• MON: US Electoral College Votes; OPEC MOMR; EZ Industrial Production (Oct).
• TUE: Hungarian Rate Decision, RBA Minutes (Dec); European Commission VP Dombrovskis speaking on EU Fiscal matters; IEA MOMR; Chinese Retail Sales (Nov); UK Labour Market Report (Oct); Japanese Trade Balance (Nov).
• WED: FOMC Monetary Policy Decision; EZ Finance Ministers meeting to discuss Draft Budgetary Plans; UK Inflation (Nov); EZ, UK, and US Markit Flash PMI (Dec); US Retail Sales (Nov); Canadian CPI (Nov); New Zealand GDP (Q3).
• THU: BoE, SNB and Norges Bank Monetary Policy Decisions; OPEC JMMC; Australian Labour Force (Nov); Swiss Trade Balance (Nov); EZ CPI (F/Nov); New Zealand Trade Balance (Nov); Japanese CPI (Nov).
• FRI: BoJ and CBR Monetary Policy Decision; UK Retail Sales (Nov); German Ifo Survey (Dec); Canadian Retail Sales (Oct).

BOJ TANKAN (SUN): The Q4 Tankan survey (exp. -15 vs prev. -27) will likely remain subdued following two consecutive quarters of negative readings for the Large Manufacturers Index, although there are expectations for business sentiment to continue to rise as the prior reading in Q3 still showed an improvement to the headline index for the first time in 11 quarters after it dropped to an 11-year low in Q2. The Q2 Tankan data, which is a short-term survey of around 10,000 enterprises in Japan, also previously showed Large All Industry Capex plans were higher than expected with growth seen at 1.4% (vs exp. 1.3%), while the recent pick-up in activity as evidenced by improved data releases could provide a boost to business sentiment. The recent firm data includes final Q3 GDP which grew at the fastest pace since comparable data was available in 1994 at 5.3% Q/Q and 22.9% annualised growth, improved industrial production and a rebound in household spending, while a recent Reuters Tankan survey for December found that Japanese manufacturers and service-sector firms were the least pessimistic since February at -9 (prev. -13) despite printing a 17th consecutive month in negative territory. This suggests there is scope for continued improvement, although a rebound into positive territory looks unlikely given that Japan is still experiencing increasing infections which have recently hit record daily infections and prompted local governments, including Tokyo, to shift to the highest alert level and ask businesses to reduce their hours.

RBA MINUTES (TUE): The RBA kept the Cash Rate Target and 3-year yield target unchanged at 0.10%  at the December meeting, in line with expectations; it also maintained parameters of its term funding programme. The board reaffirmed that it is not expecting to raise the Cash Rate for at least three years and is prepared to do more if needed, while it will keep the size of the bond purchase programme under review. All-in-all, the statement provided a balanced view in which it reiterated that policy support will be required for some time and that further increase in unemployment is still expected but noted continued strong employment growth in October. Further, the central bank stated that the economic recovery is underway although expects it to be uneven and drawn out, as well as dependent on significant policy support. The upcoming minutes may be overlooked but traders will as ever be on the lookout for the Board’s view on the economy and any future policy.

CHINESE RETAIL SALES, INDSUTRIAL PRODUCTION (TUE): Industrial Production for November expected to remain firm following the 6.9% increase the prior month which matched the fastest pace of growth since December last year, as China’s economy continues to recover from the fallout of the virus. A firm rebound was also sustained in other data releases for November including better than expected factory data, where official manufacturing PMIs rose to the highest levels since September 2017 at 52.1 vs exp. 51.5 (prev. 51.4) and the Caixin Manufacturing PMI rose to a decade high of 54.9 vs exp. 53.5 (prev. 53.6); China’s October trade data was also mostly encouraging, whereby the trade balance and exports topped estimate, with the latter surging by the most since February 2018 at 21.1% vs exp. 12.0% (prev. 11.4%). The boost to exports adds to the encouragement heading into the industrial production data given that the surge was attributed to strong global demand for medical supplies and shifts in orders as other countries continued to struggle with increasing virus numbers, as well as reduced capacity due to the pandemic impact on supply chains. Conversely, there remains scope for retail sales to continue to underwhelm after printing 4.3% vs exp. 4.9% (prev. 3.3%) in October, considering that data such as lower than forecast Imports and the first decline in CPI since 2009 adds to the weak domestic consumer narrative.

