- MondayApple iPhone Event; Japan Revised GDP (Q2), China CPI (Aug), EasySentix (September), US Employment Trends (Aug)
- Tuesday: US Energy Information Administration report, OPEC August report; Australian business confidence (Aug), German final CPI (Aug), UK unemployment/wage rate (July), Swedish GDP (July), Norwegian CPI (Aug), US non-oil CPI (Aug), China trade balance, M2 loans and new yuan (Aug)
- Get marriedUK GDP Estimates (July), US CPI (August)
- Thursday:ECB Policy Announcement, Norges Bank Regional Network (Q3), IEA CPI, Swedish CPI (August), US CPI (weekend September 7), Final Demand PPI (August), Canadian Building Permits (July), New Zealand PMIs (August)
- Friday
ECB Policy Announcement, ECB TLTRO III.10 Repayment Bulletin; Euro Area Industrial Production (July), US Export and Import Prices (August), University of Michigan (September)
Apple iPhone Event (Monday): Apple’s “It’s Glowtime” event is likely to unveil new iPhone 16 models, Apple Watch Series 10/Ultra 3/SE, and 4th-generation AirPods. Analysts at Bernstein suggest there are five key questions for investors heading into the event: 1) What happens to average iPhone selling prices? Apple is reportedly likely to increase iPhone Pro model prices by $100, though it could maintain current prices while raising costs for some configurations. Demand and macroeconomic factors could also impact pricing strategy and model mix. 2) How much more will we learn about Apple Intelligence? Initial AI features are reportedly set to debut in October with the release of iOS 18.1, but they will be limited. Apple is expected to show off additional AI capabilities and provide a timeline for broader rollouts over the next six months. 3) How strong is the iPhone 16 cycle, and will investors be disappointed if the iPhone 16 is mediocre and the iPhone 17 is more powerful? Bernstein expects strong iPhone 16 and 17 cycles due to AI features and longer replacement cycles, and sees revenue growth of 13% year-over-year (vs. 8% previously), but adds that the forecast already factors in a moderate 16 and a stronger 17. 4) Will Apple have a natural slope, and will the September quarter tell us anything? Bernstein expects fiscal year availability and no product delays, but adds that the September quarter results do not indicate strong iPhone cycles, and are dictated by building channel inventory for new offerings. 5) Finally, Bernstein notes that the seasonal trade has worked, so what should investors do now? “We see risk and reward more balanced,” she writes. “Apple is at the upper end of its historical valuation range and the stock typically takes a breather after new iPhone announcements.”
Inflation in China (Monday): There is currently no forecast for Chinese inflation measures, but the data will be closely watched for a prognosis on the health of the Chinese economy. Using the Caixin PMI release as a proxy, the commentary suggested that “on the price front, while input costs have increased in both sectors, prices charged by manufacturers and service providers have declined to varying degrees, adding to pressure on corporate profitability.” In last month’s release, the consumer price index rose 0.5% year-on-year (0.2% previously in June), partly due to weather disruptions that affected food supplies. While food prices rose, overall domestic demand remained weak, with core inflation (excluding food and fuel) falling to 0.4% from 0.6% in June. Despite Beijing’s stimulus efforts, challenges remain, including a prolonged housing slowdown and weak auto sales. July’s producer price index remained deflationary. Analysts expect inflation to remain subdued (although some expect food inflation to turn positive for the first time in over a year), with more stimulus needed to support economic growth targets. This sentiment was also reinforced by the latest PMI data in which NBS Manufacturing and Caixin Services painted bleak pictures – “There is still room for adjustments in fiscal and monetary policy. There is an increasingly urgent need for China to strengthen policy support and ensure effective implementation of past policies,” suggested the commentary from Caixin PMI.
UK Employment/Wages (Tuesday): The latest employment report prompted a hawkish reaction, driven by a significant fall in the unemployment rate (4.2% from 4.4%, 4.5% expected) and a notable rise in the employment change figure (97k from 19k, 3k expected) which more than offset the slightly weaker/lower expected wage figures; the ‘dovish’ figures were subject to warnings as the comparison period was affected by NHS bonus payments. This time around, the July average earnings figures and the renewed employment trend in that month, evident in that and subsequent periods, could add to wage pressures and thus move to a flat inflation, working in favour of those who expect the Bank of England to hold interest rates at its next meeting. However, Pantheon notes that the underlying effects will continue to suppress wages and is looking for the bonus measure to fall to 5.1% (5.4% previously); however, they see wages at this level as too strong for rapid cuts in bank interest rates. The renewed employment trend narrative points to another set of tough unemployment rate and employment change numbers as well, specifically, Pantheon expects the unemployment rate to fall to 4.1% or possibly 4.0%.
China Trade Balance (Tuesday): There is currently no forecast for August trade balance figures, but markets are closely watching Chinese economic data on concerns about slowing growth. Bureaus point to a focus on auto exports, which have been weak. Analysts at ING expect “August trade data to continue to slow, with exports growing by around 5% y/y and imports by around 3% y/y… If auto exports turn from a tailwind to a headwind, it could weigh on overall Chinese export strength.”
