- MondayUK Market Holiday (Bank Holiday), German Ifo Index (August)
- Tuesday: China central bank meeting minutes, China industrial profits (July), German GfK consumer confidence (September)
- Get married:Australian CPI (July), NVIDIA (NVDA) Earnings (Q2)
- ThursdaySpanish CPI (Aug), German Länder CPI (Aug), Eurozone Sentiment Survey (Aug), US GDP (2nd) and Personal Spending Index (2nd Q)
- Friday: Japan’s Tokyo CPI (Aug), France’s Preliminary CPI (Aug), Germany’s Unemployment (Aug), Eurozone Flash CPI (Aug), Italy’s Flash CPI (Aug), US Personal Spending (July), US U-M Final CPI (Aug)
People’s Bank of China Loan Deferred (Monday): The People’s Bank of China announced last week that it had postponed its medium-term lending operation and would hold it on Aug. 26. Instead of its medium-term loans, the PBOC injected 577.7 billion yuan via seven-day reverse repos, adding that the reverse repo operation that day was aimed at meeting its outstanding medium-term loans, tax payments and government bond issuances. “This will be consistent with the policy direction of gradually fading long-term interest rates as a guide to market prices,” said the head of the foreign exchange and rates department at Overseas-China Banking Corporation. Asked by Reuters whether the central bank would change the timing of the LRLs, the PBOC said “future arrangements will be subject to the actual operating time.” It is worth reminding ourselves that the LRLs’ delayed operating time comes after a series of rate cuts in July, with market watchers suggesting that the sequence of cuts showed a change in the framework — shifting short-term interest rates to be the main signal guiding the market. For reference, China’s benchmark lending rates were left unchanged, as widely expected, with the one-year LRL rate held at 3.35% and the five-year LRL rate at 3.85%.
China Industrial Profits (Tuesday): There is currently no forecast for Chinese industrial profits in July, though the data will be watched closely for a prognosis on the health of China’s manufacturing sector. In June, profits at Chinese industrial firms rose 3.6% year-on-year, accelerating from a 0.7% gain in May. Despite rebounding from last year’s weak performance, profits remain below 2022 levels and far from their record highs in 2021, according to Bloomberg. NBS suggested at the time that the recovery was being hampered by weak domestic demand and a tough international environment. Analysts at ING said the data “recently recovered to low single-digit growth but could start to face some pressure again amid recent signs of a manufacturing downturn.”
Australian CPI (Wednesday): The weighted CPI is expected to fall on an annual basis to 3.4% from 3.8%. Analysts believe that the introduction of energy rebates by the Commonwealth, Queensland and Western Australian governments in July is expected to reduce electricity bills, with Westpac Bank forecasting a 32% fall in electricity prices for the month – thus a weighted CPI of 2.9% – below market expectations. “When combined with a -2.3% m/m decline in motor fuels and food, we should see a -0.6% m/m fall in the monthly CPI for July with the annual pace falling sharply from 3.8% m/m to 2.9% m/m,” the bureau says. From the RBA’s perspective, the data will be closely watched given the recent hawkish tone from the central bank. As a reminder, the latest minutes from the RBA’s August 5-6 meeting said the board considered the case for raising interest rates and decided that a flat outcome better balanced the risks, adding that it was possible for the cash rate to remain on hold for an extended period. RBA Governor Bullock stuck to a hawkish tone at the post-meeting press conference, noting that the board had considered raising interest rates and that a cut was not on the agenda in the near term, while also stating that they were prepared to raise rates if needed and that pricing cuts for the next six months was not in line with the board.
