It will be a busy week filled with a wide range of economic releases, with the focus falling on the consumer and the Fed’s preferred inflation gauge. August personal income is expected to rise given the strong labor market while spending cooled given the end of summer vacations. The bond market will pay extremely close attention to the next round of inflation readings. Headline PCE will likely heat up given the surge in energy prices, while the core reading should maintain the 0.2% monthly pace.
Wall Street will also pay close attention to the UAW strike and if government shutdown odds grow. It will also be a busy week filled with central bank speak. On Monday, the Fed’s Kashkari speaks at Wharton School. Tuesday contains Bowman’s welcoming remarks at a FedCommunities event on rental housing affordability. Thursday contains four events, with Chair Powell hosting a town hall with educators and speeches from Goolsbee, Cook, and Barkin. Williams speaks on monetary policy on Friday.
The ECB signaled after its September meeting that its tightening cycle was likely at an end, barring any nasty surprises on the data front. Next week could be the first test of that, with flash HICP inflation data due on Friday. Substantial progress has already been made and much more is expected over the remainder of the year, while a cooling economy and threat of recession is clearly making policymakers nervous.
As always, a number of individual countries will release their inflation numbers in the days leading up to the eurozone release so we could have a pretty good idea of what we’re in for by the time the Friday release happens. That aside, there are some surveys released over the course of the week among other tier two and three data. Central bank speak will also be monitored, most notably President Christine Lagarde’s comments as she makes an appearance on the same day as the inflation report is released.
The Bank of England surprised markets this past week in choosing to hold the Bank Rate at 5.25, with those backing it taking the vote by the finest of margins 5-4. That doesn’t necessarily mark the end of the tightening cycle but if the data improves as the MPC expect, it may well be. Any negative data surprises between now and the early November meeting though may tip the balance the other way. There’s going to be even more pressure on the data now, not that there’s really anything of note next week. The final GDP reading for the second quarter is the only one that stands out in any way.
There’s a selection of data due next week although I’m not sure any will hold much sway when it comes to upcoming monetary policy announcements unless they’re particularly shocking. Industrial output, retail sales, GDP, unemployment, and real wages are among the releases. Russia’s issues with inflation and the currency are much bigger than all of these, although it will be interesting to see how the economy is holding up amid these additional pressures.
The SARB held rates steady at its September meeting, as expected, with headline and core inflation sitting comfortably within its 3-6% target. The central bank continued to warn about risks to the inflation outlook and hasn’t declared the end of the tightening cycle just yet. PPI figures next week may be of interest.
The Turkish central bank raised interest rates by 5% on Thursday, taking the Key Rate to 30% amid a plunging lira and soaring inflation. The move didn’t help lift the currency which still sits near record lows. Next week doesn’t have much to offer beyond a few tier-three data releases.
The SNB opted against raising interest rates in September as their new forecasts showed inflation below 2% over the forecast horizon, meaning no more tightening is necessary. The decision obviously came with warnings that hikes could be considered in the future if the data warrants it, as the SNB attempted to put itself into hawkish hold territory, which markets didn’t buy. The SNB is done with rate hikes and the focus now will shift to when the first cut will come. Next week has a few things of note, with the KOF indicator and investor sentiment surveys, and the SNB quarterly bulletin being released.
The only data to watch will be total industrial profits for August which are forecasted to contract at a slower pace of -10% y/y from -15.5% y/y in July.
Q2 current account and external debt data will be released on Friday. The current account deficit is expected to shrink marginally to $1 billion from $-1.3 billion recorded in Q1.
The Indian rupee has been resilient against the strength of the US dollar against other emerging currencies in the past three months. The USD/INR has been trading in a tight range of 175 pips and capped below its October 2022 high of 83.28.
Two key data releases to be aware of this week. Firstly, the monthly CPI for August will be out on Wednesday, and after a deceleration to 4.9% in the year to July, marking the lowest inflation rate since February 2022, a slight uptick to 5.2% is expected in August.
Secondly, preliminary retail sales for August on Thursday are expected to show a dip to 0.3% m/m from 0.5% in July.
Business confidence data for September is due on Thursday with an improvement to 5 from -3.7 in August expected. That would put an end to 26 consecutive months of negative readings.
Consumer confidence on Friday is expected to slow to 81.5 for September from 85 previously.
