MNI GLOBAL WEEK AHEAD: Central Banks Deliver Xmas Hikes

A week full of top-of-the-docket data events (UK, US CPI, December PMIs) and major central bank meetings (ECB, Fed, BOE, SNB, Norges), as markets have a final push before the holidays kick in. The final meeting of the year is likely to see central banks begin to slow monetary tightening in a move implying terminal rates are closer. Keep an eye out for MNI’s in-depth previews coming out ahead of the decisions.

Final CPI prints are also on the schedule for the eurozone this week; Germany (Tues), Spain (Weds), France (Thurs), Italy and Eurozone (Friday).

MONDAY

UK Monthly GDP/Services/Industrial/Construction/Trade: The UK’s round of October data will be followed by CPI on Wednesday, making for a substantial run of information leading up to the BOE’s Thursday rate decision. Industrial production will likely also record a weak month, anticipated to stall following the +0.2% m/m September uptick which broke a three-month run of contractions. Both industrial and manufacturing production annualised rates should remain firmly negative at approx. -2.4% and -5.2% respectively. Following the September -0.8% m/m fall, the index of services should see some recovery at +0.5% m/m, boosting the 3m/3m average to +0.8%. __WHY?

Monthly GDP will likely see a modest +0.4% m/m expansion, following the -0.6% m/m contraction in September. This would see the 3m/3m average to remain contractive at -0.4%, down 0.1pp. The UK’s trade balance should be largely unchanged at a deficit of approx. GBP 3.1bln in the October data. This would be again around a third of that seen in June, driven by lower gas imports and fuel prices.

TUESDAY

UK Labour Report: Following a robust September report, UK labour data is projected to show further 0.2pp upticks in weekly earnings (to +6.2% and ex. Bonuses to +5.9%). The 3-month unemployment rate is seen edging up by 0.1pp to 3.7%, as employment weakens by -18k (following -52k in Sep). All-in-all, the UK labour market remains tight, giving confidence to the BOE’s hiking cycle.

Italy Industrial Production: Another contraction is in sight for Italian IP in October, projected to fall by a softer -0.3% m/m following the -1.8% m/m September drop.

Germany ZEW Survey: Further improvements are largely expected for the ZEW survey across both expectations and current situation indexes. Expectations are anticipated to improve by around ten points to -26, and current assessments by around eight points to -57. This remains firmly negative, and is largely signal of future outlooks improving. Prior to the Ukraine-Russia war the indexes were around +54 (expectations) and -8 (current assessment).

US CPI: US CPI should continue to ease in the November print, expected to expand by +0.3% m/m and slow for the fifth consecutive month by 0.4pp to +7.3% y/y. Core CPI should soften by 0.2pp to +6.1% y/y. The US core index will be the most closely watched (with focus on core service prices), as the headline index only managing to begin to decelerate in October. The data will unlikely shift the Fed from 50bp on Wednesday.

WEDNESDAY

UK CPI: Only a mild 0.2pp slowdown in CPI to +10.9% y/y from October is expected. The BOE’s latest projections saw inflation peaking “around 11%” in Q4 2022, with October likely to have been the month. Yet core inflation will likely continue to edge up to a fresh over three-decade high of +6.6% y/y.

Eurozone Industrial Production: Following more mild German and Spanish falls and a surprisingly sharp French contraction, eurozone aggregate IP will likely contract by around 1.5% m/m from the +0.9% m/m expansion recorded in September. Volatile Irish data will again skew the aggregate print downwards, as such the ex. Irish production level will likely be less negative than the headline figure suggests. Persistently high energy prices and falling new orders as flagged by PMI data sees an industrial recession into year-end.

US Fed Rate Decision: The FOMC is seen kicking off the slow-down in bank rates this week, with a softer 50bp hike largely expected. But it will likely signal via the Dot Plot that it intends to tighten by a further 75bp to a terminal rate above 5% in 2023. Continued deflation across headline and core goods underpins the decision to slow the pace, any surprises here in Tuesday’s CPI release will be closely watched. See the MNI preview here.

THURSDAY

SNB Rate Decision: The Swiss National Bank is largely expected to hike by 50bp to 1.0% at their December meeting, with an outside chance of 75bp after inflation stabilised at +3.0% y/y in November, pausing the downward trajectory from +3.5% y/y in August.. This follows the initial June 50bp hike and September 75bp hike to firmly exit negative rates.

