still focused on actively curbing the pandemic and strongly supporting the economy. Congress could cooperate.

The week’s market movers

In the euro area , the week will be a rather quiet one in terms of the release of macroeconomic indicators. The second estimate of October inflation should confirm the first reading, with stable annual inflation at -0.3% in the Eurozone, and back on the rise by -0.6% from -1% in September based on the HICP in Italy. The advance estimate of the consumer confidence index, as calculated by the EU Commission, should outline a further deterioration of sentiment in November, after the one already seen in October.

This week, a host of data releases are lined up in the United States , but focus will remain on developments concerning the challenge for the White House. The initial set of manufacturing sector surveys for November should confirm activity growth, and relatively optimistic expectations among businesses, despite the worsening of the health picture. Data referred to October should be positive again: retail sales, industrial output, existing home sales, and housing starts, should send expansionary signals for the consumption and investment trends in 4Q.


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Source: BONDWorld