Conference Board and central budget deficit

welcome,

About the inflation in recent times says a lot. Low inflation in the euro area in October was the direct cause of rate cuts by the ECB, and the relatively low inflation in the U.S. (although higher than in Europe) is an excuse for the Fed to keep QE at the maximum level. This week the inflation will remain in the interest of investors: we will in fact very important preliminary data regarding the inflation for November: on Thursday for Germany and on Friday for the euro zone. They are so crucial because it will determine whether the concept of a negative deposit rate (a rumor last week caused quite a thump on a pair of euro) real in the immediate future. The market expects a minimum growth inflation for euro zone (to 0.8%), so if inflation unexpectedly fell, the euro would be under strong pressure.

The central budget deficit in Portugal reached after October 7.7 billion EUR. This means that amounted to a little over 4.7% of GDP, compared to 4.4% in the corresponding period last year. The deflationary tendencies in southern European countries may mean new problems in the public finances, despite the policy of the ECB. The growing deficit in Portugal seems to be the confirmation.

Today we know the data on the implementation of the Spanish central budget after October. The deficit amounted to 3.61% of GDP - by 0.28 percentage points more than the year before. After September (3.58%) performance was the same as last year, so the growth in the Spanish public finances is unfavorable - a fact before which warned on the occasion of the risks of deflation in Europe. 

These are risks to which no one pays attention.

It is worth noting that the spreads of Spanish and Italian bonds slightly increase. Total spread rose yesterday to 483bps - the highest in November, though still some 270bps (!) Less than the year before.

Consumer confidence in the U.S. - Conference Board (November): 70.4; expected 72.2; previous 71.2. Lowest since April. The deterioration of consumer sentiment worried, because it could mean worse prospects for recovery in consumer demand.

This week will be most important activity data - the Chicago PMI Index - Wednesday 15:45 (Warsaw time). Later, the Americans are going for a long weekend (Thanksgiving Day), and the attentions of investors moves to Europe, where we have data regarding inflation.

regards,

oscarjp