- Monday: China NBS and Composite PMI (September), Caixin PMIs (September), Japanese Retail Sales (August), German Retail Sales (June), UK GDP (Q2), Swiss KOF (September), German CPI (September), UK Mortgage/Lending Approvals (August), US Dallas Fed (September), New Zealand NZIER (Q3); Canada vacation.
- Tuesday: Riksbank Minutes, Final EU/UK/US Manufacturing PMI (September), EZ Flash CPI (September), US ISM Manufacturing PMI (September), US JOLTS (August), Mainland China and Hong Kong market holiday.
- He got married: NBP Announcement, US ADP National Employment (September), Eurozone Unemployment Rate (September), Mainland China Market Holiday.
- Thursday: Swiss CPI (September), Eurozone/UK/US final and composite services PMIs (September), US durable goods PMI (August), US ISM services PMI (September) ), Mainland China and South Korea.
- Friday: US Jobs Report (September), Market Holidays in Mainland China
China PMI (Monday):
The NBS and Caixin PMIs will be released on the same day, with the NBS manufacturing forecast to rise to 49.5 (previously 49.1) but remain in contraction territory, while the Caixin manufacturing index is expected to rise to 50.5 (previously 50.4). The data will be carefully watched for the outlook for the Chinese economy, as the release also comes in light of the bazooka stimulus announced by the Governor of the People’s Bank of China on Tuesday. The stimulus announcement came after a series of worrying Chinese metrics that generally highlighted weak domestic demand. Analysts at ING are looking at a “slight rebound in the official manufacturing PMI to 49.3 from 49.1.” Note that Chinese markets will be closed from Tuesday for the rest of the week due to the Golden Week holiday.
Riksbank meeting minutes (Tuesday):
As expected, the Riksbank cut interest rates by 25 basis points to 3.25% (previously 3.50%); What was interesting about the meeting was that the interest rate may be cut in the remaining two meetings this year, with the possibility of a larger cut of 50 basis points in one of these two meetings; Beyond that, the trajectory also suggests that one or two further cuts may take place during the first half of 2025. This was a pessimistic turn from previous verbal guidance, which had indicated a rate of 2.75% by the end of the year. As such, the EUR/SEK pair rose immediately, but this proved to be fleeting. Perhaps because this guidance is somewhat consistent with SEB analysts’ expectations. ING offers other reasons for the Swedish krona not to react, noting that the Riksbank’s openness to a 50 basis point cut could imply that the Swedish economy is on track to outperform the eurozone. The bank adds that external factors such as the Fed’s large 50 basis point cut are also more “accommodative” for the Swedish krona. Taking a look at the Riksbank’s economic forecasts for 2025; It lowered the CPI significantly, lowered the consumer CPI marginally, and raised GDP and unemployment slightly. In the post-policy announcement, Riksbank Governor Thedén did not commit to a preference of between 25 or 50 basis points for the remaining two meetings; He pointed out that there is no single factor that will determine the size, but noted that the main scenario will be 25 basis points in both meetings. Going forward, SEB reiterated its view that the Riksbank will opt for a 50 basis point cut in November and a 25 basis point cut in December, raising the interest rate to 2.50% by the end of the year. Next week will see the release of the Riksbank’s meeting minutes, where the focus will be on whether or not a larger 50 basis point cut was discussed at the last meeting, and what officials are particularly looking forward to opting for a larger cut. .
EZ Flash CPI (Tuesday):
The consensus (taken ahead of French and Spanish inflation measures) was for headline CPI to fall year-on-year to 2.0% from 2.2%, core to fall to 2.7% from 2.8%, and supercore to remain flat at 2.8%. Note that if the headline prints at 2.0%, this will be on target for the ECB for the first time since June 2021. As a reminder, the August release saw the headline reading decline from 2.6% to 2.2% on account of energy. Inflation, while core inflation fell slightly due to goods inflation and services inflation to 4.2% from 4.0% due to the French Olympics. Ahead of the release, regional gauges from France and Spain came in significantly lower than expected, with the former falling to 1.2% year-on-year from 1.8% and the latter recording 1.5% versus the former. 2.3%. As such, Capital Economics is of the view that the consensus is now effectively outdated and that eurozone-wide headline inflation should “show a sharp decline to below the 2% target”. From a fundamental perspective, the consultancy notes that core inflation is also likely to have fallen. However, in their view, this should not come as a “big surprise” to the ECB, and they therefore expect no interest rate change in October. Market prices vary with Refinitiv data suggesting a roughly 90% chance of a 25 basis point cut next month. It’s worth noting that a recent source report via Reuters indicated (in contrast to comments made in the wake of the September meeting) that the October meeting is “broadly open” in light of recent data points. However, we are yet to see many statements from policymakers supporting such a move.
