24 November 2021
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November PMIs come in at a decent clip

By Edward Bell

  • PMI numbers for the Eurozone came in stronger than expected in preliminary readings for November. The headline composite number for the Eurozone economy rose to 55.8 from 54.2 in October and far better than market expectations for a downturn. On a national basis, both the French and Germany PMI numbers came in better than expected with services and manufacturing activity accelerating in France and German services improving while manufacturing was near even on a month earlier. While the data is certainly welcome, it’s likely to be clouded over by Covid-19 developments in Europe after Austria imposed full national lockdowns and German officials haven’t ruled out taking similar action.
  • In the UK, the composite PMI came in at 57.7 for November, close to its levels for October. Manufacturing improved to 58.2 while services dipped slightly to 58.6. Similar to reports seen in the last few months, the survey noted that input costs remain elevated, helping to fuel a high inflation picture in the UK. The likelihood of a Bank of England rate increase at the December meeting is about 50% at the moment per market rates as data supports a hike in rates while statements from governor Andrew Bailey have been more changeable.
  • For the US, the composite PMI fell to 56.5 in November from 57.6 a month earlier thanks to a drop in the services component. However, the services sector is still showing solid growth with the reading coming in at 57 for November. Like most other economies, US firms are still reporting elevated input costs, hitting a new record high level while backlogs of orders also remain high.
  • In New Zealand, the RBNZ hiked rates for a second time, taking the official cash rate to 0.75% and said that it will need to tighten quickly in order to deal with inflation. While a small economy, the hiking from the RBNZ should affirms views that strongly growing developed economies will start hiking rates to tackle inflation.

Today’s Economic Data and Events

  • 13:00 GE IFO Expectations Nov: forecast 94.6
  • 17:30 US Continuing claims Nov 13: forecast 2,033k
  • 17:30 US Personal consumption Q3: forecast 1.6%
  • 17:30 US Durable goods orders Oct: forecast 0.2%
  • 19:00 US Personal income Oct: forecast 1%
  • 19:00 US PCE core deflator y/y: forecast 4.1%
  • 19:00 US Uni. Of Michigan Sentiment Nov
  • 23:00 US FOMC meeting minutes Nov 3

Fixed Income

  • A “no bad news” kind of day helped to push benchmark bonds lower, in particular in Europe as PMI numbers came in much more strongly than expected. Yields on the 10yr bund closed up 8bps to -0.22% while gilt yields also rose, climbing in line with the decent UK PMI print, and settled at 0.996%, a gain of more than 6bps. In the US the Treasury curve was higher and steeper with 2yr UST yields adding 3bps to 0.6142% while the 10yr added more than 4bps to 1.6651%.


  • The relentless gains in the dollar took a bit of a pause overnight with the DXY index slipping marginally. However, there wasn’t much positivity across the FX spectrum with EURUSD the only notable gainer, rising 0.1% to 1.1248. USDJPY added another 0.2% to move above 1115 while GBPUSD fell by 0.14% to 1.3378.
  • In commodity currencies, the loonie got a lift as the coordinated release  of strategic petroleum reserves failed to excite markets. USDCAD fell 0.24% to 1.2670 while AUD was more or less unchanged. The RBNZ, despite hiking again this morning, has failed to excite markets and NZD has sold off in response, falling by 0.3% this morning after a drop of 0.13% overnight.


  • Benchmark equities were generally higher overnight. The Dow and S&P 500 both reported gains of 0.55% and 0.17% respectively while the NASDAQ sank 0.5% In Europe, the FTSE was the outlier in terms of gains, rising by 0.15% while the EuroStoxx 50 fell almost 1.3%.
  • In early trading today, Asian equities are mixed with the Hang Seng and CSI 300 showing a modest upward tilt while the Nikkei is selling off.


  • The US, China, Japan, India, South Korea and the UK all announced a coordinated release of strategic oil reserves with the US selling 50m bbl. At current levels of refining activity, the 50m bbl from the US accounts for around 3 days of refinery input. Markets generally took the move as too little to have a meaningful impact on markets and we expect there was likely some short positions being closed out as the release had been rumoured for weeks.
  • In the end, Brent futures rose 3.3% to USD 82.31/b while WTI added almost 2.3% to USD 78.50/b. Attention will now turn to OPEC+ and whether they will respond with some further production rationalization or slowdown their planned output increases.

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Written By

Edward Bell Head of Market Economics

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