Bank of Japan (BoJ) monetary policy meeting minutes will be out on Wednesday and market participants will scrutinize the BoJ official’s remarks or expressed views on the state of inflation in Japan as well as any debate on bringing forward the end of negative interest rate policy.
A busy Friday with a slew of data releases. The leading Tokyo core inflation reading (excluding fresh food) is expected to dip to 2.6% y/y from 2.8%. That would be the third straight month of deceleration in Tokyo’s core inflation. However, the core-core inflation rate (excluding fresh food and energy) is forecasted to remain the same at 2.6% y/y for September, a 31-year high.
Retail sales for August are expected to dip slightly to 6.6% y/y from 6.8% in July, Consumer confidence in September is expected to improve to 37 from 36.2 in August.
Inflation data for August will be out on Monday and the core inflation rate is expected to decelerate further to 3.5% y/y from 3.8% in July. That would be the fourth consecutive month of slowdown. Meanwhile, the headline inflation rate is expected to be almost unchanged at 4% y/y in August versus 4.1% in July.
August’s industrial production figures will be released on Tuesday with another month of contraction expected at a higher magnitude of -3.1% y/y from -0.9% in July. That would mark eleven straight months of contraction suggesting a sticky weak external demand environment.
Saturday, Sept. 23
78th session of the UN General Assembly (plenary) continues
German Chancellor Scholz attends SPD campaign events in Nuremberg and Hesse
Sunday, Sept. 24
Austrian Chancellor Nehammer opens Salzburg Europe Summit
Monday, Sept. 25
Germany IFO business climate
IAEA General Conference starts in Vienna
RBA Assistant Governor Jones speaks on financial technology and climate change
Fed’s Kashkari participates in Q&A at the University of Pennsylvania’s Wharton School.
ECB’s Villeroy speaks on monetary policy and macroeconomics at the Paris conference
EU industry ministers meet in Brussels
German Chancellor Scholz and Economy Minister Habeck attend the national aerospace conference
European Budget Commissioner Hahn and Austrian Finance Minister Brunner speak at the Salzburg Europe Summit
Tuesday, Sept. 26
US new home sales, Conference Board consumer confidence
Mexico international reserves
Singapore industrial production
ECB’s Holzmann speaks at Bloomberg event in Vienna
ECB’s Lane speaks on monetary policy and macroeconomics at the Paris conference
Spanish Parliament begins debate on the new prime minister. Vote to occur on Sept. 27th
German Chancellor Scholz speaks at the annual meeting of the German Society for International Cooperation
German Economy Minister Habeck speaks at the BDI climate conference
Wednesday, Sept. 27
US durable goods
China industrial profits
Russia unemployment, industrial production
Thailand rate decision: Expected to raise rates 25bps to 2.50%
Bank of Japan issues minutes of July’s policy meeting
French government reveals 2024 budget
Foreign ministers of Austria, Slovenia, Slovakia, Czechia, and Hungary hold a briefing in Vienna
Thursday, Sept. 28
US initial jobless claims, GDP
Australia retail sales
Eurozone economic confidence, consumer confidence
Mexico unemployment, rate decision
Fed Chair Jerome Powell hosts town hall meeting
Fed’s Barkin dinner speech on monetary policy outlook at Money Marketeers of NYU
Fed’s Goolsbee speaks at Peterson Institute for International Economics in Washington
South African Reserve Bank issues quarterly bulletin
German Chancellor Scholz, Belgian Prime Minister De Croo, Bank of America CEO Brian Moynihan, and BlackRock CEO Larry Fink attend the Berlin Global Dialogue
Riksbank Deputy Governor Flodén speaks at Svenska Kreditföreningen’s autumn conference
IEA’s Critical Minerals and Clean Energy Summit in Paris
Austrian energy regulator’s gas chief Millgramm speaks at the Montel Energy Day conference
Friday, Sept. 29
US consumer spending, wholesale inventories, University of Michigan consumer sentiment
China Caixin manufacturing PMI, Caixin services PMI
Czech Republic GDP
Hong Kong retail sales
Japan unemployment, Tokyo CPI, industrial production, retail sales
South Africa trade balance
China’s ‘Golden Week’ holiday begins from Sept. 29 to Oct. 8
ECB President Lagarde speaks in Paris at an event on the energy transition
Fed’s Williams speaks at the Long Island Association
Helsinki Security Forum begins
Sovereign Rating Updates