After a U.S. employment report that exceeded expectations, over the coming week investors’ focus will lie abroad: in China, where growth is slowing; Europe, where growth is faltering; and Japan, where leaders are struggling to keep growth alive. The message of the majority within central banking circles continues to be that more stimulus is the answer. Both Christine Lagarde, the managing director of the International Monetary Fund, and Federal Reserve chair Janet Yellen encouraged their counterparts at the European Central Bank and the Bank of Japan to use all tools at their disposal during speeches Friday at the International Symposium of the Banque de France in Paris. For investors, the resulting question is what a new flood of liquidity from abroad could mean for bond markets as the Fed turns off its spigot. “Global central bank intervention is a cross-border phenomenon,” says Guy LeBas, chief fixed-income strategist at Janney Capital Markets in Philadelphia. “Euros, dollars and yen are fungible. It’s just a function of the exchange rate.” The connection between global fixed-income markets is at historically tight levels, says LeBas and as the European and Japanese central banks take action, it should be supportive of prices for U.S. Treasuries.
Monday, November 10: The week kicks off with Chinese consumer and producer inflation data for October and new loans and money supply data from the People’s Bank of China, as well as the beginning of this year’s Asia-Pacific Economic Cooperation Summit, taking place in Beijing. In Europe, Sentix investor confidence index data will be released with forecasts for continued negative readings. In the U.S. the Department of Agriculture will release its monthly crop report. Softer-than-anticipated export demand, driven by a stronger dollar and a forecast record harvest, have held staple grain prices below long-term averages in recent months.
Tuesday, November 11: The main data releases from Asia include Japan trade data for September and October bank lending figures from the nation’s central bank. Other numbers coming out of the country include October machine tool orders and consumer confidence, the latter in particular a gauge of Abenomics’ effectiveness. In Australia, also on the schedule is the release of third-quarter housing price index data. In recent months Reserve Bank of Australia governor Glenn Stevens has repeatedly warned of the risks of a housing bubble in the country’s historically low rate environment. Stuttgart, Germany–headquartered Porsche Automobil Holding is among the many companies reporting quarterly results on Tuesday. Porsche, a family-controlled holding company that owns a majority stake in Volkswagen, has recently kicked off an initiative to invest in early-stage automotive technology companies. Auto industry analysts will parse carefully the company’s earnings announcement for any commentary on future investment strategy.
Wednesday, November 12: On the agenda in Europe is the release of euro zone September industrial production data. Consensus forecasts point to a marginal rebound. Year-over-year numbers stand to be lower, however, providing more pressure on ECB policy leaders. In the U.S., analysts are expecting a marginal moderation in wholesale inventory levels for September. Technology bellwether Cisco Systems and retailer J.C. Penney are among the companies reporting earnings announcements. JCP, which significantly beat second-quarter 2014 consensus forecasts, recently announced that its stores would open at 5 pm Thanksgiving Day.
Thursday, November 13: Asia will be a focus for market sentiment on Thursday. In Japan, corporate goods price index levels and machinery order data for October will be released as well as numbers of September industrial production. On deck in China are October industrial production, retail sales and fixed investment results. In Europe, October CPI data for Germany, Spain and Italy will precede the monthly European Central Bank report, which will likely concentrate on the region’s sustained low inflation. In the U.S. the primary economic releases for the day are weekly jobless claims and Energy Information Administration (EIA) crude oil stock levels. Wal-Mart Stores is among the corporations announcing quarterly results on Thursday.
Friday, November 14: Preliminary third-quarter GDP data for primary EU economies and October CPI for the euro zone will put Europe in the center of market narratives again on Friday, as the Continent continues to struggle to reboot its economic growth. With two weeks left before Black Friday, retail analysts will be taking a magnifying glass to October retail sales and preliminary November University of Michigan sentiment index data. Reporting quarterly earnings are large-cap European equities Airbus Group and Vivendi.