Weekly macroeconomic and market update 16 November 2015

Weekly macroeconomic and market update

Pexels Dominika Gregušová 672532
Ben Seager-Scott
Published: 16 Nov 2015 Updated: 02 Feb 2023

Macro headlines

Further weak data from China unsettled markets with signs that the rate of economic slowdown was faster than markets have been anticipating. The export rate contracted a further 6.9% year on year in October from 3.7% in September, upsetting hopes that the rate of loss would moderate to 3%. Imports were also sharply down for the second consecutive month, falling 18.8% - again, worse than expected - whilst industrial production growth slowed 0.1% to 5.6%, the lowest level since the depths of the global financial crisis. The inflation rate fell to 1.3% whilst factory gate prices contracted for the 44th consecutive month, -5.9% lower than a year ago. The only sliver of hope came from Retail Sales growth, which was marginally stronger and ahead of expectations, up 11.0% year on year.

Flash GDP readings for the Eurozone showed the region’s GDP grew at a rate of 1.6% year on year in the third quarter, a slight acceleration on the previous quarter’s 1.5% growth but just shy of market forecasts. European economic recovery has been gaining strength through the last year, but a slowing global economic backdrop has raised concerns over the durability of the recovery, which has been apparent from recent survey data. Despite these worries about the future, industrial production in the region beat expectations, increasing 1.7% year on year for September, though this was slightly slower than the 2.2% growth seen for August.

Other macro events

  • Overnight it was confirmed that Japan has slipped back into recession, with third quarter GDP falling an annualised -0.8% from a revised fall of -0.7% in the second quarter. Although this was considerably worse than forecasts for a -0.3% fall, much was driven by a rundown of inventory amid sluggish investment - notably consumption was actually stronger than expected. The Government in Japan is already preparing a special ‘supplementary’ budget aimed at boosting economic growth. Month-on-month machinery orders also painted a stronger picture, rebounding from a -5.7% fall in August to 7.5% growth in September, ahead of forecasts. However the tertiary industry index slipped -0.4% month on month whilst the Eco Watchers sentiment survey remained below the 50 mark, indicating pessimism in consumer services. This will all combine to focus minds ahead of the Bank of Japan monetary policy decision later this week.
  • UK unemployment fell 0.1% to 5.3% in September, whilst the average earnings growth rate held steady at 3.0% year on year, though a slight acceleration had been expected. However, construction output fell sharply, -1.6% for September from -0.6% the month before (forecasts were for -0.3%).
  • US retail sales slowed from 2.2% in September to 1.7% in October. However consumer sentiment data ticked up to 93.1, ahead of expectations.


It was a pretty bleak week for risk assets with little reason to cheer. Equities and bonds suffered as sovereign bond yields fell.

  • Equities- Major equity markets trended lower through the week. In the UK, the FTSE All-Share fell -3.4% and the US and Europe were similarly down (S&P 500 -3.6%, FTSE Europe (ex-UK) -3.2%). Japanese equities managed to buck the trend as the Topix returned +1.4%, but Hong Kong joined the depressed theme as the Hang Seng index slipped -2.1%.
  • Bonds- As major risk assets fell, sovereign bonds rallied. In the UK 10-year gilt yields were back below 2%, tightening 5 bps on the week to 1.98%. There were similar moves in other major sovereign bonds: US 10-year yields were 5 bps tighter to 2.27%, German 10-year bunds were 13 bps tighter to 0.56% and Japan Government Bonds were 2 bps tighter to 0.30%.
  • Commodities- There was weakness across the commodity complex last weak. Most notable was the particularly bad week for oil, where Brent crude slipped further to end the week at US$44.63 per barrel as reports came out that global inventories were at all time highs. Copper was also weaker at US$2.16 whilst gold slipped to US$1080.80 by the end of the week.
  • Currencies- Sterling gained some strength through the week, up 1.1% against the US dollar, and 1.4% against the euro. The euro was generally weaker.


Week ahead

Looking to the coming week, highlights will be the output from Central banks – on Wednesday the US Fed’s FOMC minutes will provide more information on discussions at the recent meeting which was read as surprisingly hawkish. We then have the Bank of Japan’s decision as well as a range of mid-level economic data releases.

Monday: Little of interest at the start of the week

Tuesday: Start with UK inflation, expected to be just below zero for the headline number, but steady at 1% on the core measure. This is followed by economic sentiment out of Germany, where concerns have been mounting about the global economic outlook, despite solid economic data currently. The afternoon brings a slew of US data, including inflation, capacity utilisation, industrial production and housing data which extends into Wednesday.

Wednesday: The focus in the afternoon will be the release of the FOMC meeting minutes, where analysts will be digging through the detail that led to something of a change of tone from the committee at the latest meeting. Also of some note is the update on Eurozone construction output, which has been poor recently.

Thursday: Overnight, the bank of Japan releases its monetary policy decision. Forecasts as mixed, with some forecasting further stimulus at this meeting or the next. Later in the morning, it’s the UK’s turn to release retail sales numbers, expected to be softer than the previous readings but still strong at around 4.2% year on year.

Friday: Closing the week, the Eurozone consumer confidence reading is published which is forecast to remain subdued.


This article was previously published on Tilney prior to the launch of Evelyn Partners.