It’s a heavy week in terms of macro data releases.
Australia and the UK will publish labour market data for September and the UK and US will release retail sales numbers. In addition, in the UK the all-important CPI-inflation numbers are due for release, 48 hours before Bank of England Carney’s scheduled speech. In the US, markets will focus on the first growth indicators for October, in the form of the NY and Philadelphia Fed manufacturing indices, and on a further stream of FOMC members’ speeches. The Eurozone also has its share of important data events, with the German ZEW economic sentiment index and the Eurozone trade balance numbers out.
But the highlight of the week will most likely be the European Council working dinner on 17th October with the status of Brexit negotiations top of the agenda.
Monday 15th October
United States: NY Fed Empire State Manufacturing Index (October). Typically correlates strongly with US GDP growth. Consensus forecast is for 20.4 in October, down slightly from 22.4 inQ3 which would point to a mild slowdown in GDP growth in early Q4 albeit from still strong levels.
United States: Retail sales (September). A volatile series from month to month but the underlying trend has been one of very strong growth. The consensus forecast is for the Dollar-value of headline sales to have risen 0.7% mom, following a 0.1% mom increase in August. If accurate this would be the eighth consecutive monthly increase in retail sales and would take year-on-year growth to 6.2% yoy in Q3 – the strongest growth rate since Q1 2012.
New Zealand: CPI-inflation (Q3). Headline inflation averaged a modest 0.45% qoq in the first half of the year, underpinning the Reserve Bank of New Zealand’s dovish stance on monetary policy. But analysts expect CPI-inflation to have risen to 0.7% qoq in Q3, which if correct would be the fastest inflation rate since Q1 2017. This may still not be enough for the RBNZ to even start thinking about a possible rate hike but may temper its warnings that a rate cut could still be on the cards.
Tuesday 16th October
Australia: Reserve Bank of Australia policy meeting minutes. The RBA is unlikely to have materially changed its underlying message that a policy rate hike is well off the cards for now but it may note the recent recovery in the Australian Dollar.
United Kingdom: Labour market (September). The headline employment and unemployment numbers have been a bright spot but weekly earnings growth has remained subdued with year-on-year growth barely above zero. Moreover, Brexit uncertainties continue to weigh on the UK economy’s long-term outlook and markets are currently pricing in the Bank of England to hike its policy rate 25bp only next summer.
Germany: ZEW economic sentiment index (October). The German industrial sector and trade have had a rocky few months and the consensus forecast is that the Economic Sentiment Index weakened again in October to -12.3 from -10.6 in September.
Eurozone: Trade balance (August). Markets don’t normally pay too much attention to this data point. But given the background of a worsening trade war between the US and China and the introduction of US tariffs on imports of steel and aluminium from the EU earlier this year this data series has gained importance. Consensus forecast is for the Eurozone’s trade surplus to have narrowed further in August to EUR 15.1bn from EUR 17.6bn in July and EUR 22.5bn in June. This would reinforce forecasts that Eurozone GDP growth remained modest in Q3.
United States: Industrial output (September).
United States: FOMC member Daly to speak. FOMC members in the past week have shown a degree of restraint in their expectations for future Fed rate hikes in the next 15 months, at least compared to Chairperson Powell who has been outright hawkish.
Australia: Reserve Bank of Australia Assistant Governor Debelle to speak.
Wednesday 17th October
United Kingdom: CPI-inflation (September). Consensus forecast is that core CPI-inflation hit 2.0% yoy in September, in the middle of the 1.9-2.1% yoy range in place since April. Similarly, analysts expect headline CPI-inflation to have remained within the 2.4-2.7% yoy range in place since February, at 2.6% yoy. If UK CPI-inflation indeed moved little in September, this will likely reinforce market expectations that the Bank of England has little need, or arguably room, to hike its policy rate in coming months.
United States: Building permits and housing starts (September).
United States: FOMC member Brainard to speak.
Germany: Bundesbank President Weidmann to speak.
United Kingdom: Bank of England MPC Member Broadbent to speak
United States: Federal Reserve policy meeting minutes. The Federal Reserve hiked rates 25bp at its September meeting, in line with expectations, but markets will likely pour over the minutes for any signs of divisions within the FOMC with regards the pace and magnitude of further Fed rate hikes.
European Union: European Council meeting. The leaders of the 27 EU member state will review the state of Brexit negotiations with the UK. There have been noises in recent days that both sides were nearing a mutually acceptable agreement but UK officials have played down these reports. There are seemingly still a number of key issues, including the Irish border, which have yet to be put to bed.
Thursday 18th October
Australia: Labour market data (September). The labour market has added a solid 94,000 full-time jobs in the previous three months which has arguably helped provide some support for the Australian Dollar.
United Kingdom: Retail sales (September). Non-official data suggest that UK retail sales growth slowed in the wake of this summer’s football World Cup and the consensus forecast is indeed that August’s 0.3% mom gain in the volume of retail sales was fully reversed in September. This would imply a slowdown in retail sales growth to 1.3% qoq in Q3 from 2.1% in Q2. The overriding expectation however is still that UK GDP growth accelerated further in Q3 to 0.6% qoq from 0.4% qoq in Q2 and 0.2% qoq in Q1.
United States: Philadelphia Fed Manufacturing Index (October). Like the NY Empire State index typically correlates strongly with US GDP growth and consensus forecast is for a pick-up in the index to 21.0 from an already strong 20.1 in Q3. Unlike the forecast for the NY Empire State index this would imply a rise in US GDP growth, albeit modest, in the first half of October from Q3.
United States: FOMC member Quarles and Bullard to speak
Friday 19th October
United Kingdom: Bank of England Governor Carney to speak. He has been outright bearish about the impact of a no-deal scenario on the UK economy and the question is whether Carney is now more hopeful that the UK and EU can reach a mutually acceptable deal in coming weeks.
United States: FOMC members Kaplans and Bostic to speak.
