Daily Brief Macro: UK: Unemployment Turn Confirmed and more

• The UK unemployment rate rose again to 3.67% in Oct-22. The 3-month change in the single-month rate slowed to 0.2pp, so it remains consistent with 3.8% at yearend.
• Falling vacancies and rising redundancies confirm the turn in labour demand, which failed to absorb the recent increase in supply despite still being historically high.
• Government policy has encouraged bumper pay demands and second-round effects. The BoE should be worried by signs 5% is becoming the new 2% in pay awards for 2023.

Covid-19: Covid chaos at China’s hospitals as stringent control policy eases

Yuan: Xi seeks yuan settlement of China energy trades with Gulf states

Bonds: China to roll over $108 billion of special sovereign bonds

• As such, we were more than a little pleased to see that the authorities in the Hong Kong SAR have indeed announced some new reductions to the restrictions to travel, in particular in lifting the 0+3 limitations to visit bars and restaurants that, among other things, were limiting the ability of international investors to include Hong Kong SAR as part of a broader Asia business trip (admitted self interest here!).
• While some limited restrictions still remain, the direction of travel is clear and likely that a lot of focus will now be for full opening up to China for Chinese New Year (something Hong Kong SAR CEO John Lee has declared as something “I will do everything I can to facilitate”).
• Of course, the HSI has also been rallying since the end of October, helped in particular by the rebound to the China Internet stocks that were linked to the ADR capitulation – many of the stocks had listed on the HSI and thus had acted as a drag on the performance of the index as the ADRs were dumped by US investors (see Is US tax driving Chinese stocks?).

• Modi’s BJP won a landslide victory in Gujarat, but the Aam Aadmi Party makes a significant breakthrough in vote share, cementing its position as a national party.
• Congress wrests control of the Himachal Pradesh legislature, demonstrating that the party still has some fight in it despite its recent challenges. 
• Aam Aadmi also takes over the Delhi Municipal Corporation, its pitch of delivering public service benefits resonating with the Delhi electorate.