UK dominates economic calendar

Summary:

• BOE rate decision and inflation report top the billing

• Also UK parliament to vote on UK budget

• US ISM manufacturing PMI expected to remain strong

12:00 pm GMT - Bank of England rate decision and inflation report. Carney press conference (12:30 pm GMT)

The main event today for the economic calendar comes from London with the Bank of England expected to announce their latest policy mix. A tangible change in the current monetary policy is highly unlikely but as always there could still be some market moving events. The decision will be the 7th of the year but perhaps more importantly the 4th and final “Super Thursday” of 2018. This sensationalised moniker is due to today’s event being one of the alternate decisions wherein the bank also release their quarterly inflation report as well as Governor Carney conducting a press conference.

Current market expectations are for 1 further interest rate hike in the next 12 months and  comments supporting a faster or slower pace of tightening could well be the most important. Along these lines the bank’s view on inflation could be telling, with the most recent data showing the consumer price index back below the 2.0% level in core terms and whether or not rate setters see this as an indication that price pressures are back at acceptable levels will be of particular interest. Finally, traders will be looking out for any Brexit related comments, and while it is unlikely that Carney and the MPC will break rank from their previous stance of attempting to not be drawn too much on the subject while using a smooth and orderly transition as the base case, there could be a surprise here.

UK budget vote from 10:10 GMT

This Monday the UK Chancellor Philip Hammond declared an end to austerity with the most generous budget in a number of years, and today the debate on this is expected to continue before a parliamentary vote. While it it seems unlikely, there is a slight chance that PM Theresa May fails to receive the requisite backing to pass the budget and should this occur then it would almost certainly lead to a leadership challenge. May’s position has been precarious for quite some time now, but it appears that she will survive once more, with the DUP stating that they won’t use this opportunity to vote against her.

2 pm GMT ISM manufacturing PMI

It’s quite a big week for US data with tomorrow’s NFP report the clear standout and given yesterday’s beat in the ADP, then expectations have been ratcheted up another notch. Before then however, we get the latest look at the US manufacturing sector with the ISM release. This is the most widely viewed indicator for manufacturing and is expected to come in at 59.0 for October after 59.8 last month. This data point has been pretty strong of late with 3 of the last 5 beating expectations and with only a handful of prints lower than 59.0 so far this year there is a fair chance we get another strong read. Also of importance could be the employment component as it may provide further insight into the labour market ahead of tomorrow’s jobs report.