NVIDIA Earnings (Wednesday): Consensus forecasts Nvidia to post earnings per share of 0.63 on revenue of $28.35 billion. The tech giant is expected to report Q3 EPS of 0.69 and Q3 revenue of $31.18 billion. For the full year, Nvidia is expected to report earnings per share of around 2.70 on revenue of $120.14 billion. Analysts generally expect Nvidia’s upcoming earnings report to show strong results due to continued demand for AI, however, there is some caution due to potential production delays. Oppenheimer expects strong Q2 results and a positive outlook for Q3, driven by data center growth. HSBC and Stifel expect continued strength, despite concerns about potential delays at the Blackwell chain. Susquehanna expects strong results, but points to risks from potential delays to the GB200. Wells Fargo is focusing on long-term growth, particularly from Blackwell and software monetization, while Barclays highlights stronger-than-expected supply chain metrics and expectations for increased data center revenue. Analysts currently rate Nvidia stock as a Buy, with an average price target of $137.41 per share, according to Refinitiv data.
Japan CPI in Tokyo (Friday): The data is typically used as a preview of key metrics released two weeks later. Tokyo’s core CPI is forecast to hold steady at 2.2%, while the headline CPI is forecast to slow to 1.9% from 2.2% — largely due to the government’s temporary energy subsidy program. “However, service sector prices are likely to grow at a faster pace than the previous month due to strong wage growth,” ING said. The data comes amid a Bank of Japan normalization. BOJ Governor Ueda said in parliamentary testimony on Friday that economic indicators released after July’s rate hike, including second-quarter GDP and wage data, confirmed that the economy was moving in line with the BOJ’s outlook and that the July decision was therefore appropriate. He added that there was no change in the stance that they would adjust the degree of monetary easing if price expectations were likely to be met.
EZ Flash CPI (Friday): The headline CPI is forecast to ease to 2.2% y/y in August from 2.6% in July, with the super core measure falling to 2.8% y/y from 2.9%. The previous release saw headline inflation rise to 2.6% y/y from 2.5%, as energy inflation picked up. Elsewhere, the widely watched services component fell to 4.0% y/y from 4.1%. This time around, Investec analysts “expect a decline in the headline measure to 2.3% y/y. This is energy-related given the 4.9% drop in oil prices on the month and the positive base effect of utility prices.” Investec analysts expect service sector inflation to remain “flat” and “do not expect to see a sustained improvement until wage growth eases more substantially.” As a reminder, regional releases ahead of the eurozone-wide measure will give traders a glimpse into what to expect from Friday’s release. From a policy perspective, the September rate cut is fully priced in with increased interest in how the rate-cutting cycle plays out after that with a total of 64 basis points of easing expected by the end of the year implying two 25 basis point rate cuts and a 56% chance of another 25 basis point cut.
US CPI (Friday): The consensus is for the headline CPI to rise +0.2% m/m in July (previous +0.1%). Following the release of the CPI and PPI data, Nick Timeraos of The Wall Street Journal said forecasters who translate the CPI and PPI into the CPI are expecting core prices to rise 0.16% m/m in July — roughly 0.2% m/m, matching the June measure. Timeraos added that this would keep the 12-month rate steady at 2.7% y/y, the six-month annual rate would fall to 2.7% from 3.4% in June, and the three-month annual rate would fall to 1.9% from 2.3%. Capital Economics says the CPI and PPI data show a strong contractionary trend, supporting the case for the Fed to cut rates by 25 basis points in September, despite a likely slight annual increase in core consumer price inflation. While some categories, such as rental and motor vehicle insurance, have shown price increases, the overall data suggests that inflationary pressures are easing, but not enough to justify a larger cut, it said. Analysts generally see the Fed as a case in point after the August jobs report (due out on September 6).
Australian Retail Sales (Friday): Retail sales data for July is expected to fall to 0.2% from 0.5%. The report will provide the first official data on the impact of the “Phase 3” tax cuts on consumer spending introduced in July. Westpac’s Card Tracker tool suggests consumers are mostly saving their income gains, leading to only a modest increase in spending. However, Westpac expects a reading of 0.8% – above the market consensus – “Overall, we expect retail sales to rise by 0.8% in July, which is likely to be seen as a weak result given the (tax relief) context,” the bureau says.
This article originally appeared on Newsquake.