US
It is now all about inflation data. The focus was temporarily on the labour market but everyone knows that the Fed is primarily concerned with what is happening with inflation.
Wall Street will first get a look at producer prices on Wednesday and then CPI the next day. August data showed high inflation remains well-entrenched as shelter and food prices surged, while gas prices softened. Expectations for the September inflation report are for inflation pressures to remain hot. The consumer price index is expected to increase by 0.2% for the month and 8.1% over the past year.
Traders will also pay close attention to the FOMC minutes that should show a consistent hawkish stance to fight persistently high inflation. It will also be another busy week of Fed speak as seven FOMC members will be making appearances. Evans and Brainard speak on Monday. On Tuesday, Mester speaks to the Economics Club of NY. Wednesday sees Kashkari and Barr speak before the minutes are released. Cook makes the last Fed appearance on Friday.
Earnings season also begins with the big banks. This earnings season will likely be filled with hiring freezes/layoff announcements, cost-cutting saving measures, and mostly downbeat outlooks. The health of the consumer is weakening, and Wall Street will want to see how bad banks assess the health of the consumer.
Three weeks to go until the next ECB meeting and it’s still not clear whether the central bank will opt for 75 basis points or 100. The decision to super-charge the tightening cycle is not an easy one as policymakers are desperately concerned about the economic ramifications and the risk of going too far too quickly. Final inflation readings combined with various ECB appearances – including President Christine Lagarde – could shed further light on which way the central bank is currently leaning.
Where do we begin? The key event next week may well be the expiry of the BoE’s gilt-buying intervention on 14 October which some fear could spark another exodus from UK government bonds as the backstop is removed. Those fears may be overblown but investors may only be able to relax again once successfully removed.
We’ll hear from a variety of BoE policymakers next week, all of whom will likely face a barrage of questions related to its bond-buying, the government and its mini-budget and of course the economy. On top of that, there’s a selection of economic data including the jobs report on Tuesday, and GDP and industrial production on Wednesday.
Another week of question dodging and scripted “answers” is on the cards for the government as it desperately scrambles to clear up the mess it so rapidly created.
Russia
The focus remains on Ukraine as Russia continues to lose ground in territories it previously captured. Meanwhile, the West is working towards fresh sanctions and potential caps on Russian energy prices in response to the illegal annexation of four regions it currently partially controls in Ukraine.
South Africa
Another quiet week with only tier three data scheduled for release.
Turkey
It’s that time of the week when I rant about Turkey’s ridiculous monetary policy experiment and its damaging consequences at a time of global tightening. Inflation rose above 83% in September, a victory for President Erdogan no doubt as forecasts put it closer to 85%. Next week we’ll get labour market figures on Monday and current account on Tuesday (spoiler, it hasn’t been fixed by soaring inflation and the weakest ever exchange rate).
Switzerland
Further rate hikes are coming, the question is when and how much. Markets are pricing in a coin flip between 50 and 75 basis points but will the SNB wait until 15 December to pull the trigger? Inflation eased to 3.3% in September, a level Chairman Thomas Jordan suggested the central bank won’t tolerate (anything above target, in fact). We’ll hear from him again on Tuesday.
China
Next Friday, China’s CPI data will be released and is expected to be around 2.5%, comfortably within target. Against the backdrop of a sharp correction from a recent peak in the US dollar, USD/CNH fell by 3.44%, easing pressure on the currency. The 20th National Congress of China will be held next Sunday, 16 October. The market generally expects that adjusting the pandemic prevention and control policy may be one of the important themes of this meeting.
India
WPI inflation data for September is expected to show price pressures easing next week, which could enable the RBI to consider slowing its tightening cycle.
Australia
A quiet week following the RBA decision to slow the pace of tightening last week with a 25 basis point hike. This was below market expectations of 50bps and made the RBA the first major central bank to ease off the brake. Consumer inflation expectations on Thursday may be of some interest.
New Zealand
In New Zealand the central bank did not ease off the brake, opting instead to maintain its pace with another 50bps hike, taking the cash rate to 3.5%. The market expects the central bank’s final interest rate target for this round to be around 4.5% according to the Refinitiv rate probability tracker. A tight labour market and lower immigration are creating more sustained domestic inflation pressures and the RBNZ believes there’s still more work to do. On the data front, the BusinessNZ manufacturing index will be released on Thursday.
Japanese FX intervention is a hot topic once more as it trades around 145 to the dollar. This is just shy of where the Ministry of Finance intervened a couple of weeks ago and around the level the BoJ conducted a rate check the week prior. Another hot US jobs report on Friday may have made intervention more likely.
The BoJ is unlikely to tweak its yield curve control policy any time soon. Governor Haruhiko Kuroda said it would continue to adhere to the easing policy and keep the yield curve ceiling at 0.25% and the benchmark interest rate at -0.1 %. No changes are expected until after Kuroda’s term ends in March 2023. Still, PPI data on Thursday may be of interest.
Singapore
GDP data on Friday is the only notable economic release. Growth is seen slowing to 3.4% in Q3.
