Week Ahead – Earnings season is back

US

It is now all about inflation data.  The focus was temporarily on the labour market but everyone knows that the Fed is primarily concerned with what is happening with inflation. 

Wall Street will first get a look at producer prices on Wednesday and then CPI the next day. August data showed high inflation remains well-entrenched as shelter and food prices surged, while gas prices softened. Expectations for the September inflation report are for inflation pressures to remain hot.  The consumer price index is expected to increase by 0.2% for the month and 8.1% over the past year.   

Traders will also pay close attention to the FOMC minutes that should show a consistent hawkish stance to fight persistently high inflation. It will also be another busy week of Fed speak as seven FOMC members will be making appearances.  Evans and Brainard speak on Monday. On Tuesday, Mester speaks to the Economics Club of NY.  Wednesday sees Kashkari and Barr speak before the minutes are released. Cook makes the last Fed appearance on Friday. 

Earnings season also begins with the big banks.  This earnings season will likely be filled with hiring freezes/layoff announcements, cost-cutting saving measures, and mostly downbeat outlooks.  The health of the consumer is weakening, and Wall Street will want to see how bad banks assess the health of the consumer.  

EU 

Three weeks to go until the next ECB meeting and it’s still not clear whether the central bank will opt for 75 basis points or 100. The decision to super-charge the tightening cycle is not an easy one as policymakers are desperately concerned about the economic ramifications and the risk of going too far too quickly. Final inflation readings combined with various ECB appearances – including President Christine Lagarde – could shed further light on which way the central bank is currently leaning.

UK 

Where do we begin? The key event next week may well be the expiry of the BoE’s gilt-buying intervention on 14 October which some fear could spark another exodus from UK government bonds as the backstop is removed. Those fears may be overblown but investors may only be able to relax again once successfully removed.

We’ll hear from a variety of BoE policymakers next week, all of whom will likely face a barrage of questions related to its bond-buying, the government and its mini-budget and of course the economy. On top of that, there’s a selection of economic data including the jobs report on Tuesday, and GDP and industrial production on Wednesday. 

Another week of question dodging and scripted “answers” is on the cards for the government as it desperately scrambles to clear up the mess it so rapidly created. 

Russia

The focus remains on Ukraine as Russia continues to lose ground in territories it previously captured. Meanwhile, the West is working towards fresh sanctions and potential caps on Russian energy prices in response to the illegal annexation of four regions it currently partially controls in Ukraine. 

South Africa

Another quiet week with only tier three data scheduled for release.

Turkey

It’s that time of the week when I rant about Turkey’s ridiculous monetary policy experiment and its damaging consequences at a time of global tightening. Inflation rose above 83% in September, a victory for President Erdogan no doubt as forecasts put it closer to 85%. Next week we’ll get labour market figures on Monday and current account on Tuesday (spoiler, it hasn’t been fixed by soaring inflation and the weakest ever exchange rate).

Switzerland

Further rate hikes are coming, the question is when and how much. Markets are pricing in a coin flip between 50 and 75 basis points but will the SNB wait until 15 December to pull the trigger? Inflation eased to 3.3% in September, a level Chairman Thomas Jordan suggested the central bank won’t tolerate (anything above target, in fact). We’ll hear from him again on Tuesday. 

China

Next Friday, China’s CPI data will be released and is expected to be around 2.5%, comfortably within target. Against the backdrop of a sharp correction from a recent peak in the US dollar, USD/CNH fell by 3.44%, easing pressure on the currency. The 20th National Congress of China will be held next Sunday, 16 October. The market generally expects that adjusting the pandemic prevention and control policy may be one of the important themes of this meeting.

India

WPI inflation data for September is expected to show price pressures easing next week, which could enable the RBI to consider slowing its tightening cycle. 

Australia

A quiet week following the RBA decision to slow the pace of tightening last week with a 25 basis point hike. This was below market expectations of 50bps and made the RBA the first major central bank to ease off the brake. Consumer inflation expectations on Thursday may be of some interest.

New Zealand

In New Zealand the central bank did not ease off the brake, opting instead to maintain its pace with another 50bps hike, taking the cash rate to 3.5%. The market expects the central bank’s final interest rate target for this round to be around 4.5% according to the Refinitiv rate probability tracker. A tight labour market and lower immigration are creating more sustained domestic inflation pressures and the RBNZ believes there’s still more work to do. On the data front, the BusinessNZ manufacturing index will be released on Thursday.

Japan

Japanese FX intervention is a hot topic once more as it trades around 145 to the dollar. This is just shy of where the Ministry of Finance intervened a couple of weeks ago and around the level the BoJ conducted a rate check the week prior. Another hot US jobs report on Friday may have made intervention more likely.

The BoJ is unlikely to tweak its yield curve control policy any time soon. Governor Haruhiko Kuroda said it would continue to adhere to the easing policy and keep the yield curve ceiling at 0.25% and the benchmark interest rate at -0.1 %. No changes are expected until after Kuroda’s term ends in March 2023. Still, PPI data on Thursday may be of interest. 

