ON DECK FOR WEDNESDAY, DECEMBER 22
KEY POINTS:
- Choppy markets face no new information
- US travel and mobility are holding up so far…
- …with flights still close to pre-pandemic levels
- Canadian mobility is also fairly resilient
- It might be early for US consumer confidence to be impacted by omicron
- Lagging US existing home sales expected to advance
- Final US Q3 GDP revision on tap
Fresh developments are practically non-existent in thinning holiday trading. There are no materially new COVID-19 developments. Overnight releases were non-existent other than the universally expected hold by the Bank of Thailand and with that we bid adieu to central banks for 2021 and thank them for high inflation... Geopolitical tensions are focused on the Russian devil beseeching the West to make a deal that hopefully they reject. Absent catalysts, US and Canadian equity futures are flat. European cash markets are flat to a touch higher. Sovereign bonds are a little cheaper, with 10 year yields up 1–4bps across the US, Canada and Europe. The gilts curve is up by about 4bps across maturities. Oil is unchanged. The dollar is very slightly softer and primarily versus sterling.
We’ve got some stale data coming our way from the US both today and tomorrow but the fresher readings on how consumers are behaving will follow the round-up of releases.
- It could be the most significant of the releases, but it might be too early for December’s consumer confidence (10amET) to show much reaction to the omicron variant given that only a portion of the sample up to last Friday would capture omicron’s escalating effects. Chart 1 shows the rough connection between new COVID-19 cases and the expectations component of the confidence gauge.
- Existing home sales for November (10amET) are expected to follow pending home sales with a significant gain.
- The third swing at Q3 GDP (8:30amET) incorporates fuller services spending estimates and is expected to be left largely unchanged.
So barring a big shift in consumer confidence, we’re likely staring at another session during which off-calendar risk including random tape bombs will dominate market movements in relatively thin trading that is about to get even thinner.
As an aside, it’s how behaviour responds that informs expectations for how economies will prove to be resilient to the new omicron variant. Behaviour is better judged by observing actions rather than surveyed words. As market observers, we can each have our views on how we think people should behave, but what matters is how they are behaving.
To that effect, chart 2 shows that despite headlines about cancelled plans and events, Americans are not changing flight plans in any significant numbers at least as indicated by Transportation Security Administration figures on checkpoint travel numbers. You or I might think they’re nuts to be floating in a tin can thousands of feet above earth surrounded by who knows what, but they’re doing it; in fact, the numbers continue to be close to the pre-pandemic conditions of 2019.
Further, with figures up to the other day, US and Canadian stringency indices remain low (few restrictions) as shown in chart 3. Chart 4 breaks this down in Canada by region.
Also check out Apple’s resilient measures of mobility by mode of transportation which is data that is readily accessed because so many folks are a.o.k. with the company tracking all of your movement day and night, 365 days a year (chart 5). Google has similar data for the same reason; other than parks that are less frequently visited in winter months for obvious reasons, travel to other destinations is also holding up well (chart 6).
Canadian equivalents are shown in charts 7–10; there isn’t much evidence of softness other than normal seasonality via summertime influences on on driving and walking and park visitations.
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