German IFO survey sees modest improvement

Germany’s IFO business climate survey rose modestly in November, climbing to 95.0, from 94.6 in October, matching consensus expectations. While this represented a four-month high, it nevertheless remains weak and far off long-term trends. Indeed, the results do not provide much grounds for optimism that GDP growth in the European powerhouse will see any marked acceleration in the final quarter from the 0.1% q/q averaged over Q1-Q3.

Fed Chair Jerome Powell was talking in Rhode Island last night, where he struck an upbeat tone on the US economy, and reiterated that rates were on hold for now. He sad that he sees the ‘glass as much more than half full’, and that ‘the current stance of monetary policy as likely to remain appropriate as long as incoming information remains consistent with our outlook.’ According to Powell, the three 25 basis point cuts implemented over July-October are already having a positive effect on consumer and business sentiment ‘and boosting spending in interest-sensitve sectors, such as housing and consumer durable goods.’ Data out of the US was somewhat weak yesterday, as the October Chicago National Activity Index came in at -0.71, compared to estimates of -0.20, while the Dallas Fed Manufacturing Index was -1.3 in November, the second negative reading in a row.

Some more positive noise around trade negotiations between the US and China as senior representatives of the two sides, including Liu He and Robert Lighthizer, have discussed core concerns according to a Ministry of Commerce statement. The December 15 deadline to reach a phase one deal before US plans for 15% tariffs on USD 160bn of Chinese imports is approaching.

In Egypt, CBE governor Tarek Amer has had his tenancy renewed for a second four-year term, to 2023. Amer has overseen the monetary policy aspects of the economic reform programme implemented since late 2016, including the painful devaluation of the pound and the subsequent hiking of rates.

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Source: Emirates NBD Research