UK LABOUR MARKET REPORT (TUE): The latest jobs report from the UK is forecast to show the 3-month rolling unemployment rate for October hold steady at 4.8% and employment change at -148k (prev. -164k) with the release once again set to only offer limited insight into the domestic employment landscape. The government’s furlough scheme has provided significant support to the jobs market, however, as of August this began to dwindle as employers had to begin covering pension contributions and national insurance. The September data reflected a further tightening of the scheme as the government’s contributions to employee wages was curtailed to up to 70% from a prior level of up to 80%. However, some of this pain may be eased by an extension of the original furlough scheme until March 2021 in lieu of the recent national lockdown announcement. As it stands, in its latest MPR, the BoE expects unemployment to peak at 7.75% in Q2 2021. On the wages front, Pantheon Macroeconomics expect a 2.3% rise in the headline earnings metrics on a Y/Y basis (vs 2.2% in September), whilst cautioning that “timelier PAYE data on median pay suggest that the rebound in the level of wages, from its furlough-depressed level in Q2, has run its course.

EZ FLASH PMIs (WED): Expectations for the latest batch of PMI metrics for the Eurozone look for services to tick lower to 41.5 (prev. 41.7), manufacturing nudge down to 53.1 (prev. 53.8) with the composite at 47.2 (prev. 45.3). Unlike the UK, large parts of the Eurozone have been unable to ease recently imposed lockdown restrictions with Germany, Spain and Italy seen as noteworthy examples. France is an outlier, with the government permitting some non-essential shops to reopen on November 28th, however, this is not expected to have much impact on the EZ-wide metric, according to the consensus. The report will also once again highlight the differing fortunes of the manufacturing and services sectors with the former relatively unimpaired by the recent batch of lockdown measures. From a policy perspective, the upcoming release will likely have little bearing on ECB actions with the Bank having come to market last week with another easing package.

UK CPI (WED): Expectations are for Y/Y CPI to remain at 0.7% with the core reading seen declining to 1.4% from 1.5%, and the M/M measure is set to rise to 0.1% from 0%. Ahead of the release, RBC notes that the uptick in the prior report was mainly attributable to four categories: clothing and footwear, furniture and household goods, food and beverages and transport. This time around, the Canadian bank, which looks for a below-consensus 0.5% Y/Y reading, expects a weaker contribution from clothing and household goods last month to be reflected in CPI inflation slowing from the previous report. Note, the most recent assessment from the BoE noted that “CPI inflation is expected to remain at, or just above, 0.5% during most of the winter, before rising quite sharply towards the target as the effects of lower energy prices and VAT dissipate. In the central projection, conditioned on prevailing asset prices, inflation is projected to be 2% in two years’ time”

UK FLASH PMIs (WED): Expectations for the latest batch of PMI metrics from the UK look for the all-important services sector to move back into expansionary territory, at 50.5 (prev. 47.6), manufacturing to tick higher to 55.8 (prev. 55.6), leaving the composite at 51.3 (prev. 49.0). With the UK exiting its national lockdown and entering into a tiered system as of December, parts of the hospitality and leisure industry have been able to reopen. As such, the services industry is expected to be granted some reprieve with damage to the sector certainly less pronounced in November compared to the lockdown earlier in the year. Additionally, and as partially reflected by the upward revisions for the final November report, vaccine optimism will also likely garner some focus for the upcoming release as those surveyed can now look ahead to 2021 with a greater degree of confidence than seen in recent months. That said, mounting uncertainty over Brexit as we enter the end phases of the transition period could hamper positivity for some respondents.

FOMC POLICY ANNOUNCEMENT (WED): There are three broad areas to monitor at the December FOMC: whether the Fed boosts the size of its asset purchases (currently at USD 80bln/month of Treasuries, USD 40bln/month of mortgage bonds); whether the Fed extends the weighted average maturity (WAM) of its asset purchases; whether the Fed will 'enhance' its forward guidance. Both doves and hawks on the Committee have been cool on boosting the size of asset purchases, particularly given that financial conditions continue to loosen; that leaves a WAM extension and/or enhanced guidance. The Fed has argued that QE helps with market functioning and policy accommodation, but some analysts point out that the market functioning argument no longer seems valid given that we have avoided going back to the conditions seen in March, and accordingly, the Fed might be able to achieve more 'bang for buck' by shifting purchases further out the yield curve. However, there has not been a lot of commentary to signal that such a move was likely in December, which leaves focus on the statement. Currently, the official guidance reads that asset purchases will be made "over coming months ... at least at the current pace ... "; however, the November meeting minutes revealed that "most participants" think that the Fed should update this guidance at some point and implement "qualitative outcome-based guidance that links the horizon over which the Committee anticipates it would be conducting asset purchases to economic conditions," and that "many participants" wanted the Fed to enhance its guidance for asset purchases "fairly soon". Accordingly, UBS thinks the Fed will tweak the language in its statement, and instead of "coming months", it might use language to the effect that it will continue making asset purchases until it is are confident that the economy has recovered from the COVID shock, which would be vague enough so not to constrain its policy function but offer scope to continue or boost purchases if conditions required.