Singapore

GDP data on Friday is the only notable economic release. Growth is seen slowing to 3.4% in Q3.

Economic Calendar

Sunday, Oct. 9

Economic Data/Events

China aggregate financing, money supply, new yuan loans expected this week

Austria holds its presidential election

Monday, Oct. 10

Economic Data/Events

US bond market is closed in observance of Columbus Day/Indigenous People’s Day. The stock market will be open.

Norway CPI

Greece CPI

Australia foreign reserves

Singapore MAS monetary policy statement, GDP

Canadian financial markets are closed in observance of Thanksgiving

China’s financial markets open after Golden Week Holiday

The 2022 annual meetings of the International Monetary Fund and World Bank kick off in Washington. Through Oct. 16

Fed’s Brainard and Evans speak at the NABE annual meeting in Chicago

ECB chief economist Lane gives opening remarks at the online ECB Conference on Monetary Policy

ECB’s Centeno speaks at a meeting in Lisbon of central banks from Portuguese-speaking countries

Scotland’s First Minister Sturgeon delivers the keynote speech to Scottish National Party’s National Conference in Aberdeen

Tuesday, Oct. 11

Economic Data/Events

Australia consumer confidence, business conditions, household spending

China FDI

Italy industrial production

Japan BoP current account

Mexico international reserves

New Zealand truckometer heavy traffic index, card spending

South Africa manufacturing production

Turkey current account

UK jobless claims, unemployment

IMF publishes its World Economic Outlook and Global Financial Stability Report

Fed’s Mester speaks at a webinar hosted by the Economic Club of New York

BOE Governor Bailey speaks at the Institute of International Finance annual meeting in Washington. Deputy Governor Jon Cunliffe speaks on a panel on global payments at the IIF meeting

ECB chief economist Lane delivers the keynote speech at the 7th SUERF, CGEG, EIB and Societe Generale conference on “EU and US Perspectives: New Directions for Economic Policy” in New York

SNB President Jordan delivers the annual O. John Olcay Lecture at the Peterson Institute in Washington

The Bretton Woods Committee International Council meeting begins. Through Oct. 14

BOJ announces the outright purchase amount of government securities

Wednesday, Oct. 12

Economic Data/Events

US PPI, FOMC minutes, mortgage applications

Eurozone industrial production

India CPI, industrial production

Japan machinery orders

Mexico industrial production

New Zealand home sales, net migration

Thailand foreign reserves, forward contracts

Turkey industrial production

UK industrial production, trade, monthly GDP

IMF publishes its Fiscal Monitor report

The OPEC Monthly Oil Market Report is published

EU energy ministers meet in Prague

Fed’s Bowman speaks at a Money Marketeers event in New York

Fed’s Kashkari participates in a town hall discussion at an economic development summit in Rhinelander, Wisconsin

ECB’s Christine Lagarde, de Cos and Knot speak at the IIF annual meeting in Washington. Knot also speaks at the IMF meeting in Washington

BOE’s Haskel delivers the keynote speech at the 7th World KLEMS conference in investment and productivity at the University of Manchester

BOE’s Mann speaks at a webinar hosted by the Canadian Association for Business Economics titled “Global Macro Conjuncture and Challenges Facing Small Open Economies.”

BOE chief economist Pill speaks at an event hosted by the Scottish Council for Development and Industry in Glasgow

RBA’s Ellis speaks at Citi Australia & New Zealand Investment Conference in Sydney

Hong Kong Chief Executive John Lee delivers the opening keynote speech at the two-day BritCham Hong Kong Summit

Bloomberg Invest New York two-day conference begins

Thursday, Oct. 13

Economic Data/Events

US CPI, initial jobless claims

Germany CPI

Sweden CPI

Australia inflation expectations 

China medium-term lending

Japan PPI

New Zealand food prices

Mexico central bank releases minutes from its Sept. 29 meeting

ECB’s de Guindos speaks at the “Mercado de Fusiones y Adquisiciones en España y Europa” conference organized by PwC and Expansión

Riksbank’s Breman speaks in a roundtable on the economic outlook for Sweden at the Citi Macro Forum in Washington

G-20 finance ministers and central bankers meet in Washington

Italy’s newly elected parliament convenes for the first time

IEA publishes its oil market report

EIA oil inventory report

Friday, Oct. 14

Economic Data/Events

US retail sales, business inventories, University of Michigan consumer sentiment

US banks kick off earnings season: JPMorgan, Wells Fargo, and Morgan Stanley report

China CPI, PPI, trade

France CPI

Poland CPI 

Canada existing home sales, manufacturing sales

India wholesale prices, trade

Japan money stock

New Zealand PMI

Philippines overseas remittances

UK RICS home prices

BOE emergency bond buying is set to end

BOE publishes its quarterly bulletin

ECB’S Holzmann speaks at a conference hosted by the OECD and Austrian National Bank in Vienna

Australia ends mandatory Covid-19 isolation requirements

Sovereign Rating Updates

Czech Republic (S&P)

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.