Take Five: Dark December

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In this news, we discuss the Take Five: Dark December.

1 / MORE PITFALLS

It has been a year many would rather forget and there is still a month of 2020 – a month filled with events that could cause the markets to explode. Here they are:

December 1: one month before the end of the transition agreement between the UK and the EU.

December 8: Deadline to complete US state-level vote recounts and court contests during the election.

December 10: The European Central Bank meets and is expected to step up emergency stimulus measures.

December 11: U.S. government funding expires unless lawmakers agree to a 12-bill spending schedule.

December 10-11: EU Council meeting. The problems are Brexit and the risk of Poland and Hungary sabotaging an EU stimulus spending plan.

December 14: The American electoral college votes, with the risk that certain “infidel” voters break the rule which obliges them to vote according to the popular vote.

December 15-16 – The US Federal Reserve meets. Will he expand bond purchases or signal a yield cap?

December 28: The European Parliament could vote on any Brexit deal.

Graphic: Sterling roller coaster

2 / HARD WORK

An explosion in new COVID-19 infections and trade restrictions have undermined the recovery in the U.S. labor market, so November’s payroll figures will be closely watched.

Last month, 638,000 jobs were created as the economy recovered from the downturn induced by the pandemic. But it was the smallest gain since the employment recovery started in May and left employment 10.1 million below its February high.

November will likely be the seventh consecutive month of job gains, but only 520,000 jobs are expected to have been added.

-Weekly US jobless claims rise as COVID-19 infections rise

– US consumer spending increases; income drops in October

Chart: Non-farm payroll in the United States

3 / ROLLOVER OPEC

OPEC and its allies were expected to increase oil production by 2 million barrels per day (bpd) from January to mitigate record supply cuts that were implemented as crude prices fell more early in 2020.

But when the group – known as OPEC + – meets on November 30-December. 1, it is planned to delay these plans to increase production for at least three months.

As crude futures have hit eight-month highs near $ 50 a barrel, OPEC + is reportedly still considering delaying the increase as Libyan production increases and restrictions on movement continue. cap energy prices.

Sources tell Reuters a current curb rollover of 7.7 million bpd until the end of the first quarter has support within the group. Analysts seem to agree – most believe a rollover of at least three months is needed to bring down high levels of oil inventories.

-OPEC + sees the extension of oil cuts curb the rise in oil stocks in 2021, according to a document

Chart: OPEC Demand Forecast

4 / OPULENCE IN JAPAN

Japanese trendsetters are protecting themselves against COVID-19 with diamond and pearl encrusted masks. Prime Minister Yoshihide Suga’s ruling party will also spend heavily, with draft budget plans due to be presented to parliament.

The project contains green investment plans and extensive subsidies for households and businesses.

Upcoming data will show the impact of previous 234 trillion yen stimulus packages. We could see an expansion in industrial production and perhaps the first signs of growth in retail sales.

– Japanese ruling party to propose major green investment spending – project

– POLL-Japan factory production, increased retail sales, prospects for virus resurgence

Chart: Japan’s GDP and debt

5 / NO HELP

Eurozone consumer prices are expected to have fallen further in November – a 0.3% year-on-year decline is expected from Tuesday’s flash reading.

The figures will not surprise the ECB, which expects average inflation of -0.2% over one year in the fourth quarter. But a fourth consecutive month of negative price growth may not turn out well – ECB chief economist Philip Lane recently warned of tolerating low inflation.

And while a COVID-19 vaccine can improve the outlook for growth, it may not do much for inflation – inflation-adjusted bond yields remain deeply negative. The data will only reinforce the need for further stimulus and that will come in December as the ECB has seen increased bond purchases and cheap loans for banks.

– ECB Lane warns of tolerance of low inflation as more stimulus looms

Chart: No inflation relief for the ECB

Reporting by Sujata Rao, Dhara Ranasinghe and Ahmad Ghaddar in London; Saqib Iqbal Ahmed in New York and Vidya Ranganathan in Singapore; Compiled by Sujata Rao; Edited by Catherine Evans

Original © Thomson Reuters

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