MNI Global Week Ahead - ECB and US CPI Headline

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

Developed Markets

TUESDAY - UK Labour Market Data

UK labour market data is due for release on Tuesday, and it remains one of the most notable data releases for the MPC. An early consensus looks for the unemployment rate to tick down another tenth to 4.1% in the 3-months to July (although unrounded it only rounded up to 4.2% but a small margin as it was 4.16% prior; which was notably below the BOE/consensus June forecasts). Private sector average weekly earnings numbers remain key (last month 5.242% vs 5.2% MNI median, 5.1% BOE). We will round up expectations for this in next week’s UK Labour Market Preview PDF. The claimant count has come into focus recently after some notable pickups, but this is largely due to changes surrounding claim eligibility and hard to really deduce any proper signal from it at present.

WEDNESDAY - US August CPI

The week’s inflation data could prove more of a deciding factor in market expectations of a 25bp or 50bp cut from the FOMC later this month than we first thought. Considering Payrolls explicitly doesn't want to see anymore softening in the labor market, Friday’s payrolls report importantly showed no real change in the unemployment rate but payrolls growth was softer than expected and importantly saw heavy downward two-month revisions. That brings up CPI (Wed) in particular but also PPI (Thu) for latest core PCE implications. Fed Funds have recently been pricing more than 35bp of cuts for the Sep 18 decision, but we expect we’d need to see a sizeable core CPI miss and a return of particularly weak CPI core services ex-housing for the Fed to seriously consider a 50bp cut. Bloomberg consensus currently looks for core CPI at 0.2% M/M for an unchanged 3.2% Y/Y. Note that the releases will land firmly within the Fed’s blackout period ahead of the Sep 17-18 meeting.

THURSDAY - ECB Decision

The ECB is unanimously expected to cut its deposit rate by 25bps to 3.50%. Markets have been pricing such an outcome for several weeks now, with focus on the pace of easing ahead and the revised macroeconomic projections. Consensus amongst ECB speakers and analysts continues to centre around the case for quarterly cuts (though the market sees a more aggressive cycle), with sticky services inflation a key hurdle to a more aggressive easing cycle. While explicit guidance from President Lagarde is unlikely, she may hint toward the December meeting as a signpost for "more data" and a new set of projections, thereby shifting focus away from the October gathering. The ECB will also narrow the corridor between its three key interest rates at the September meeting, following the bank's Framework Review in March. The MRO rate will be set at 15 basis points over the DFR (implying a 3.65% rate, vs 4.25% prior), and the MLF rate at 25bp over the MRO (implying a 3.90% rate, vs 4.50% prior). The MNI Policy Team has reported that it is likely to be many months before any effect on policy transmission is felt from this change.

Emerging Markets

MONDAY - China August Inflation Data

Next week’s data on pricing for August will provide insight as to the immediacy of the problem that the government faces in a slowing economy. Monday will see the release of both PPI and CPI. PPI market consensus is for an increasing contraction to -1.4% following last month’s contraction of -0.8%. July saw, with the exception of Mining and Raw Materials, a contraction across all other segments. CPI is also released where at present the market consensus is for an August rise of 0.7% versus a prior rise of 0.5%. Whilst remaining in positive territory, a CPI print such as this is not reflective of an economy growing at the growth rates desired by the government. CPI has remained tepid at best for over a year now and the counteractive policies implemented thus far have failed to arrest this trend. Monday will also see Aggregate Financing / Net New CNY loan data, while trade data is released on Tuesday. 

THURSDAY - BCRP (Peru)

The fall of core inflation to within the BCRP’s target band for the first time since January, along with the weak June economic activity print and expectation that the Fed will start an easing cycle this month, keeps the door open for the BCRP to deliver another 25bp rate cut to 5.25% next week.

FRIDAY - CBR Decision (Russia)

Analyst views are mixed over whether the Central Bank of Russia will deliver a rate hike of 100bps or stand pat at 18%. At its last meeting in July, the central bank raised its benchmark interest rate by 200bps to 18% and indicated that tight monetary policy would remain for some time to achieve a sustainable slowdown in inflation. In the base-case scenario presented by the CBR, the key interest rate is expected to remain in double digits for two more years.