Norwegian CPI (Tuesday): Tuesday sees the release of Norway’s CPI for August; there is currently no consensus from news agencies on the headline measure, but SEB expects it to cool slightly to 2.7% from 2.8%. As for the core measure (ATE), the bank sees it coming in at 3.3%, which would be 0.3% below the Norges Bank’s forecast for the month and unchanged from the previous one. As a reminder, the July figure was lower than the Norges Bank’s view, but it was not enough to prompt a shift away from the central bank’s hawkish stance. At the moment, the Norges Bank’s forecast is for the first cut to come in Q2 2025, with the latest policy announcement stating that “the policy rate is likely to remain at the current level for some time to come.” An inflation release in August is unlikely to be enough to prompt a major adjustment in the interest rate path, although a lower-than-expected measure could, depending on the development of other points (i.e. the regional grid), see a modest indicative adjustment in the September decision/monetary policy report.
UK GDP Estimates (Wednesday): June’s monthly growth rate was 0.0%, as expected, and the monthly growth rate was 0.6%; however, the annual growth rate was slightly below expectations at 0.7% versus 0.8% forecast. The release had little impact on BoE pricing. The latest August PMIs were indicative of “a reasonably strong quarterly expansion of around 0.3%”. Similarly, Investec reminds us that the periods of retail and public sector strikes only occurred in the first two days of July, and it expects a rise to 0.3% m/m in July. Overall, July’s GDP release is likely to be strong but will probably have little impact on BoE pricing, with the focus on firming inflation; however, firmer readings marginally reduce the need for timely policy adjustments and favour those who expect the BoE to leave interest rates on hold at its September meeting.
US Consumer Price Index (Wednesday): Consensus is for US CPI to rise +0.2% m/m in August (previous +0.2%), and the core rate is also expected to rise +0.2% m/m (previous +0.2%). Wells Fargo says the CPI rise is a reminder that the road to price stability will still have some bumps along the way. Wells itself is slightly ahead of consensus, forecasting core CPI to rise +0.25% m/m (which would be closer to 0.3%, but would leave the annual rate at 3.2% y/y). “A rate cut at the upcoming FOMC meeting on September 18 seems certain, but the upcoming CPI report could act as a trade-off between a 25bp or 50bp cut if the August jobs report falls in the gray area between clear weakness and clear strength,” it says. August’s labor market data offered no clear clarity: the headline figure came in below expectations at 142,000 jobs (vs. 160,000 expected), despite the unemployment rate falling to 4.2% from 4.3%; however, the underemployment rate rose to 7.9% from 7.8%, and average hourly earnings rose +0.4% month-over-month (+0.3% expected), pushing the annual rate up to 3.8% year-over-year from 3.6%. Speaking after the jobs data, Fed voter Williams said the labor market was in better balance but was not the primary source of inflation. Williams expects inflation to be 2.25% this year (versus the Fed’s June forecast of 2.6%; that forecast is now seen as somewhat outdated and will be updated on September 18) and sees unemployment at 4.25% by the end of this year (versus the Fed’s 4.0%), though he also added that he expects the longer-term unemployment rate to be around 3.75% (versus the Fed’s June forecast of 4.2%). He offered no insight into whether he favors a 25 basis point rate cut or a larger 50 basis point move in September.
ECB announcement (Thursday): The ECB is expected to cut interest rates by 25 basis points, taking the deposit rate to 3.50%, after starting the easing process at the June outlook meeting, skipping July and then focusing on September for the next policy move. Market prices suggest a 25 basis point cut is around 99%. The case for a rate cut has been driven by the continued advance in inflation, easing wage pressures (i.e. the negotiated wage survey in Q2) and the downbeat growth outlook for most of the bloc; however, the flatness of some components of inflation (i.e. services) means that hawkish voices remain in the Council. As such, the focus at the meeting will be on any guidance for the next cut. A Reuters source recently explained that decisions are expected to be more complex after September with a debate over how weak growth/possible recession will affect inflation expectations. Interestingly, the article concludes that the ECB will not make any commitment by October, however, the doves want Lagarde to signal that successive moves are not out of the question. As a reminder, the ECB is set to cut the spread between its short-term and long-term lending rates to 15 basis points (previously 50 basis points) from September 18 (the effective date of this month’s meeting), a change that was announced in March.
Swedish CPI (Thursday): There is currently no consensus on the news, but SEB Research expects the August CPI to slow to 1.3% YoY versus the Riksbank’s previous forecast of 1.7%. The bank expects the core (ex-energy) YoY to remain flat at 2.2%; it is expected to be -0.2% YoY. As for the previous inflation report, the core CPI came in slightly above expectations, but not enough to deter a 25bps cut at its last meeting, as well as a dovish shift in its language; which indicated two or three more rate cuts this year. The August metrics could have some bearing on the debate between two versus three cuts for the rest of the year, along with the performance of the Swedish krona and the overall economy.
This article originally appeared on Newsquake
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