UPCOMING EVENTS:
- Monday: Australia Retail Sales.
- Tuesday: Japan Jobs data, Japan Retail Sales and Industrial Production, Chinese PMI, BoJ Policy Decision, Swiss Retail Sales, Eurozone GDP and CPI, Canada GDP, US ECI, US Consumer Confidence, New Zealand Jobs data.
- Wednesday: Chinese Caixin Manufacturing PMI, US ADP, Canada Manufacturing PMI, US ISM Manufacturing PMI, US Job Openings, FOMC Policy Decision.
- Thursday: Swiss CPI, US Challenger Job Cuts, BoE Policy Decision, US Jobless Claims.
- Friday: Chinese Caixin Services PMI, Eurozone Unemployment Rate, Canada Jobs data, US NFP, US ISM Services PMI.
Tuesday
The BoJ is expected to keep everything unchanged with rates at -0.10% and YCC to target the 10yr JGBs at 0% with a +/-50 bps soft cap and 1% hard cap. There is some speculation about a tweak of the YCC policy though. The central bank is also expected to raise its inflation forecasts to show prices exceeding its 2% target for 2023 and 2024.
The Eurozone CPI Y/Y is expected to fall to 3.2% vs. 4.3% prior, while the Core CPI Y/Y is seen at 4.2% vs. 4.5% prior. The ECB has paused its tightening cycle at the last meeting with the market expecting the central bank to remain on hold into the mid-2024 when it sees the ECB starting the rate cut cycle.
The US Consumer Confidence is seen ticking lower to 100 vs. 103 prior. The Conference Board survey is more weighted towards the labour market, while the University of Michigan survey is more about households’ financial outlook. The labour market details have been showing some weakness lately, which is something that we’ve been also seeing via rising continuing claims.
Wednesday
The US ADP has a poor track record in forecasting the US NFP, but it’s still a market moving report, especially now that the labour market data is at the top of the market’s attention. The consensus sees 150K jobs added in October vs. 89K in the prior month.
The US ISM Manufacturing PMI is expected to remain unchanged at 49.0 vs. 49.0 prior. The recent S&P Global Manufacturing PMI beat expectations with the index printing at 50.0 as the sector rebounded from the 2022 recession. Moreover, price pressures continue to ease, which is a good development for the Fed.
The US Job Openings are seen falling to 9.270M vs. 9.610M prior. This has been a strong market moving report given that the labour market data is now at the top of the market’s focus. For now, the US labour market has been softening via less jobs rather than more layoffs, which is what the Fed has been aiming for. This is something that we’ve been also seeing lately with the rising continuing claims and falling initial claims.
The Fed is expected to keep the FFR unchanged at 5.25-5.50%. The market doesn’t expect the Fed to raise rates anymore and sees the central bank cutting in mid-2024. The focus will be more on the guidance for the December meeting, but we are unlikely to see any pre-commitment as the FOMC remains in a “wait and see” mode. Expect to hear the usual “data-dependent”, “proceeding carefully” and “resilient economy”, but this meeting is likely to be as “boring” as the July one.
Thursday
The Swiss CPI Y/Y is expected at 1.8% vs. 1.7% prior, while the M/M reading is seen at 0.1% vs. -0.1% prior. The Switzerland inflation has been in the SNB’s 0-2% target on both the headline and core measures for quite some time already.
The BoE is expected to keep the bank rate unchanged at 5.25%. Citing Governor Bailey, this decision is likely to be a “tight” one as the hawks might not like the recent CPI report, while the doves may see the softness in the labour market as a reason to keep rates steady.
The US Jobless Claims last week missed expectations with Continuing Claims now showing a clear upward trend, which suggests that workers are finding it harder to get a job after being laid off. This week the consensus sees Initial Claims at 210K vs. 210K prior, while Continuing Claims are expected at 1795K vs. 1790K prior.
Friday
The US NFP is expected to show 172K jobs added vs. a whooping 336K seen in the prior month, and the Unemployment Rate to remain unchanged at 3.8%. The Average Hourly Earnings Y/Y are expected to cool to 4.0% vs. 4.2% prior, while the M/M figure is seen at 0.3% vs. 0.2% prior.
The Canadian labour market report is expected to show 20K jobs added vs. 63.8K in the prior month and the unemployment rate to increase to 5.6% vs. 5.5% prior. The focus will also be on wages as the BoC has been highlighting its focus on wage growth.
The US ISM Services PMI is expected to tick lower to 53.0 vs. 53.6 prior. The recent S&P Global Services PMI beat expectations with the Services index returning into expansion. The good news is that the price pressures continue to ease.