Date	GMT/Local	Impact	Country	Event
09/09/2024	2301/0001	**	GB	KPMG/REC Jobs Report
09/09/2024	2350/0850	**	JP	GDP (r)
09/09/2024	0130/0930	***	CN	CPI
09/09/2024	0130/0930	***	CN	Producer Price Index
09/09/2024	1400/1000	**	US	Wholesale Trade
09/09/2024	1500/1100	**	US	NY Fed Survey of Consumer Expectations
09/09/2024	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
09/09/2024	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
09/09/2024	1900/1500	*	US	Consumer Credit
10/09/2024	0600/0800	***	DE	HICP (f)
10/09/2024	0600/0700	***	GB	Labour Market Survey
10/09/2024	0600/0800	***	NO	CPI Norway
10/09/2024	0700/0900	**	ES	Industrial Production
10/09/2024	0800/1000	*	IT	Industrial Production
10/09/2024	0900/1000	*	GB	Index Linked Gilt Outright Auction Result
10/09/2024	1000/0600	**	US	NFIB Small Business Optimism Index
10/09/2024	1100/1200		GB	BOE's Breeden remarks from Wharton-IMF Dialogue - Text release
10/09/2024	-	***	CN	Trade
10/09/2024	-	***	CN	Money Supply
10/09/2024	-	***	CN	New Loans
10/09/2024	-	***	CN	Social Financing
10/09/2024	1210/0810		CA	BOC Governor Macklem speech in London UK
10/09/2024	1255/0855	**	US	Redbook Retail Sales Index
10/09/2024	1530/1130	*	US	US Treasury Auction Result for Cash Management Bill
10/09/2024	1700/1300	***	US	US Note 03 Year Treasury Auction Result
11/09/2024	0600/0700	**	GB	UK Monthly GDP
11/09/2024	0600/0700	**	GB	Trade Balance
11/09/2024	0600/0700	**	GB	Index of Services
11/09/2024	0600/0700	***	GB	Index of Production
11/09/2024	0600/0700	**	GB	Output in the Construction Industry
11/09/2024	0900/1000	**	GB	Gilt Outright Auction Result
11/09/2024	1100/0700	**	US	MBA Weekly Applications Index
11/09/2024	1230/0830	***	US	CPI
11/09/2024	1230/0830	*	CA	Intl Investment Position
11/09/2024	1400/1000	*	US	Services Revenues
11/09/2024	1400/1000		US	MNI Connect Video Conference on ‘Fed Balance Sheet – Comparison with Other Central Banks’
11/09/2024	1430/1030	**	US	DOE Weekly Crude Oil Stocks
11/09/2024	1700/1300	**	US	US Note 10 Year Treasury Auction Result
12/09/2024	0600/0800	***	SE	Inflation Report
12/09/2024	0700/0900	***	ES	HICP (f)
12/09/2024	-		GB	OBR Fiscal Risks and Sustainability Report
12/09/2024	1215/1415	***	EU	ECB Deposit Rate
12/09/2024	1215/1415	***	EU	ECB Main Refi Rate
12/09/2024	1215/1415	***	EU	ECB Marginal Lending Rate
12/09/2024	1230/0830	***	US	Jobless Claims
12/09/2024	1230/0830	**	US	WASDE Weekly Import/Export
12/09/2024	1230/0830	***	US	PPI
12/09/2024	1230/0830	*	CA	Building Permits
12/09/2024	1230/0830	*	CA	Household debt-to-income
12/09/2024	1245/1445		EU	ECB Monetary Policy Press Conference
12/09/2024	1345/1545		EU	Eurosystem staff macroeconomic projections publications
12/09/2024	1415/1615		EU	ECB Podcast: Lagarde presents the latest monetary policy decisions
12/09/2024	1430/1030	**	US	Natural Gas Stocks
12/09/2024	1600/1200	***	US	USDA Crop Estimates - WASDE
12/09/2024	1700/1300	***	US	US Treasury Auction Result for 30 Year Bond
12/09/2024	1800/1400	**	US	Treasury Budget
13/09/2024	0430/1330	**	JP	Industrial Production
13/09/2024	0645/0845	***	FR	HICP (f)
13/09/2024	0830/0930	**	GB	Bank of England/Ipsos Inflation Attitudes Survey
13/09/2024	0900/1100	**	EU	Industrial Production
13/09/2024	-		EU	ECB's Lagarde in Eurogroup meeting
13/09/2024	1230/0830	**	US	Import/Export Price Index
13/09/2024	1230/0830	**	CA	Wholesale Trade
13/09/2024	1400/1000	**	US	U. Mich. Survey of Consumers
13/09/2024	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
14/09/2024	0200/1000	***	CN	Fixed-Asset Investment
14/09/2024	0200/1000	***	CN	Retail Sales
14/09/2024	0200/1000	***	CN	Industrial Output
14/09/2024	0200/1000	**	CN	Surveyed Unemployment Rate M/M