In the US, the most important release will be the first estimate for Q3 GDP growth, with markets anticipating an annualized 3.3 percent expansion, compared to 4.2 percent in the previous period which was the highest since the third quarter of 2014. Despite the slowdown, growth would remain above trend and would be the second-highest in near three years. Markit PMIs are also due next week, providing a first snapshot for the country’s private sector growth in October. Factory activity is seen rising slightly less while the services sector is expected to expand faster. Other releases include: new and pending home sales; final Michigan consumer sentiment; durable goods; FHFA housing index; Chicago Fed Index, Richmond Fed Index; and Kansas Fed Index. Fed officials will also speak at respective events.
Elsewhere in America, the Bank of Canada is seen rising rates by another 25bps after NAFTA negotiations concluded last month with Canada, the US and Mexico signing a new deal called United States-Mexico-Canada Agreement, or USMCA. It would be the fifth rate hike since July last year when the central bank started the tightening cycle. On Sunday October 28th, Brazilians will go to polls to vote for the second round of the Presidential election. Jair Bolsonaro, the far-right nationalist, continues to lead opinion polls and is seen as a market-friendly candidate expected to facilitate the implementation of needed reforms. In the first round, Bolsonaro won by a higher-than-expected 46 percent of votes against 29 percent for the leftist Worker's Party Haddad.
In Europe, the European Central Bank will decide on monetary policy, with markets anticipating no changes in borrowing costs but waiting for the central bank outlook on growth and inflation and comments on Italy's budget. Flash Markit PMIs for the Eurozone, Germany and France are expected to show a slowdown in all sectors expect for France services. Other importance data include: Euro Area flash consumer confidence; Germany Ifo business climate and Gfk consumer confidence, both seen falling; UK CBI factory orders; and monetary policy decisions from Russia, Turkey, Sweden and Norway, with none of the central banks seen changing rates. Investors will also follow Italy’s budget developments. After the country sent a first draft to the European Commission, Brussels said it is in a serious risk of non-compliance with EU budget rules, asking Italy to change it until Monday October 22nd.
In Asia, investors will be waiting for Japan flash Markit manufacturing PMI; South Korea preliminary estimates for GDP growth; and Indonesia monetary policy decision. The central bank is seen leaving rates steady after the rupiah stabilized in recent weeks and inflation slowed in September.
The Future Investment Initiative or “Davos in the Desert” summit will happen in Saudi Arabia between the 23rd and the 25th of October. Media representatives, sponsors, speakers and government officials already pulled out of the conference as the Saudi journalist Jamal Khashoggi is still missing. The Washington Post contributor was last seen entering the Saudi consulate in Istanbul and Turkish authorities claim he has been killed by Saudi agents. President Trump threatened sanctions against Saudi Arabia if it proves to be true and the Saudi government said he would retaliate.