MNI Global Week Ahead - US CPI Headlines

Oct-04 16:01By: Emil Lundh

MNI (LONDON) - See below for the key events in Developed and Emerging Markets next week:

Developed Markets

WEDNESDAY - RBNZ Decision

The RBNZ meets on Wednesday October 9 and is widely expected to cut rates 50bp to 4.75% based off sell-side consensus. While Q2 GDP was stronger than the RBNZ expected in August, it still contracted. The monthly inflation data, which covers around 40% of the CPI, also signalled that it should return to the 1-3% band in Q3. In the past week survey data has reinforced the lower inflation trajectory. This decision won't include updated staff forecasts or a press conference.

WEDNESDAY - FOMC Minutes

The minutes to the September FOMC meeting (released Wednesday at 1400ET) could shed further light on the decision to semi-surprise markets with a 50bp vs a 25bp cut to begin the easing cycle. While the vast majority of participants have since commented that they supported the half-point cut, the meeting decision brought the first dissent from a Fed governor (Bowman) since 2005, and it will be interesting to get a gauge of how many non-voting members also opposed the outsized rate reduction. It's to be expected that the discussion over the future rate path will revolve around a data-dependent/meeting-by-meeting approach, but the characterization of the decision to cut 50bp will be of note in this context if there was a sense of falling behind the curve of labor market deterioration, and/or regret over not cutting 25bp in July. Was there more support on the Committee to get to neutral quickly due to policy being far too restrictive, or for the front-loaded 50bp being a pure "recalibration", with the bar to sizeable future easing set a little higher?

THURSDAY - US CPI

Inflation data arguably carry more weight again after the widespread strength of the September payrolls report, with Fed Funds pricing swinging close to a 25bp cut with the Nov 7 FOMC decision vs 34bp beforehand. Enter Thursday’s CPI and Friday’s PPI, which will inform estimates for core PCE inflation (Oct 31) in the last main inflation release before the meeting. Core CPI is currently seen printing 0.2% M/M in September after it surprised higher with 0.28% M/M in August prior to which it saw three months averaging just 0.13% M/M. Details will continue to matter when it comes to core PCE implications, with the latter running at a below-target 1.8% annualized over the four months to August for its lowest since late 2020 to offer some minor undershooting risk. It will likely take a large downside surprise to sway markets back towards greater odds of a second 50bp cut from the Fed. There is also still another payrolls report to be seen before the Nov FOMC, which sees added importance again now that it's less likely to be distorted by strike impact with the dockworkers restarting work.

FRIDAY - Canada Jobs Report

The main Canadian events are firmly backloaded this week, with both the labour force survey for September and the BoC’s quarterly business and consumer surveys for Q3 on Friday. The September CPI report is still to land the following week on Oct 15, but these are otherwise the last major releases before the BoC decision on Oct 23. Markets have attributed sizeable risk of a 50bp cut from the Bank this month since the Fed started its easing cycle with a 50bp move, with OIS currently pricing 38bp. Early days for consensus see the unemployment rate unchanged at 6.6% and we think it would need to see a further increase to warrant an upsizing from its previous pace of 25bp cuts at the past three meetings. Aside from the current focus on the extent to which increased supply is driving changes in the unemployment rate, we also watch the extent to which full-time employment recovered after a heavy -44k in August.

THROUGH THE WEEK - US Q3 Earnings Season

Earnings season informally begins with Pepsi's midweek report on Wednesday, before the cycle begins in earnest on Friday. Key names set to report include BlackRock, Wells Fargo and JP Morgan. Unfortunately for net interest margins, the Fed's first rate cut since the pandemic will have come too late in the quarter to provide any material relief for banks - leaving initial focus on FICC revenues and general cost reduction. Desk performance will have been supported by acute volatility across stock markets in August, while lenders will be eyed for any response in originations after the sharp pullback in mortgage rates over the summer.

Emerging Markets

WEDNESDAY - RBI Decision (India)

Expect the RBI keep the Repurchase Rate on hold at 6.50% at next week's meeting, with the bias now moving to cut. GDP has softened, though the monsoon rains have been good and likely to start to see the impacts of the expenditure from the recent budget flow through. CPI has moderated, as have wholesale prices, currently sitting around mid part of the target for the RBI. Area to watch will be how the two new voting members vote given there is limited understanding of their bias. September's services PMI whilst softer, should not have a material impact on the decision.

FRIDAY - BOK Decision (South Korea)

The shift in sentiment towards a 25bp rate cut to 3.25% has moved rapidly in the last week. Following the weaker than expected CPI and a contraction in the PMI, the door is now ajar for a rate cut. The BOK has been focused on the surge in property prices in Seoul yet recent data shows that the macro-prudential measures put in place are having an effect with the number of transactions and average sale price declining. Whilst exports have remained robust, it appears that the decline in consumer confidence is the primary focus and September's consumer confidence data supports that. Our bias now turns to a cut at the next meeting of the BOK on October 11, with the accompanying statement reasonably measured to allow the impact of the cut, the effects of the China stimulus and the flow on from the cut in rates by the US Federal Reserve to be seen.

FRIDAY - BCRP Decision (Peru)

Following the soft September CPI data, the BCRP is widely expected to deliver another 25bp cut to 5.0% next week. Headline inflation fell to its lowest level since October 2020, while core prices have shown no variation over the last two months, giving policymakers ample room to continue with their gradual easing cycle.