US ISM Manufacturing PMI (Tuesday):
Consensus expects the ISM Manufacturing Survey to come in at 47.3 in September, little changed versus 47.2 in August. By comparison, S&P Global’s flash data for the month showed the manufacturing production index at a two-month high (48.9 vs. previous 48.2), and the same manufacturing PMI fell to a 15-month low (47.0 vs. previous 47.9). With a “strong” expansion in the services sector that contrasts with a decline in manufacturing output, and indicates that business conditions within the goods-producing sector have deteriorated for the third month in a row. “The largest negative contribution to the PMI came from new orders, which fell at the fastest rate since December 2022, followed by employment, which fell at a pace not seen since June 2020,” the report said. The Purchasing Managers’ Index (PMI), with delivery times shortening to a degree not seen since February, indicating spare capacity for the supply chain). In August, while stocks remained unchanged.
Japanese Tankan Survey (Tuesday):
The Q3 Large Manufacturers Index is expected to reach 13 (previous 13), while the Large Non-Manufacturers Index is expected to fall to 32 (previous 33), and Q3 Large Manufacturing Capex is expected to rise to 11.9%. (more than 11.9%). 11.1%). Offices expect the services-led recovery to continue amid slowing inflation and strong wage growth. Meanwhile, industrial production is seen as fairly flat with Toyota production gradually recovering. “The BOJ is likely to downplay weak IP results, but if the Tankan survey describes positive business sentiment, it should support BOJ policy normalization as early as December,” ING says.
OPEC+ Joint Ministerial Committee (Wednesday):
No recommendations are expected to be made by the JMMC, which is not the decision-making body for OPEC+ policy. OPEC+ is likely to focus more on addressing overproduction by some countries. Recent sources indicated that OPEC+ is preparing to move forward with increasing oil production in December because its impact will be minimal if some members plan to make deeper cuts to compensate for surplus production. Russian Deputy Prime Minister Novak also recently indicated that there are no changes in the group’s plans to gradually restore some production in December. Note that the Financial Times reported that Saudi Arabia was willing to abandon its unofficial target of US$100 per barrel to regain market share, although this report was met with skepticism by OPEC watchers and was later denied by multiple sources. “Neither Saudi Arabia nor the broader OPEC+ group has any specific target for oil prices, and no member of the producer alliance is about to abandon production discipline in favor of seeking market share,” multiple OPEC+ sources told the Argus.
US Services Purchasing Managers’ Index (ISM) (Thursday):
The services PMI is expected to rise to 51.7 in September from 51.5 in August. By comparison, S&P Global’s flash PMI report for September showed US services business activity at a two-month low of 55.4 (vs. 55.7 previously). Standard & Poor’s said inflows of new work in the services sector rose at a rate close to the 27-month high recorded in August, while new export orders for services rose at an increasing rate. Consequently, the backlog of requests at service providers increased slightly, indicating a lack of spare capacity. However, the survey author also noted that optimism about next year’s output deteriorated sharply, and the survey’s future output index fell to its lowest level since October 2022, and the second lowest level since the pandemic; “The services sector led the deterioration in confidence amid concerns about the economic outlook and demand, which are often linked to uncertainty about the presidential election,” the report said.
US jobs report (Friday):
Consensus expects 145,000 nonfarm jobs to be added to the US economy in September (vs. 142,000 in August), with the unemployment rate expected unchanged at 4.2% (Note: FOMC forecast for September calls for unemployment to rise to 4.4% by the end ). for this year). Average hourly earnings are expected to rise by 0.3% per month (previously 0.4%), and average weekly hours worked are expected to remain unchanged at 34.3 hours. Although job gains remain positive, they reflect a slowdown compared to recent years, Capital Economics says, adding that employment expectations are declining, suggesting that salary growth could average around 100,000 a month for the rest of the year. Consumer confidence in job security is also declining, with a Conference Board survey highlighting the risk that the unemployment rate could rise to 5% later this year. CapEco says that given the cooling labor market, if payrolls data continues to underperform, the Fed may consider cutting the interest rate by an additional 50 basis points in November, after its 50 basis point cut in September. As this note goes to print, financial market expectations are divided regarding a 25 basis point or 50 basis point cut in November.
This article originally appeared on Newsquak.