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A calm economic calendar keeps COVID-19 and the political chatter of the ECB in focus

The statistics

According to the preliminary PMIs for the private sector and the German business sentiment figures from November, the focus this morning was on the GDP and consumer sentiment figures from Germany.

The German economy

According to the second estimate, the German economy grew by 1.7% in the third quarter compared to the previous quarter. This was a decrease from a preliminary 1.8% and a 2nd quarter 2.0%.

According to Destatis

  • Household final consumption expenditure rose by 6.2% compared to the previous quarter.
  • However, government consumption fell by 2.2%.
  • Gross fixed capital formation in machinery and equipment fell by 3.7% and in construction by 2.3%.
  • Foreign trade also declined in the quarter, with exports of goods and services down 1.0% from Q2 2021. Imports decreased by 0.6% more modestly.
  • The economy grew by 2.5% year-on-year. In the second quarter the economy grew by 10.4%.

German consumer sentiment

The numbers on consumer sentiment were also disappointing: the GfK consumer confidence index fell from +1.0 to -1.6. Economists had forecast a decrease to -0.5.

According to the November poll

  • Consumer confidence fell sharply in November as both economic and income expectations fell.
  • While the consumer’s economic outlook fell by 15.6 points to 31 points, the indicator was still 31 points above the same month last year.
  • The income expectation indicator fell by 10.4 points to 12.9 points.
  • The propensity to buy indicator fell to a nine-month low, falling by 9.7 points to 9.7 points. A lower value was last recorded in February 2021 at 7.4%.

Minutes of the monetary policy meeting of the ECB

Inflation remained a hot topic for the ECB and the minutes revealed a lot of uncertainty.

Key points in the ECB’s monetary policy stance and political considerations included:

  • The accommodative monetary stance remained adequate to support the medium-term convergence of inflation towards the 2% target.
  • In view of the increased uncertainty, monetary policy had to be patient in order to support a self-sustaining re-anchoring of inflation expectations at the target value.
  • It has been suggested that the underlying causes of the pre-pandemic low-growth, low-inflation environment have not fundamentally changed.
  • Members agreed that the current and short-term rise in inflation was mainly due to temporary factors that would subside in the medium term.

From the USA

There were no major stats to consider as U.S. markets were closed for Thanksgiving.

The market movers

For the DAX: It was a bearish day for the auto sector on Thursday. BMW slipped 1.34% to lead the way down with Continental decreases by 1.04%. Volkswagen and Daimler ended the day with relatively modest losses of 0.10% and 0.05%, respectively.

It was a mixed day for the banks. Deutsche Bank increased by 0.66% while Commerzbank down by 0.58%.

From the CAC, it was a mixed day for the banks. Credit Agricole slipped 0.36% while BNP Paribas and Soc Gen recorded increases of 0.32% and 0.24% respectively.

The French automotive sector also had a mixed session. Stellantis NV fell 0.59% while Renault ended the day up 0.03%.

Air France-KLM rose by 2.51%, but with Airbus SE increasing by 0.22%.

On the VIX index

The US markets were closed on Thursday.

On Wednesday, the VIX was down 4.13%, reversing a 1.10% increase from Tuesday to end the day at 18.58.

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