Norges Bank Rate Decision: The downside surprise in the November CPI release, whereby the CPI-ATE (underlying) Y/Y dipped below expectations feeds into the Norges Bank's views that previous tightening steps and slowing domestic demand will drive disinflation next year. This could feed into next week's rate path projections. Norges Bank is still expected to raise rates a further 25bps on Thursday to 2.75%, with the key policy rate projected to peak at 3% at the start of 2023.

BOE Rate Decision: Around 55bp is currently priced in by Markets for the Bank of England’s December meeting. Following external MPC member Tenreyro’s recent comments for rates not to be raised, a four-way split of unchanged, 0.25, 0.5 and 0.75 could occur. The Bank appears to still see a 50bp hike to 3.5% remains the favourite and adequate, yet any major surprises in Monday and Wednesday’s labour and CPI data could shift this outlook.

ECB Rate Decision: The ECB is expected to follow suit and slow the pace to 50bp on Thursday. Despite November seeing headline inflation cool by 0.6pp to +10.0% y/y to come off the October peak, core inflation held steady at the euro-era high of +5.0% y/y, a concerning indication that underlying price pressures could remain expansive, especially in light of fiscal packages launched across the bloc to assist with the cost of living.

US Retail Sales / Industrial Production: US retail sales are forecasted to stall in November, slowing from +1.3% m/m in October and implying bleak outlooks for festive-season spending. Industrial production is seen growing by a mild +0.2% m/m, after dipping into contraction at -0.1% m/m in October.

FRIDAY

UK Retail Sales: UK retail trade appears set to slow by 0.3pp to +0.3% m/m in November, implying another weak month compared to the same period last year (-5.7% y/y).

Flash PMIs: Across the euro area, UK and US, flash manufacturing and services PMIs are expected to remain relatively unchanged compared to November at moderately contractive levels. Weak demand has generated global contractions across both manufacturing and services into year-end as high inflation and a weak economic backdrop weigh on spending.

Eurozone CPI Final: Final November CPI data is due on Friday, which should confirm the 0.6pp fall in headline inflation from October’s peak to +10.0% y/y, whilst core inflation holds steady at the euro-era high of +5.0% y/y.

ECB, Fed and BOE all seen slowing to 50bp hikes:

