This week will deliver a make-or-break moment for Fed rate hike expectations. The main event will be the September inflation report..
Expectations are for both headline and core inflation to post 0.3% month-over-month gains in September, while headline year-over-year inflation will drop a tick to 3.6% and core’s annual reading will ease from 4.3% to 4.1%. In September, gas prices were relatively stable, car prices rose, and some core services were sticky.
Before Wall Street locks in on Thursday’s CPI release and weekly jobless claims, traders will pay close attention to the PPI release on Wednesday. On Friday, the University of Michigan sentiment report will closely be watched, with the focus falling on near-term inflation expectations. Last month, consumers saw prices rising 3.2% over the next 12 months, which was the lowest level since 2021.
Clarity is expected as to who will be the frontrunner to become the speaker of the House, which will play a critical role in avoiding a government shutdown come mid-November.
The banks kickoff earnings on Friday and it seems many are expecting the financials to highlight a much weaker consumer given surging delinquencies and exhausted excess savings. JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Blackrock (NYSE:BLK), and Citigroup (NYSE:C) report earnings before the NY open.
Fed officials will be making 14 appearances throughout the week. Bostic and Collins speak after the inflation report and Harker makes the lone Friday appearance.
Eurozone
A pretty quiet week for the euro area, with an appearance from ECB President Christine Lagarde probably among the few highlights. The ECB minutes release on Thursday is probably the key event of the week considering how debated the dovish hike likely was. The message was clear though but it will be interesting to see how united the committee was.
UK
The focus next week will be the array of BoE appearances which come at a time of great uncertainty for central banks, most notably in the UK. The MPC surprised markets last month with a decision to leave interest rates unchanged – just – and a lot of the language around it was more neutral than would have been expected under those circumstances. We can sometimes read too much into these things so it will be interesting to hear what the thoughts of the various policymakers are. We also have GDP figures on Thursday.
Russia
Inflation data on Wednesday is the standout release next week and once more, it’s expected to rise, this time to 5.8%. Pressure will mount on the central bank to keep raising rates with inflation increasing at this rate and the rouble still sitting near its 18-month lows.
South Africa
A couple of economic releases are on the agenda next week but both are tier two or three and therefore unlikely to be game-changing.
Turkey
Another quiet week but there are a couple of releases worth noting, with unemployment and industrial production figures due on Tuesday.
Switzerland
Next week offers very little with the only release being PPI on Friday.
China
Financial markets in China will be back in action after the Golden Week holiday. On Wednesday, M2 money supply, new yuan loans, and vehicle sales data for September will be released.
The key consumer and producer prices inflation data for September will be out on Friday where the consensus is expecting a tick higher to 0.2% y/y from 0.1% in August. That would be the second consecutive month of y/y growth in consumer prices.
A similar consensus for the PPI where its negative growth is expected to shrink slightly to -2.4% y/y from -3% in August. That would be the third consecutive month of deceleration in producer deflation.
The balance of trade data for September will be released on Friday as well; the trade surplus is expected to expand slightly to US$70 billion from $68.36 billion. The consensus for export growth is almost unchanged at -8.3% y/y versus -8.8% in August, while import growth is expected to contract at a lesser magnitude of -6% y/y from -7.3% in August.
India
Industrial production data for August is released on Thursday and it is expected to rise to 9.3% y/y from 5.7% in August. The inflation rate for September out on the same day is expected to inch lower to 5.45% y/y from 6.83%. That would be the second consecutive month of contraction from July print of 7.44%, the highest level since April 2022.
On Friday, we will have the balance of trade data for September where the deficit is forecasted to shrink to $23 billion from $24.2 billion.
Australia
Consumer and business confidence data will be released on Tuesday and the Westpac consumer confidence is expected to improve to -0.7% m/m from -1.5% .in September.
The NAB business confidence for September is expected to fall to -2 from 2 in August.
New Zealand
Two key data to focus on; food inflation for September on Thursday which is expected to dip to 7.5% y/y from 8.9%. That would be the third consecutive month of growth deceleration in food prices.
The manufacturing PMI for September will be released on Friday and a contraction reading is forecasted at 46.9, almost unchanged from August’s 46.1.
Japan
On Tuesday, we will get the current account data which is expected to show a further surplus of JPY 3.091 trillion from JPY 2.772 trillion.
Banking lending & PPI data for September will be released on Wednesday. Bank lending is forecasted to dip to 2.4%y/y from 3.1% in August. That would be the lowest growth rate since September 2022. PPI is expected to decelerate further in September to 2.3% y/y from 3.2% in August.
Singapore
Two key events to watch on Friday. Firstly, the advance estimate for Q3 GDP growth, the consensus is expecting a lackluster growth rate of 0.4% y/y from 0.7% in Q2. That would be the third consecutive quarter of y/y growth below 1%. The risk of a recession has increased for next year.
On the same day, the Monetary Authority of Singapore (MAS) will release its semi-annual monetary policy statement; it is expected that the MAS will likely maintain the prevailing rate of appreciation of the S$NEER policy band as inflation pressures have started to cool in the past three months while the external demand environment has remained weak.