While I believe it’s widely anticipated that we’ll have a split Congress after tomorrow, I would assume it’s already been priced in. As that alone will limit any new notable legislation in the coming two years, whether the Senate flips too will matter less for markets and the economy. Thus if the case, the Thursday CPI will likely have more of an impact on markets instead. The ad people will miss the election season but I think the rest of us will be happy that the election ad bombardment is ending, for now.
China’s trade data reflected the global slowdown and its own internal struggles. Exports fell .3% y/o/y instead of rising by 4.5% as expected. Exports to the US fell 12.6%, lower to the EU by 9%, and declined by 15% to the UK but rose to other parts of Asia ex Hong Kong. Imports, many of which end up in eventual exports, declined by .7% y/o/y. The estimate was for no change. Reflecting the challenges of its residential housing industry, m/o/m imports of iron ore, steel and copper all fell. Imports m/o/m of crude and refined products rose but declined for natural gas and coal.
While Chinese authorities pushed back on the reopening rumors, Chinese stocks closed up again but the yuan is weaker. After the Friday jump, copper is lower by almost 2% but iron ore is flat.
The investor mood in Europe improved in November as the Sentix investor confidence index rose to -30.9 from -38.3. Mild weather helped as it gave confidence that the region can make it through the winter without any natural gas supply issues. Sentix said “Concerns about a catastrophic gas shortage are fading.” For perspective, this index stood at +7.6 in January 2020.
Sentix EU Investor Confidence index
When the downward revision to August is included, the September industrial production figure out of Germany was slightly better than expected but “The mood among companies is still very low and demand is noticeably decreasing” according to the economy ministry. Germany will likely report a negative Q4 print after the surprise modest growth seen in Q3. The euro is higher while bond yields are down slightly and in turn US Treasuries are bouncing.