Economic Calendar
Sunday, Oct. 9
Economic Data/Events
- China aggregate financing, money supply, new yuan loans expected this week
- Austria holds its presidential election
Monday, Oct. 10
Economic Data/Events
- US bond market is closed in observance of Columbus Day/Indigenous People’s Day. The stock market will be open.
- Norway CPI
- Greece CPI
- Australia foreign reserves
- Singapore MAS monetary policy statement, GDP
- Canadian financial markets are closed in observance of Thanksgiving
- China’s financial markets open after Golden Week Holiday
- The 2022 annual meetings of the International Monetary Fund and World Bank kick off in Washington. Through Oct. 16
- Fed’s Brainard and Evans speak at the NABE annual meeting in Chicago
- ECB chief economist Lane gives opening remarks at the online ECB Conference on Monetary Policy
- ECB’s Centeno speaks at a meeting in Lisbon of central banks from Portuguese-speaking countries
- Scotland’s First Minister Sturgeon delivers the keynote speech to Scottish National Party’s National Conference in Aberdeen
Tuesday, Oct. 11
Economic Data/Events
- Australia consumer confidence, business conditions, household spending
- China FDI
- Italy industrial production
- Japan BoP current account
- Mexico international reserves
- New Zealand truckometer heavy traffic index, card spending
- South Africa manufacturing production
- Turkey current account
- UK jobless claims, unemployment
- IMF publishes its World Economic Outlook and Global Financial Stability Report
- Fed’s Mester speaks at a webinar hosted by the Economic Club of New York
- BOE Governor Bailey speaks at the Institute of International Finance annual meeting in Washington. Deputy Governor Jon Cunliffe speaks on a panel on global payments at the IIF meeting
- ECB chief economist Lane delivers the keynote speech at the 7th SUERF, CGEG, EIB and Societe Generale conference on “EU and US Perspectives: New Directions for Economic Policy” in New York
- SNB President Jordan delivers the annual O. John Olcay Lecture at the Peterson Institute in Washington
- The Bretton Woods Committee International Council meeting begins. Through Oct. 14
- BOJ announces the outright purchase amount of government securities
Wednesday, Oct. 12
Economic Data/Events
- US PPI, FOMC minutes, mortgage applications
- Eurozone industrial production
- India CPI, industrial production
- Japan machinery orders
- Mexico industrial production
- New Zealand home sales, net migration
- Thailand foreign reserves, forward contracts
- Turkey industrial production
- UK industrial production, trade, monthly GDP
- IMF publishes its Fiscal Monitor report
- The OPEC Monthly Oil Market Report is published
- EU energy ministers meet in Prague
- Fed’s Bowman speaks at a Money Marketeers event in New York
- Fed’s Kashkari participates in a town hall discussion at an economic development summit in Rhinelander, Wisconsin
- ECB’s Christine Lagarde, de Cos and Knot speak at the IIF annual meeting in Washington. Knot also speaks at the IMF meeting in Washington
- BOE’s Haskel delivers the keynote speech at the 7th World KLEMS conference in investment and productivity at the University of Manchester
- BOE’s Mann speaks at a webinar hosted by the Canadian Association for Business Economics titled “Global Macro Conjuncture and Challenges Facing Small Open Economies.”
- BOE chief economist Pill speaks at an event hosted by the Scottish Council for Development and Industry in Glasgow
- RBA’s Ellis speaks at Citi Australia & New Zealand Investment Conference in Sydney
- Hong Kong Chief Executive John Lee delivers the opening keynote speech at the two-day BritCham Hong Kong Summit
- Bloomberg Invest New York two-day conference begins
Thursday, Oct. 13
Economic Data/Events
- US CPI, initial jobless claims
- Germany CPI
- Sweden CPI
- Australia inflation expectations
- China medium-term lending
- Japan PPI
- New Zealand food prices
- Mexico central bank releases minutes from its Sept. 29 meeting
- ECB’s de Guindos speaks at the “Mercado de Fusiones y Adquisiciones en España y Europa” conference organized by PwC and Expansión
- Riksbank’s Breman speaks in a roundtable on the economic outlook for Sweden at the Citi Macro Forum in Washington
- G-20 finance ministers and central bankers meet in Washington
- Italy’s newly elected parliament convenes for the first time
- IEA publishes its oil market report
- EIA oil inventory report
Friday, Oct. 14
Economic Data/Events
- US retail sales, business inventories, University of Michigan consumer sentiment
- US banks kick off earnings season: JPMorgan, Wells Fargo, and Morgan Stanley report
- China CPI, PPI, trade
- France CPI
- Poland CPI
- Canada existing home sales, manufacturing sales
- India wholesale prices, trade
- Japan money stock
- New Zealand PMI
- Philippines overseas remittances
- UK RICS home prices
- BOE emergency bond buying is set to end
- BOE publishes its quarterly bulletin
- ECB’S Holzmann speaks at a conference hosted by the OECD and Austrian National Bank in Vienna
- Australia ends mandatory Covid-19 isolation requirements
Sovereign Rating Updates
- Czech Republic (S&P)
