Intesa Sanpaolo : FOMC – New forward guidance coming soon for the asset purchase programme, to be “well coordinated” with guidance on rates,
Weekly Economic Monitor – 20. November 2020
Intesa Sanpaolo – Research Department
whereas an expansion of the programme can wait, for now.
The week’s market movers
In the euro area, inflation is expected little changed in November in the eurozone (to -0.2% from -0.3% previously), in Italy (stable at -0.6%) and in Germany (to -0.4% from -0.5%). The final estimate of the PMI surveys for the month of November will confirm the sharp slowdown seen in the first reading, which leaves manufacturing still expanding and services, heavily hit by the new restrictions, largely in recessionary territory.
Unemployment is expected to rise sharply both in Italy and in the whole euro area, and the rise could go on in the coming months. Retail sales in the Eurozone should show a recovery in October, but it will not last this month. Finally, the second reading of 3Q national accounts data in Italy will confirm the large GDP rebound in the Summer months, which is however destined to turn into a new contraction in activity in the Autumn quarter.
In the United States, data out next week are referred to November, with the focus on the Employment Report. Jobs growth should remain solid, with monthly job gains likely above 500k, held back by cuts in the public sector. The unemployment rate should drop further, to 6.8%.
The ISM indices are expected to remain in markedly expansionary territory, despite the rise of new infections and the introduction of (limited) containment measures. The trade balance should outline a widening of the deficit in October, and support forecasts for a negative contribution from net exports to 4Q growth.
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