It’s a big data week for the US and UK, with the US due to publish NY and Philly Fed manufacturing indices for October and retail sales, housing and industrial output figures for September. In the UK, it’s the trilogy of labour market, inflation and retail sales data.
However, the spotlight is likely to remain on ongoing US-China negotiations and detailed Brexit discussions between the UK and EU which are entering a critical phase. EU leaders meet on 17-18 October and European Council President Donald Tusk is expected to give a formal decision on Boris Johnson’s proposed Brexit deal.
RBA policy meeting minutes may shed more light on how much appetite there is for further easing and important Australian labour market data are due out Thursday. In New Zealand the main data release is tomorrow’s Q3 CPI-inflation print.
Monday 14th October
Eurozone: Industrial output (August). Industrial output in the Eurozone shrunk 2% between March and July but analysts forecast a 0.3% rebound in August.
Tuesday 15th October
Australia: Reserve Bank of Australia policy meeting minutes. The RBA cuts its policy rate 25bp to a record low of 0.75% at its meeting on 1st October and markets are pricing in for the RBA to halve its policy rate in the next 12 months.
United Kingdom: Labour market data (August). The highlight in recent months has been the steady rise in average weekly earnings growth which hit 4.2% yoy in July (or about 2.3% in real terms), its fastest pace of growth since February 2010.
Eurozone: German ZEW Economic Sentiment (October). Economic sentiment in the Eurozone’s largest economy rebounded to -22.5 in September from a multi-year low of -44.1 in August but macro data still point to a non-negligible risk that GDP contracted in Q3 and therefore that the German economy was in recession. Moreover, analysts forecast that economic sentiment fell back in October to -27.3.
United States: New York Empire State manufacturing index (October). This index will provide an early indication of how the US manufacturing sector fared in early Q4. Analysts estimate that GDP growth slowed slightly in Q3 from 2.0% qoq seasonally annualised in Q2.
New Zealand: CPI-inflation (Q3). Headline CPI-inflation rebounded to 0.6% qoq in Q2 after two weak quarters of 0.1% qoq and analysts forecast that it remained unchanged at 0.6% qoq in Q3. If this forecast proves correct, it may at the margin increase the odds of the RBNZ keeping its policy rate on hold for the time being.
Wednesday 16th October
United Kingdom: CPI-inflation (August). Headline and core CPI-inflation fell to respectively 1.7% yoy and 1.5% in July, their lowest levels since end- 2016. This contributed to markets pricing in the Bank of England to cut rates by a full 25bp by next May but following on from last week’s Brexit-related news markets are now pricing in only 11bp of rate cuts.
United States: Retail sales (September). Retail sales rose every month between March and August, cumulatively by almost 4%, but growth in the broader measure of household consumption has slowed in recent months.
Thursday 17th October
Australia: Labour market data (September). The Australian economy created a reasonable 76,000 jobs in July-August but full-time employment fell by 15,500 in August – the largest contraction in 14 months. This seems to have contributed to the RBA’s decision to cut rates 25bp at its 1st October policy meeting.
European Union: Start of 2-day European Council meeting. The 28 EU leaders, bar Prime Minister Johnson, will discuss a number of issues but top of the agenda will be the UK’s latest Brexit proposal, particularly with regards the Irish backstop. European Council head Donald Tusk is expected to give a formal decision on 18th October as to whether this proposal is acceptable to the EU.
United Kingdom: Retail sales (September). Retail sales contracted 0.2% mom in August and last week’s British Retail Consortium (BRC) data point to further consumer demand weakness in September.
United States: Building permits and housing starts (September).
United States: Philadelphia Fed manufacturing index (October).
United States: Industrial output (September). The NY and Philly Fed manufacturing indices suggest that US industrial output growth slowed in September and indeed analysts forecast a 0.2% mom contraction.
Friday 18th October
No major data release or policy events scheduled.
Saturday 19th October
United Kingdom: Meaningful parliamentary vote (tentative). Should the UK and EU agree on a Brexit deal during the week, Prime Minister Johnson has said that he would ask members of the Lower House of Commons to sit and hold a meaningful vote on the new Brexit deal. A simple majority is required.
