MNI GLOBAL WEEK AHEAD: Fed, BOE & ECB to Hike

This week the FOMC is set to slow the pace to 25bp at their Wednesday meeting in a busy week for central banks.

Flash eurozone inflation and Q4 GDP prints due this week are at the top of the data docket ahead of the ECB’s meeting on Thursday. Basket reweightings will add an element of volatility to expectations. The BOE will also meet on Thursday. Markets are looking for 50bp hikes for both central banks, although a substantial downside risk of 25bp has been priced for the BOE.

MONDAY

Spain Flash CPI: The fourth largest eurozone economy will kick off the round of prelim January CPI data. Helped by the introduction of a food VAT reduction, harmonised producer prices are projected to fall -1.9% m/m after stalling in December, whilst annualised HICP is seen slowing 0.5pp to +5.0% y/y.

In the December data, core HICP edged up 0.1pp to +4.1% y/y. Despite optimism on the headline data, sticky core CPI remains a key concern for the ECB, as it implies that broad-based price pressures remain.

Germany Flash Q4 GDP: The German economy is largely anticipated to have stalled in Q4, after growing by +0.4% q/q in Q3 due to a surprise boost in consumer demand. Q4 growth will likely be +1.3% q/q, equalling that of 2021 Q4 where the Omicron Covid wave dampened the economy.

Eurozone Consumer/Economic Indicators: The eurozone January flash consumer confidence index ticked up, signalling a fourth consecutive month of improvements after having collapsed to a record low in September 2022. Government energy bill support is driving the bulk of improvements in consumers' outlooks, yet whether this filters into higher consumer spending remains uncertain.

The eurozone economic confidence index is forecasted to improve by 1.2 points to 97.0 as economic uncertainty fades and future outlooks including softer inflation into 2023 improve.

TUESDAY

France Flash Q4 GDP / CPI: French Q4 GDP is projected to stall alongside neighbouring Germany in the Q4 flash estimate, after a modest +0.2% q/q Q3 expansion. On the year GDP is seen slowing to +0.5%, half that of the Q3 year-on-year rate.

French inflation is expected to reaccelerate in January due to the winding back of government energy support measures which has seen fuel and regulated gas prices jump recently. HICP is expected at +0.4% m/m (after -0.1% in Dec), rising 0.3pp to +7.0% y/y in the January flash (only 0.1pp below the November high).

Germany CPI: German harmonised inflation is expected to rebound by +1.4% m/m (after -1.2% in Dec), pushing headline HICP 0.6pp higher to +10.2% y/y. Despite being below the October peak of +11.6%, this would break a two-month streak of slowing. Upside risks come from the reversal of government support such as the deflationary December one-off energy bill payments alongside basket reweighting. A slew of German states confirmed not reporting January CPI data in the coming week: we have been informed by Hessen, Berlin/Brandenburg, NRW, Baden-W and Saxony that they are waiting until February 22nd. It looks increasingly likely all state-by-state data will be delayed.

Labour market and retail sales data is also due, whereby the unemployment rate should hold steady at a tight 5.5% and retail sales signal a weak holiday-season spending period.

Italy Flash Q4 GDP: Italian GDP is expected to take a hit in Q4, contracting by -0.1% q/q making it the weakest print for the major euro area players.

Eurozone Flash Q4 GDP: The eurozone aggregate print is forecasted to dip into a contraction at -0.1% q/q after the +0.3% q/q upside surprise record in Q3. Note: any major moves across earlier French and German prints will shift these expectations. Compared to Q4 2021 the bloc is expected to have expanded by +1.7% (vs +2.3% y/y in Q3).

US Chicago Report & Consumer Confidence: The Chicago PMI for January follows four consecutive months of contractionary activity. The data is due one day in advance of the strongly correlated ISM manufacturing index. US Conference Board Consumer Confidence is due shortly after, whereby a 0.6-point uptick to 108.9 is expected for January, extending the December rebound.

WEDNESDAY

Final Manufacturing PMIs: Final S&P Global manufacturing PMI prints should confirm upside surprises for eurozone manufacturing and services suggesting the bloc may avoid a recession, as German/EZ services and French manufacturing PMIs edged back into expansive territory. Selling prices remain a key concern after output charges increased. Services final prints are due Friday.

Italy Flash CPI: Italian harmonised inflation is seen falling -1.5% m/m (after +0.2%) in January, with the headline print easing by a marked 1.8 points to +10.5% y/y. Energy base-effects are seen feeding in, offsetting upwards pressure from concluding government fuel-price support.

Eurozone Flash CPI / Unemployment Rate: The eurozone aggregate inflation print is seen slowing to +0.1% m/m, leaving headline CPI 0.2pp lower at +9.0% y/y. Basket reweightings for 2023 are also due, which alongside a mixed bag of national energy and food price subventions will muddle the picture and largely produce a softer headline print.

Core inflation will be the key focus. Consensus is currently looking for a 0.1pp deceleration in core inflation to +5.1% y/y which hit a fresh euro-era high in December and has largely underpinned hawkish rhetoric from the ECB. Whether this easing core materialises is highly uncertain.

US ISM Manufacturing PMI: The US ISM manufacturing PMI is seen edging down by 0.3 points to 48.1 in January. December new orders fell further, the lowest since May’20 and with the balance of new orders less inventories points to a sizeable further downside to the ISM headline reading ahead.

