Weekly Digest – INVESTEC

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At yesterday’s Brexit summit, the EU 27 took just 38 minutes to unanimously agree the UK Withdrawal Agreement. Attention will now turn to Westminster, where the agreement will be subject to a vote in the week commencing 10 December. The parliamentary arithmetic still looks difficult for the Prime Minister, who refused to answer questions about whether she would resign in the event of a defeat. She may have no choice in the matter, if the move to hold a no-confidence vote is revived in that eventuality. Meanwhile, Mrs May has challenged Jeremy Corbyn to a televised debate over the merits of the deal, a marked departure from her campaigning strategy during last year’s General Election campaign. As far as investment markets are concerned, the weekend’s developments were nothing materially new.

In other news, there were further signs of a resolution to the budget dispute between Italy and the EU over the weekend. Deputy Prime Minister Salvini appeared to suggest that there is some flexibility in the 2.4% budget deficit policy, saying “if there is a budget which makes the country grow, it could be 2.2% or 2.6%.” Meanwhile, EU Commission President Juncker suggested that spending cuts of only €6-€7bn might be enough to secure EU agreement.

Last week ended quietly in markets following the Thanksgiving holiday in the US, though there was some important economic data in the form of manufacturing data reports from the US and Eurozone. All were weaker than expected. There are a number of economic data releases this week, including US third quarter GDP on Wednesday. The main highlight on Wednesday, however, will be Fed Chair Powell’s speech at the Economic Club of New York, where it is increasingly thought that he might signal a slower pace of monetary tightening that had previously been expected. It is a busy week for central bank speak, with ECB President Mario Draghi due to speak in the European Parliament today and Bank of England Governor Mark Carney scheduled to speak this evening. Tomorrow, there is a meeting of OPEC, taking place against the backdrop of an oil price which is down 25% over the last month after another sharp fall last week. Thursday is the busiest day, with the release of US Central Bank meeting minutes, some Eurozone inflation data, Japanese industrial production and manufacturing data from China. The other big event of the week is the G20 summit in Buenos Aires, where the focus of attention will be the planned meeting between Presidents Trump and Xi. Recent rhetoric around the ongoing trade dispute has been mixed, but the absence of Mr Trump’s hawkish trade adviser Peter Navarro has been interpreted in some quarters as providing hope for progress towards a deal.