Date	GMT/Local	Impact	Country	Event
07/10/2024	0600/0800	**	DE	Manufacturing Orders
07/10/2024	0700/0900		EU	ECB's Cipollone at Deutsche Bundesbank's Symposium
07/10/2024	0745/0945		EU	ECB's Lane speech at ECB MonPol conference
07/10/2024	0900/1100	**	EU	Retail Sales
07/10/2024	-		EU	ECB's Lagarde & Cipollone in Eurogroup meeting
07/10/2024	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
07/10/2024	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
07/10/2024	1700/1300		US	Fed Governor Michelle Bowman
07/10/2024	1750/1350		US	Minneapolis Fed's Neel Kashkari
07/10/2024	1900/1500	*	US	Consumer Credit
07/10/2024	2200/1800		US	Atlanta Fed's Raphael Bostic
07/10/2024	2230/1830		US	St. Louis Fed's Alberto Musalem
08/10/2024	2301/0001	*	GB	BRC-KPMG Shop Sales Monitor
08/10/2024	2330/0830	**	JP	average wages (p)
08/10/2024	2330/0830	**	JP	Household spending
08/10/2024	0500/1400		JP	Economy Watchers Survey
08/10/2024	0600/0800	**	DE	Industrial Production
08/10/2024	0600/0800		SE	Flash CPI
08/10/2024	0645/0845	*	FR	Foreign Trade
08/10/2024	0700/0900		EU	ECB's Schnabel chairing ECB MonPol session
08/10/2024	0700/0300		US	Fed Governor Adriana Kugler
08/10/2024	0900/1000	*	GB	Index Linked Gilt Outright Auction Result
08/10/2024	1000/0600	**	US	NFIB Small Business Optimism Index
08/10/2024	-		EU	ECB's de Guindos at ECOFIN meeting
08/10/2024	1230/0830	**	US	Trade Balance
08/10/2024	1230/0830	**	CA	International Merchandise Trade (Trade Balance)
08/10/2024	1255/0855	**	US	Redbook Retail Sales Index
08/10/2024	1530/1130	*	US	US Treasury Auction Result for Cash Management Bill
08/10/2024	1645/1245		US	Atlanta Fed's Raphael Bostic
08/10/2024	1700/1300	***	US	US Note 03 Year Treasury Auction Result
08/10/2024	2000/1600		US	Boston Fed's Susan Collins
09/10/2024	-		NZ	Reserve Bank of New Zealand Meeting
08/10/2024	2330/1930		US	Fed Vice Chair Philip Jefferson
09/10/2024	0030/1130	*	AU	Building Approvals
09/10/2024	0100/1400	***	NZ	RBNZ official cash rate decision
09/10/2024	0600/0800	**	DE	Trade Balance
09/10/2024	0830/1030		EU	ECB's Elderson in 'true cost of green...' session
09/10/2024	0900/1000	**	GB	Gilt Outright Auction Result
09/10/2024	1100/0700	**	US	MBA Weekly Applications Index
09/10/2024	1200/0800		US	Atlanta Fed's Raphael Bostic
09/10/2024	1315/0915		US	Dallas Fed's Lorie Logan
09/10/2024	1400/1000	**	US	Wholesale Trade
09/10/2024	1430/1030	**	US	DOE Weekly Crude Oil Stocks
09/10/2024	1630/1230		US	Fed Vice Chair Philip Jefferson
09/10/2024	1700/1300	**	US	US Note 10 Year Treasury Auction Result
09/10/2024	1800/1400	***	US	FOMC Minutes
09/10/2024	2100/1700		US	Boston Fed's Susan Collins
09/10/2024	2200/1800		US	San Francisco Fed's Mary Daly
10/10/2024	0600/0800	***	NO	CPI Norway
10/10/2024	0600/0800	**	SE	Private Sector Production m/m
10/10/2024	0600/0800	**	DE	Retail Sales
10/10/2024	0800/1000	*	IT	Industrial Production
10/10/2024	-	***	CN	Money Supply
10/10/2024	-	***	CN	New Loans
10/10/2024	-	***	CN	Social Financing
10/10/2024	1230/0830	***	US	Jobless Claims
10/10/2024	1230/0830	**	US	WASDE Weekly Import/Export
10/10/2024	1230/0830	***	US	CPI
10/10/2024	1315/0915		US	Fed Governor Lisa Cook
10/10/2024	1430/1030	**	US	Natural Gas Stocks
10/10/2024	1430/1030		US	Richmond Fed's Tom Barkin
10/10/2024	1500/1100		US	New York Fed's John Williams
10/10/2024	1700/1300	***	US	US Treasury Auction Result for 30 Year Bond
10/10/2024	1800/1400	**	US	Treasury Budget
11/10/2024	0600/0700	**	GB	UK Monthly GDP
11/10/2024	0600/0700	**	GB	Trade Balance
11/10/2024	0600/0700	**	GB	Index of Services
11/10/2024	0600/0700	***	GB	Index of Production
11/10/2024	0600/0700	**	GB	Output in the Construction Industry
11/10/2024	0600/0800	***	DE	HICP (f)
11/10/2024	1230/0830	***	US	PPI
11/10/2024	1230/0830	*	CA	Building Permits
11/10/2024	1230/0830	***	CA	Labour Force Survey
11/10/2024	1345/0945		US	Chicago Fed's Austan Goolsbee
11/10/2024	1400/1000	**	US	U. Mich. Survey of Consumers
11/10/2024	1430/1030	**	CA	BOC Business Outlook Survey
11/10/2024	1445/1045		US	Dallas Fed's Lorie Logan
11/10/2024	1600/1200	***	US	USDA Crop Estimates - WASDE
11/10/2024	1710/1310		US	Fed Governor Michelle Bowman