US RETAIL SALES (WED): The consensus looks for retail sales to fall 0.4% m/m in November, and the ex-autos gauge is seen unchanged; the control group is seen rising 0.1% m/m, matching the prior pace. Nomura's analysts note that high-frequency data on credit and debit card spending suggest continued recovery of spending on goods during the holiday period, albeit at a more modest pace relative to the summer, however, due to the impact of tighter pandemic restrictions on food services and a sharp decline in auto sales. The bank is in line with the consensus for the headline, noting that many local authorities have reduced indoor dining capacity and hours at restaurants and bars as the pandemic continued to spread in November and hospitalisations ticked up.

CANADIAN CPI (WED): There is not yet an analyst consensus for the November CPI report; the October data saw headline CPI falling 0.1% m/m, although the annual rate was unchanged at 0.7% y/y. Canadian bank RBC notes that November has a some seasonal effects which may be reflected in the data; the negatives from the apparel and travel categories may drag, and while there could be a positive contribution from food prices and autos, it might not be enough to offset the negative seasonal impulse, RBC says. Meanwhile, gas prices will not be too influential, only rising by around 1.0% in the month. Elsewhere, we will be watching the average of the three BoC measures, which could slip from the 1.77% printed in October, RBC says.

NZ GDP (WED): Desks expect Kiwi GDP to print a double-digit rebound in Q3 following a 12.2% slump seen in the prior quarter. Over H1 2020, the country fell into recession amid strict lockdown measures implemented in late March. Analysts highlight the bounce-back seen in high-frequency data but the resurgence of the virus in August is likely to have dampened the pace of recovery. Unsurprisingly, accommodation and food services were the most impacted during the restriction. The recent retail trade survey points to activity recovering in Q3, whilst retail volumes were also lifted. ASB estimates +13% Q/Q, near the RBNZ's +13.4% forecast. "The NZ economy looks to have been more resilient and has recovered from lockdown much faster than expected earlier this year," and add that "at present we believe the economy has enough going for it and sufficient policy support in place such that no further OCR cuts are needed." Note, the Q3 release will include annual benchmark revisions.

BOE POLICY ANNOUNCEMENT (THU): Last time around, the MPC opted to stand pat on rates at 0.1% as expected, whilst expanding its APF by GBP 150bln (entirely via Gilts) vs exp. GBP 100bln, taking the total size of the APF to GBP 895bln. Given the action taken in November and lack of accompanying MPR this month, policymakers are expected to stand pat on existing measures. Recent data has revealed a Q3 GDP bounceback in growth of 15.5% (vs the MPC's forecast of 16.1%) with the October reading of just 0.4% M/M suggesting a slowdown in growth ahead of the November national lockdown. Timelier November PMIs highlighted the differing fortunes of the services and manufacturing sectors with the former now residing in contractionary territory and the latter remaining firmly above 50; the composite fell to 49.0 from 52.1. Note, next week sees the release of the latest inflation, labour market and retail sales metrics. Since the prior meeting, the UK has exited a national lockdown and entered into a tiered system, in which around 42% of the population has been placed into the most stringent tier. As such, economic activity in the UK remains suppressed, however, the November MPR already painted a dour picture for the end-2020 growth outlook in which it pencilled in a Q4 GDP contraction. The MPC may take solace in recent vaccine updates, with vaccinations now underway in the UK. However, given the lack of MPR and subsequent economic forecasts it is unlikely to trigger a radical overhaul of the MPC’s view on 2021 at this stage. That’s also likely the case given the looming cloud of Brexit which (at the time of writing) remains unresolved. The prospect of negative rates continues to surround the Bank with the likes of Saunders and Tenreyro continuing to talk up the success of NIRP abroad with the former noting that the effective lower bound may “be a little below zero”. However, nothing from the MPC has indicated that a move below 0% is imminent.

