- Tuesday: AU-JP-EZ-UK-US PMIs, UK Unemployment Rate.
- Wednesday: Australia CPI, German IFO, BoC Policy Decision.
- Thursday: ECB Policy Decision, US Durable Goods, US GDP Q3, US Jobless Claims.
- Friday: Tokyo CPI, Australia PPI, US Core PCE.
The ONS last week published only the figures on the workers’ earnings, vacancies and real time information on employment. The rest of the UK labour market data was pushed back to this week due to falling response rates to the LFS survey. The consensus sees the Unemployment Rate to remain unchanged at 4.3%.
Throughout the day we will get the PMIs for Australia, Japan, Eurozone, UK and the US. At this point they are unlikely to influence the near-term policy outlook as the central banks are expected to keep rates steady as they gather more data and let the monetary policy lags filter through the economy. The market is more likely to react to downside surprises given the recent rise in long-term yields. The most important ones will be the Eurozone, the UK and especially the US PMIs:
- Eurozone Manufacturing PMI 43.7 vs. 43.4 prior.
- Eurozone Services PMI 48.7 vs. 48.7 prior.
- UK Manufacturing PMI 45.0 vs. 44.3 prior.
- UK Services PMI 49.5 vs. 49.3 prior.
- US Manufacturing PMI 49.5 vs. 49.8 prior.
- US Services PMI 49.9 vs. 50.1 prior.
The Australian Q3 CPI Y/Y is expected at 5.3% vs. 6.0% prior, while the Q/Q reading is seen at 1.1% vs. 0.8% prior. The RBA is more likely to focus on the core measures with the Trimmed Mean CPI Q/Q expected at 1.1% vs. 0.9% prior and the Y/Y reading seen at 5.0% vs. 5.9% prior, while the Weighted Mean CPI Q/Q expected at 1.0% vs. 1.0% prior and the Y/Y figure seen at 5.0% vs. 5.5% prior. The recent RBA Minutes were more hawkish than expected and suggest that an upside surprise in the CPI data could raise the chances of another rate hike.
The BoC is expected to keep interest rates unchanged at 5.0% given the recent miss in the CPI report. In fact, prior to that, there was a good chance that the BoC could have hiked by 25 bps as the underlying inflation measures kept on surprising to the upside with wage growth trending upwards. If the BoC decides to surprise with a rate hike, the Canadian Dollar is likely to come under pressure after an initial spike.
The ECB is expected to keep the deposit rate unchanged at 4.0% given several dovish comments from ECB members, the miss in the Eurozone CPI and the line in the September Monetary Policy Statement saying that “the GC judges that rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to target”.
Last week, the US Initial Claims beat expectations once again, but Continuing Claims missed for the second time in a row suggesting that workers are finding it harder to get another job after being laid off. This week the consensus sees Initial Claims at 209K vs. 198K prior, while Continuing Claims are expected at 1720K vs. 1734K prior.
The Tokyo CPI is seen as a leading indicator for National CPI, and it’s been consistently trending downwards, although the Core-Core measure looks stickier. The consensus sees the Headline CPI Y/Y to tick lower to 2.7% vs. 2.8% prior, while the CPI ex-Fresh Food Y/Y is expected to remain unchanged at 2.5%.
The US PCE Y/Y is expected to tick lower to 3.4% vs. 3.5% prior, while the M/M reading is seen at 0.3% vs. 0.4% prior. The Core PCE Y/Y, which is the Fed’s preferred measure of inflation, is expected at 3.4% vs. 3.5% prior, while the M/M figure is seen at 0.3% vs. 0.1% prior. This report shouldn’t be market moving given that it’s unlikely to change the near-term policy outlook and we recently got the timelier CPI report.