Week Ahead – Happy Holidays!

US

Thin trading conditions could persist as much of Wall Street will be taking off this week. While trading volumes might be lower it will be a week filled with lots of economic readings.  There will be no earnings and no Fed speak.

On Monday, US markets will be closed to observe the Christmas holiday.  Tuesday contains several economic releases that are expected to show the economy is weakening.  Wholesale inventories in November are expected to increase at a slower pace, both the October readings for the FHFA house price index and S&P Corelogic Case-Shiller releases will show the housing market continues to weaken.  The Dallas Fed Manufacturing Activity report could show business activity remains depressed.  On Wednesday, the December Richmond Fed Manufacturing index is expected to continue its downtrend, while November pending home sales weaken.  Thursday contains both weekly initial jobless claims and the MNI Chicago PMI reading that might show a rebound.

EU

There are no releases out of Germany. Spain will release retail sales and CPI.

UK

Strike action continues to dominate UK headlines over the festive period. On Friday, the Nationwide House Price Survey should show the housing market is in bad shape.

Russia

There are a host of events from Russia next week. With the Ukraine war and Western sanctions draining the Russian economy, the CPI and GDP releases will be of particular interest. Russia will also release industrial production and unemployment.

South Africa

Money supply and trade data will be released.

China

The focus will remain on China’s reopening and over how this COVID surge tests their health systems.  In addition to China’s reopening, traders will pay close attention to how much further China’s PMIs drop into contraction territory. A significant drop with these upcoming economic readings will bolster the case for the PBOC to cut rates next quarter.

India

India will release the November fiscal deficit data and the eight core industries overall growth rate.

Australia & New Zealand

It is expected to be a quiet week for both Australia and New Zealand.

Japan

The Bank of Japan stole the show last week, as it widened the yield curve from 25 to 50 basis point and sent the yen soaring. The move was completely unexpected as the markets hadn’t anticipated any major policy moves before Governor Kuroda ends his term in April. The BoJ will release the Summary of Opinions from the meeting during the week, which will give investors the opportunity to read the details of the dramatic meeting. Japan will also release unemployment and retail sales and industrial production.

Singapore

On Friday, the release of Singapore’s money supply data will be released.

Markets

Energy

Energy traders will pay close attention to the arctic blast that could impact US refineries. Crude flows could see significant disruptions as Lyondell Houston Refinery and Exxon Beaumont reportedly are having issues.

A close eye will be kept on Russia now that they have signaled they could cut oil output by 5-7%. Lower production from Russia and if US supplies go offline, oil could continue to rise.

Gold

Gold hovers around the $1800 as Wall Street becomes more confident that disinflation trends will continue.  Another round of economic data is painting a picture that consumers and businesses are weakening and that should help keep pricing pressures coming down.  The economy is still recession bound and if inflation continues to cool, gold demand should improve in the New Year.

Cryptos

Bitcoin looks like it might be finding a home between the $16,000 and $17,000 zone. The Crypto industry has been rather constructive over Core Scientific’s bankruptcy, but investors still remain stuck in wait-and-see mode to see if any other major collapses occur.

Monday, Dec. 26

Economic Events:

• BOJ Governor Kuroda speaks at the Keidanren Councillors meeting.
• Christmas Day holidays are observed in the US and Europe (no stock or bond trading).

Tuesday, Dec. 27

Economic Data/Events:

• China industrial profits
• Japan unemployment, retail sales
• Mexico international reserves
• US wholesale inventories
• Norway retail sales
• Finland confidence
• UK markets closed

Wednesday, Dec. 28

Economic Data/Events:

• Japan industrial production
• Mexico unemployment
• Russia industrial production, unemployment
• Switzerland Credit Suisse survey expectations
• Sweden trade, household lending
• BOJ Summary of Opinions

Thursday, Dec. 29

Economic Data/Events:

• US initial jobless claims
• Hong Kong trade
• Thailand trade
• South Korea industrial production
• Spain retail sales
• Finland house prices
• ECB publishes Economic Bulletin.
• US Census Bureau releases annual projection of the nation’s population.
• Italian PM Meloni expected to speak
• Bank of Portugal releases data on banking system

Friday, Dec. 30

Economic Data/Events:

• US bond market closes early at 2pm EST
• Russia CPI, GDP
• Spain CPI
• Spain inflation preliminary
• Portugal inflation preliminary

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