UPCOMING EVENTS:
- Tuesday:
Japan
PPI, UK Labour Market report, Switzerland CPI, German ZEW, US NFIB Small
Business Optimism Index, US CPI. - Wednesday:
UK CPI,
Eurozone Industrial Production. - Thursday:
Japan
GDP, Australia Labour Market report, UK GDP, UK Industrial Production,
Switzerland PPI, US Retail Sales, US Jobless Claims, US Industrial
Production, US NAHB Housing Market Index, New Zealand Manufacturing PMI,
PBoC MLF. - Friday:
UK
Retail Sales, Switzerland Industrial Production, US PPI, US Housing Starts
and Building Permits, US University of Michigan Consumer Sentiment.
Tuesday
The UK Unemployment Rate is expected to
tick higher to 4.0% vs. 3.9% prior.
The markets are likely to focus on wage growth with the Average Earnings
ex-Bonus seen at 6.0% vs. 6.6% prior, while the Average Earnings including
Bonus expected at 5.7% vs. 6.0% prior. The data will influence the market’s
pricing with a miss bringing rate cuts forward.
UK Unemployment Rate
The Switzerland CPI Y/Y is expected at
1.6% vs. 1.7% prior. The inflation rate has been is the SNB’s 0-2% target
range since last summer and although the central bank expects a short term
increase, Chairman
Jordan said that their base case
scenario is that inflation should average below 2% this year.
Switzerland Core CPI YoY
The US CPI Y/Y is expected at 3.0% vs.
3.4% prior, while the M/M measure is seen at 0.2% vs. 0.2% prior. The Core CPI
Y/Y is expected at 3.8% vs. 3.9% prior, while the M/M reading is seen at 0.3%
vs. 0.3% prior. This is going to be the most important report for the week and,
as it’s been the case for the prior releases, it will influence the market’s
pricing with a miss bringing rate cuts forward and a beat pushing them backword.
US Core CPI YoY
Wednesday
The UK CPI Y/Y is expected at 4.2% vs.
4.0% prior, while the M/M reading is seen at -0.3% vs. 0.4% prior. The Core CPI
Y/Y is expected at 5.2% vs. 5.1% prior. The last
report surprised to the upside which
prompted a hawkish repricing in interest rates expectations. The BoE is
particularly focused on services inflation, so that would be the most important
metric to watch for. Again, a downside surprise should bring rate cuts
forward, while another upward surprise is likely to push them backword.
UK Core CPI YoY
Thursday
The Australian Unemployment Rate is
expected to tick higher to 4.0% vs. 3.9% prior with 30K jobs added in January
vs. -65.1K in December. The last
report surprised to the downside with a
hefty contraction in full-time employment. Citing RBA’s Governor Bullock, the
central bank is “very, very focused” on employment but unless we get some
notable surprise, it’s unlikely to change much for the RBA.
Australia Unemployment Rate
The US Retail Sales M/M are expected at
-0.1% vs. 0.6% prior, while the ex-Autos M/M measure is seen at 0.3% vs. 0.4%
prior. The last
report surprised to the upside with the
Control Group coming in at a strong 0.8% vs. a previous positively revised 0.5%
reading. US Retail Sales have been strong for several months, but they are
expected to be weaker in January due to negative weather effects.
US Retail Sales YoY
The US Jobless Claims continue to be one
of the most important releases every week as it’s a timelier indicator on the
state of the labour market. Initial Claims keep on hovering around cycle
lows, while Continuing Claims remain firm around cycle highs. This week the
consensus sees Initial Claims at 220K vs. 218K prior,
while Continuing Claims are seen at 1878K vs. 1871K prior.
US Jobless Claims
The PBoC is expected to keep the MLF rate
unchanged at 2.50%. The central bank surprised
recently by cutting the RRR by 50bps vs. 25 bps expected and sparked a rally in
the stock market (although most of the gains were
erased in the following weeks). The PBoC will have an opportunity to surprise
the markets again with a cut and this time trigger a more sustained and
positive reaction.
PBoC
Friday
The US PPI Y/Y is expected at 0.7% vs.
1.0% prior, while the M/M measure is seen at 0.1% vs. -0.1% prior. The Core PPI
Y/Y is expected at 1.6% vs. 1.8% prior, while the M/M reading is seen at 0.1%
vs. 0.0% prior. This report is unlikely to be that much market moving given
that the focus will be on the US CPI on Tuesday.
US Core PPI YoY