It is a big week in terms of policy events and macro data releases. The US, UK and Switzerland will hold central bank policy meetings, with the Fed meeting on Wednesday likely to take centre-stage. The US will also release manufacturing indices for September and industrial output and housing figures for August, which should provide greater clarity as to whether GPD growth slowed in Q3.
In the UK, CPI-inflation and retail sales figures are due for release ahead of the Bank of England meeting on Thursday. Moreover, the Supreme Court will on Tuesday provide a final ruling on the legality of PM Johnson’s decision to suspend Parliament. The data calendar is reasonably light in the Eurozone, with the exception of German ZEW economic sentiment numbers on Tuesday.
In Australia, the focus will be on the release of the RBA’s policy meeting minutes and labour market data, while in New Zealand the key data point will be Q2 GDP.
Monday 16th September
United States: New York Empire State Manufacturing Index (September). This forward looking indicator of manufacturing activity will provide a first glimpse of how the US economy fared in September. Analysts forecast another weak print of 4.0, which if correct would imply a Q3 average of only 4.4 – down from 6.4 in Q2 and the weakest quarterly print since Q4 2016. However, the Atlanta Fed GDP Now tracker currently estimates that US GDP growth only slowed marginally in Q3 to 1.9% qoq annualised from 2.0% in Q2.
Tuesday 17th September
Australia: Minutes of Reserve Bank of Australia policy meeting. The RBA left its policy rate unchanged at 1.00% at its 3rd September meeting. The RBA seems willing to cut rates further if necessary but unwilling to take rates into negative territory or initiate a QE program. The release of the minutes may provide markets with greater clarity on this front.
Eurozone: German ZEW economic sentiment index (September). This forward-looking indicator of economic activity in the Eurozone’s largest economy collapsed to -44.1 in August, its weakest level since December 2011 and analysts forecast only a modest rebound to -38 in September. If this forecast proves correct, the ZEW index will have dropped from -6.7 in Q2 to -35.5 in Q3, its lowest level since Q4 2011, increasing the odds that the Germany economy was in recession in Q3 (after GDP contracted 0.1% qoq in Q2).
United Kingdom: Supreme Court ruling on suspension of Parliament. The highest court in the land will rule on whether Prime Minister Boris Johnson’s decision to suspend the British Parliament until 14th October was lawful or not. Constitutional experts expect the Supreme Court to uphold the original decision by a Scottish court that the decision was lawful, which would imply that Members of Parliament will not return for another month, in turn giving the government breathing space to pursue its Brexit strategy.
United States: Industrial output (August)
Eurozone: European Central Bank board member Coeure to speak. Coeure may provide some more colour on the ECB’s package of policy-easing measures announced last week and the extent to which board members were in disagreement.
New Zealand: Current account balance (Q2). This is a highly seasonal data series, with the current account balance typically recording a deficit in the second quarter (after a small surplus in the first quarter). Indeed analysts forecast a NZD 1.12bn deficit in Q2 following a NZD 680mn surplus in Q1.
Wednesday 18th September
United Kingdom: CPI-inflation (August). Core CPI-inflation has been stuck in a 1.7-1.9% yoy range since October and analysts expect this measure of inflation to have weakened to the bottom of this range in August. Normally markets and the Bank of England would attach great weight to this data series but in the context of Brexit-related uncertainty, the Bank of England is likely to keep rates on hold at 0.75% for the foreseeable future.
United States: Building permits and housing starts (August).
United States: Federal Reserve policy meeting, statement, press conference and updated forecasts. Markets are currently pricing in a full 25bp rate cut at this meeting and a further 25bp cut before year-end. Chairperson Powell has said little to dispel the notion that the Fed will cut rates for a second time this year at its September meeting and markets will be trying to gage the appetite for a third rate cut this year, particularly in the context of the ongoing US-China trade war.
New Zealand: GDP (Q2). GDP growth was unchanged in Q1 at a decent 0.6% qoq. While analysts forecast that growth slowed to 0.4% qoq in Q2, in line with the global slowdown in economic growth, New Zealand’s economy remains comfortably above the recession line.
Thursday 19th September
Australia: Labour market data (August). The RBA has attached a great deal of weight to the relative strength/weakness of the Australian Labour market when setting an appropriate level for its policy rate. The economy generated 41,100 jobs in July – the highest rate since September 2018 – but this was on the back of a paltry 500 jobs in June. Analysts forecast a 10,000 print for August.
Switzerland: Swiss National Bank policy meeting. The SNB may well opt to cut its (deposit) policy rate, which currently stands at -0.75%, following last week’s decision by the ECB to cut its deposit rate 10bp to -0.50%.
United Kingdom: Retail sales (August). Retail sales surged 0.9% mom in June – which may have been partly due to stock-building ahead of the original Brexit date – but growth slowed to 0.2% mom in July and analysts forecast a 0.2% mom contraction in August. This softening in consumer demand is likely to continue weighing on headline GDP growth even if the economy may have avoided a recession in Q3
United Kingdom: Bank of England policy meeting. The MPC will in all likelihood leave its policy rate once again unchanged at 0.75% but is likely to provide an update on its assessment of how Brexit-related issues are impacting the economy and may impact its future interest rate decisions.
United States: Philadelphia Fed Manufacturing index (September). Unlike the NY Empire manufacturing index, the Philly Fed index of economic activity in the US manufacturing sector was robust in July (21.8) and August (16.8). Analysts forecast a dip to 11.0 in August but this would still leave the Q3 average at 16.5 – almost double the Q2 average – and its strongest quarter in a year.
Friday 20th September
United States: FOMC Member Rosengren to speak