Source: MNI / Bloomberg

Date	GMT/Local	Impact	Flag	Country	Event
12/12/2022	0001/0001			UK	Rightmove House Prices
12/12/2022	0700/0700	**		UK	UK Monthly GDP
12/12/2022	0700/0700	**		UK	Trade Balance
12/12/2022	0700/0700	***		UK	Index of Production
12/12/2022	0700/0700	**		UK	Index of Services
12/12/2022	0700/0700	**		UK	Output in the Construction Industry
12/12/2022	1330/0830	*		CA	Household debt-to-disposable income
12/12/2022	1600/1100	**		US	NY Fed survey of consumer expectations
12/12/2022	1630/1130	*		US	US Treasury Auction Result for 26 Week Bill
12/12/2022	1630/1130	***		US	US Note 03 Year Treasury Auction Result
12/12/2022	1800/1300	**		US	US Note 10 Year Treasury Auction Result
12/12/2022	1800/1300	*		US	US Treasury Auction Result for 13 Week Bill
12/12/2022	1900/1400	**		US	Treasury Budget
12/12/2022	2025/1525			CA	Governor Macklem speech in Vancouver
12/12/2022	2200/1700			CA	BOC Governor Macklem press conference
13/12/2022	0700/0800	***		DE	HICP (f)
13/12/2022	0700/0700	***		UK	Labour Market Survey
13/12/2022	0700/0800	**		NO	Norway GDP
13/12/2022	0900/1000	*		IT	Industrial Production
13/12/2022	1000/1000	**		UK	Gilt Outright Auction Result
13/12/2022	1000/1100	***		DE	ZEW Current Expectations Index
13/12/2022	1000/1100	***		DE	ZEW Current Conditions Index
13/12/2022	1100/0600	**		US	NFIB Small Business Optimism Index
13/12/2022	1330/0830	***		US	CPI
13/12/2022	1355/0855	**		US	Redbook Retail Sales Index
13/12/2022	1500/1000	**		US	IBD/TIPP Optimism Index
13/12/2022	1800/1300	***		US	US Treasury Auction Result for 30 Year Bond
14/12/2022	0001/0001	*		UK	XpertHR pay deals for whole economy
14/12/2022	0700/0700	***		UK	Consumer inflation report
14/12/2022	0700/0800	***		SE	Inflation report
14/12/2022	0800/0900	***		ES	HICP (f)
14/12/2022	0930/0930	*		UK	Halifax House Price Index
14/12/2022	1000/1100	**		EU	Industrial Production
14/12/2022	1200/0700	**		US	MBA Weekly Applications Index
14/12/2022	1330/0830	**		US	Import/Export Price Index
14/12/2022	1530/1030	**		US	DOE weekly crude oil stocks
14/12/2022	1900/1400	***		US	FOMC Statement
15/12/2022	2145/1045	***		NZ	GDP
14/12/2022	2230/2330			EU	ECB Elderson Pre-recorded Speech at COP15
15/12/2022	0030/1130	***		AU	Labor force survey
15/12/2022	0200/1000	***		CN	Fixed-Asset Investment
15/12/2022	0200/1000	***		CN	Retail Sales
15/12/2022	0200/1000	***		CN	Industrial Output
15/12/2022	0200/1000	**		CN	Surveyed Unemployment Rate
15/12/2022	0745/0845	***		FR	HICP (f)
15/12/2022	0745/0845	**		FR	Manufacturing Sentiment
15/12/2022	0830/0930			CH	SNB interest rate decision
15/12/2022	0900/1000	***		NO	Norges Bank Rate Decision
15/12/2022	1200/1200	***		UK	Bank Of England Interest Rate
15/12/2022	1200/1200	***		UK	Bank Of England Interest Rate
15/12/2022	-			IE	Ireland Prime Minister Transition
15/12/2022	1315/0815	**		CA	CMHC Housing Starts
15/12/2022	1315/1415	***		EU	ECB Deposit Rate
15/12/2022	1315/1415	***		EU	ECB Main Refi Rate
15/12/2022	1315/1415	***		EU	ECB Marginal Lending Rate
15/12/2022	1330/0830	**		US	Jobless Claims
15/12/2022	1330/0830	***		US	Retail Sales
15/12/2022	1330/0830	**		US	Empire State Manufacturing Survey
15/12/2022	1330/0830	**		US	Philadelphia Fed Manufacturing Index
15/12/2022	1330/0830	**		US	WASDE Weekly Import/Export
15/12/2022	1345/1445			EU	ECB Press Conference Following Rate Decision
15/12/2022	1400/0900	*		CA	CREA Existing Home Sales
15/12/2022	1415/0915	***		US	Industrial Production
15/12/2022	1500/1000	*		US	Business Inventories
15/12/2022	1530/1030	**		US	Natural Gas Stocks
15/12/2022	1900/1400	***		MX	Mexico Interest Rate
15/12/2022	2100/1600	**		US	TICS
16/12/2022	2200/0900	***		AU	IHS Markit Flash Australia PMI
16/12/2022	0001/0001	**		UK	Gfk Monthly Consumer Confidence
16/12/2022	0030/0930	**		JP	IHS Markit Flash Japan PMI
16/12/2022	0700/0700	***		UK	Retail Sales
16/12/2022	0700/0800	**		SE	Unemployment
16/12/2022	0815/0915	**		FR	IHS Markit Services PMI (p)
16/12/2022	0815/0915	**		FR	IHS Markit Manufacturing PMI (p)
16/12/2022	0830/0930	**		DE	IHS Markit Services PMI (p)
16/12/2022	0830/0930	**		DE	IHS Markit Manufacturing PMI (p)
16/12/2022	0900/1000	**		EU	IHS Markit Services PMI (p)
16/12/2022	0900/1000	**		EU	IHS Markit Manufacturing PMI (p)
16/12/2022	0900/1000	**		EU	IHS Markit Composite PMI (p)
16/12/2022	0930/0930	***		UK	IHS Markit Manufacturing PMI (flash)
16/12/2022	0930/0930	***		UK	IHS Markit Services PMI (flash)
16/12/2022	0930/0930	***		UK	IHS Markit Composite PMI (flash)
16/12/2022	1000/1100	*		EU	Trade Balance
16/12/2022	1000/1100	**		IT	Italy Final HICP
16/12/2022	1000/1100	***		EU	HICP (f)
16/12/2022	1030/1330			RU	Russia Central Bank Key Rate Decision
16/12/2022	-			US	'Continuing Resolution On US Government Funding Expires
16/12/2022	-			UK	BOE Announce Q1 Active Gilt Sales Schedule
16/12/2022	1445/0945	***		US	IHS Markit Manufacturing Index (flash)
16/12/2022	1445/0945	***		US	IHS Markit Services Index (flash)