NORGES POLICY ANNOUNCEMENT (THU): Norges Bank is expected to maintain its key rate at 0.00%. The last meeting saw all policy measures and the majority of language left unchanged, as was expected given it was an interim gathering. For the December MPR, focus will be on the repo path and broader forecasts in light of recent COVID-19 developments as well as any fresh language around oil prices following the OPEC+ gathering and rally experienced in tail-end of the week prior to the meeting. On the repo rate path, the September update saw it lifted slightly to imply the first hike just prior to Q4-2022; given recent vaccine developments and the likelihood that mass vaccination will be in full force next year, the Bank could elect to bring the date of their first hike closer. However, it would perhaps be more prudent for rate setters to wait to see how this process occurs and then both to what extent and how quickly it reinvigorates economic activity. For reference, the recent regional network report had a survey period prior to OPEC+ and the most recent vaccine news (26th October – 13th November) and as such is less pertinent for the gathering; nonetheless, noting that growth has slowed throughout the period.

SNB POLICY ANNOUNCEMENT (THU): Following the ECB’s decision to keep its deposit rate on hold at -0.50%, the SNB is expected to do the same and keep its key rate at -0.75%. Attention will be on the Bank’s COVID-19 language given the substantial number of updates that have taken place since the September gathering. In September, the SNB’s baseline scenario envisaged the global economy being able to keep the pandemic under control without a serious renewed impairment to global activity; a feat which was not attained as the likes of the UK had to re-implement nationwide lockdowns and Germany, among other nations, is still discussing further measures. The SNB’s forecasts saw a modest upward tweak to inflation in-spite of the pronounced price pressure the economy was experiencing at that point and at present; such an increase was also subject to high uncertainty given the COVID-19 backdrop but, justified by the increase in oil prices – as such, the recent oil developments could justify a retention of this upgrade or perhaps even a further increase. Elsewhere, the SNB will likely elect to retain language around the CHF ("highly valued"), as although they have continued to make clear their increased FX interventions and willingness to intervene, the weekly sight deposit updates suggest that interventions have slowed from their H1 levels. Finally, tiering continues to remain a focus point for meetings but, and as has been the case throughout the year, the SNB can afford not to tweak the current 30x exemption threshold at present, assuming no unexpected rate change, given the slowing sight deposit activity and associated burden on domestic banks. Note, as this is the Q4 gathering it will include a press conference.

OPEC JMMC (WED): The upcoming JTC and JMMC meetings are to be held in the aftermath of the OPEC+ tweak to its Declaration of Cooperation (DoC) whereby the producers agreed to increase production by 500k BPD beginning in January such that output curbs fall to an aggregate 7.2mln BPD in the month. The ministers will meet each month (next on Jan 4th) to assess market conditions and decide on further production adjustments for the following month with further adjustments not to exceed 500k bpd, while they agreed to extend compensation cuts to the end of March. Although the decision at face value seemed to be sub-par vs expectations heading into the meeting, the consensus reached among producers for policy flexibility in the upcoming months provided the crude markets with impetus at the time, with oil ministers stating that upcoming meetings will not necessarily only take decisions on production increases but could also decide on output decreases if the market requires it. The upcoming JMMC meeting will see a review secondary source data alongside current market fundamentals before proposing policy recommendations – thus no policy decision will be taken at this meeting. The findings of this meeting are likely to be overlooked as the overall environment is little changed since the start of the month.

AUSTRALIAN LABOUR MARKET REPORT (THU): Headline Employment Change for November is expected to show an addition of 50k jobs (prev. 178.8k) with the unemployment rate seen steady at 7.0% while the participation rate is expected to tick up to 66% from 65.8%. Desks note that the increase in employment last month was largely on account of Victoria which contributed the largest increase. Westpac expects the Victorian trend to continue to at least December or Q1 2021 as with the economy only reopened in November. The bank sees headline employment change at +75k, above consensus; "Even allowing for some pull back in the other states, a solid 75k rise is easily achievable. In fact it is possible that the reopening has had a positive flow–on to other states supporting further gains there as well", the bank states.

JAPANESE CPI (THU): Japanese National CPI data for November is likely to remain weak following the decline in October, where core CPI declined by 0.7%, the steepest fall in nine years. The downward pressure on prices was due to factors including the government’s 'Go to Travel' subsidy campaign and as the base-effects of last year’s consumption tax increase petered out. Furthermore, the recent Tokyo inflation data, which is a leading indicator of the national average, remained negative for November with headline Tokyo CPI Y/Y at its largest decline since May 2012 at -0.7% vs exp. -0.5% (prev. -0.3%), while core CPI also printed -0.7%, which does not bode well for next week’s release. The accelerated declines in the capital’s prices compared to the previous month was mostly due to a slump in energy costs such as electricity and gas which were down 8.9%, while inflation is likely to continue its negative trend; the BoJ anticipates consumer prices will decline for the time being but turn positive as the economy improves, and with the Japanese government set to extend the domestic travel subsidy programme.

BOJ POLICY ANNOUNCEMENT (FRI): The Bank of Japan is expected to keep its main policy settings unchanged with negative rates to be held at -0.10% and QQE with Yield Curve Control maintained to flexibly target 10-year yields at around 0%. However, the central bank is expected to discuss an extension to its COVID-19 relief measures such as the special corporate funding operations which funnel funds via financial institutions to cash-strapped firms hit by COVID-19 and which are due to expire in March. The BoJ has reiterated a willingness to support the economy if required with Governor Kuroda reaffirming that they will take additional easing steps if the impact of COVID-19 is more severe and persists longer than anticipated, while he had previously flagged that it will extend corporate financing support measures related to the pandemic if deemed necessary, and Deputy Governor Amamiya also suggested they will extend the duration of COVID response measures past the March deadline as needed with an eye on the pandemic impact to the economy. Nonetheless, expectations for the central bank to hold-off adjustments to its main policy settings have been supported by the improving data, including better-than-expected Final Q3 GDP which grew at the fastest pace since comparable data was available in 1994 with Q/Q at 5.3% vs exp. 5.0% and annualized growth at 22.9% vs exp. 21.5%. Household spending data was also encouraging with M/M growth at 2.1% vs exp. 1.0% and although Y/Y missed estimates at 1.9% vs exp. 2.5% (prev. -10.2%), this was still the first increase in 13-months. In addition, the recent announcement of a new stimulus package valued at JPY 73.6tln which includes fiscal measures of around JPY 40tln and which will be partly funded by JPY 19.2tln additional budget, also provides the central bank with scope to continue bide its time.

US FUNDING DEADLINE (FRI): NOTE: This section is subject to a dynamic situation on Capitol Hill; At pixel time (14:00GMT/09:00EST Friday), the Senate has not ratified the House Bill to extend the government funding deadline by a week to 18th December. The Senate delayed a vote due to disagreements over some of the amendments (relating to liability protections and bailing out state and local governments with aid are the main sticking points), while disagreements on the defense bill have also been cited. Not that this has been concerning financial markets too much; there is still the feeling that lawmakers will strike a deal that keeps the government funded, avoiding any shutdowns, as well as injecting fiscal stimulus into the economy. Indeed, policymaker commentary supports this notion: Senate Majority Leader McConnel and House Speaker Pelosi have been demonstrating an appetite to secure a deal, on the face of it at least, while House Minority Leader McCarthy after discussions with various factions has suggested that a deal will be done next week. If lawmakers cannot strike a deal by the end of the day, then a government shutdown will follow; in the first instance, this is likely to be short, perhaps running only through to the first part of next week. If lawmakers can still not strike a deal, then there will be increasing concerns of a more protracted government shutdown, which will likely inject a negative growth impulse at a time when economic momentum is already showing signs of cooling. In this environment it is hard to quantify what that hit will be to the economy; the CBO has previously indicated that the last five-week government shutdown in 2018 cost the economy USD 11bln, including a permanent USD 3bln loss.

CBR POLICY ANNOUNCEMENT (FRI): Despite the IMF recently urging the central bank to ease policy, analysts expect the CBR will keep rates unchanged at 4.25% at its policy meeting on Friday, amid rising inflation pressures due to a weakening RUB. Prices are seen rising at an annualised pace of 4.4% by the end of this year versus the 4.0% printed in October; the CBR sees price rises as temporary phenomenon, and sees inflation returning to a 3.5-4.0% window by the end of 2021. And while the RUB may stabilise as capital inflows increase to emerging oil markets as the global economy recovers, and oil prices also supported by OPEC+ actions, the threat of sanctions may keep the currency defensive, analysts have said. This week, Governor Nabiullina said she expected monetary policy to remain accommodative in 2021, stating that the balance of risks for 18th December meeting will be made based on its forecasts, and as of Tuesday 8th of December, it was too soon to pre-judge the CBR's decision.

CANADIAN RETAIL SALES (FRI): There is currently no consensus for Canadian retail sales in October. RBC notes that StatsCan's flash estimates have reduced the excitement around the reporting month, with the final print likely to come in around the earlier estimate of flat. "This is consistent with our proprietary card data as well, though the same data indicates November should see a sequential fall around 2% m/m (flash estimate out with the October release)," the bank writes, "this would still leave the y/y rate in positive territory."