Fed Meeting: The Fed is largely anticipated to slow their tightening cycle to a 25bp hike at the January meeting as they near peak rates. See MNI’s preview here: https://marketnews.com/mni-fed-preview-feb-2023-downshift-with-ongoing-concern

THURSDAY

BOE Rate Decision: Consensus is leaning towards a 50bp rate hike from the Bank of England, which would bring the bank rate to 4.00%. The terminal rate is largely seen at 4.25% with a small downside skew, more details will be in the MNI preview to come.

ECB Rate Decision: After hawkish and direct comments from President Lagarde in the December ECB meeting, a 50bp hike is expected, followed by a second 50bp move in March as the bank grapples with sticky core inflation.

US Factory Orders: December factory orders are anticipated to expand by +1.5% m/m, after the -1.8% m/m contraction in November.

FRIDAY

France Industrial Production: French IP is expected to have remained modestly expensive in December, slowing to +0.2% m/m and up +0.9% y/y.

Eurozone PPI: Factory-gate inflation is projected to cool further in December, down -0.5% m/m and 4.5pp lower at +22.6% y/y.

US Unemployment / Nonfarm Payrolls / ISM Services: A 0.1pp uptick in US unemployment is pencilled in for January. The unemployment level currently stands at 3.5%, a February 2020 low pointing to continued labour-market tightness. Nonfarm payrolls are projected to increase by 175k in January, just shy of 60k below the December boost. Earnings are anticipated to accelerate by +0.3% m/m again, albeit slowing on the year at +4.3% in January (vs +4.6% in Dec).

The ISM services survey weakened substantially in December, contracting for the first time since May 2020 on the back of one of the largest monthly declines on record as new orders collapsed. Yet this probably won't lead to a further decline next month, according to ISM chair Anthony Nieves. Expectations are currently for a 0.7-point improvement to 50.3.

Date	GMT/Local	Impact	Flag	Country	Event
30/01/2023	0800/0900	***		ES	HICP (p)
30/01/2023	0800/0900	*		CH	KOF Economic Barometer
30/01/2023	0900/1000	***		DE	GDP (p)
30/01/2023	1000/1100	**		IT	PPI
30/01/2023	1000/1100			EU	Consumer / Economic Confidence Indicators
30/01/2023	1500/1000			US	Treasury Quarterly Financing Estimates
30/01/2023	1530/1030	**		US	Dallas Fed manufacturing survey
30/01/2023	1630/1130	*		US	US Treasury Auction Result for 26 Week Bill
30/01/2023	1630/1130	*		US	US Treasury Auction Result for 13 Week Bill
31/01/2023	0030/1130	**		AU	Retail Trade
31/01/2023	0130/0930	***		CN	CFLP Manufacturing PMI
31/01/2023	0130/0930	**		CN	CFLP Non-Manufacturing PMI
31/01/2023	0630/0730	**		FR	Consumer Spending
31/01/2023	0630/0730	***		FR	GDP (p)
31/01/2023	0700/0800	**		DE	Retail Sales
31/01/2023	0730/0830	**		CH	retail sales
31/01/2023	0745/0845	***		FR	HICP (p)
31/01/2023	0745/0845	**		FR	PPI
31/01/2023	0855/0955	**		DE	Unemployment
31/01/2023	0930/0930	**		UK	BOE M4
31/01/2023	0930/0930	**		UK	BOE Lending to Individuals
31/01/2023	1000/1100	***		IT	GDP (p)
31/01/2023	1000/1100	***		EU	EMU Preliminary Flash GDP Q/Q
31/01/2023	1000/1100	***		EU	EMU Preliminary Flash GDP Y/Y
31/01/2023	1300/1400	***		DE	HICP (p)
31/01/2023	1330/0830	***		CA	Gross Domestic Product by Industry
31/01/2023	1330/0830	**		US	Employment Cost Index
31/01/2023	1355/0855	**		US	Redbook Retail Sales Index
31/01/2023	1400/0900	**		US	S&P Case-Shiller Home Price Index
31/01/2023	1400/0900	**		US	FHFA Home Price Index
31/01/2023	1445/0945	**		US	MNI Chicago PMI
31/01/2023	1500/1000	***		US	Conference Board Consumer Confidence
31/01/2023	1500/1000	**		US	housing vacancies
31/01/2023	1530/1030	**		US	Dallas Fed Services Survey
01/02/2023	2200/0900	**		AU	IHS Markit Manufacturing PMI (f)
01/02/2023	0001/0001	*		UK	BRC Monthly Shop Price Index
01/02/2023	0030/0930	**		JP	IHS Markit Final Japan Manufacturing PMI
01/02/2023	0145/0945	**		CN	IHS Markit Final China Manufacturing PMI
01/02/2023	0815/0915	**		ES	IHS Markit Manufacturing PMI (f)
01/02/2023	0845/0945	**		IT	S&P Global Manufacturing PMI (f)
01/02/2023	0850/0950	**		FR	IHS Markit Manufacturing PMI (f)
01/02/2023	0855/0955	**		DE	IHS Markit Manufacturing PMI (f)
01/02/2023	0900/1000	**		EU	IHS Markit Manufacturing PMI (f)
01/02/2023	0930/0930	**		UK	S&P Global Manufacturing PMI (Final)
01/02/2023	1000/1100	***		IT	HICP (p)
01/02/2023	1000/1100	***		EU	HICP (p)
01/02/2023	1000/1100	**		EU	Unemployment
01/02/2023	1200/0700	**		US	MBA Weekly Applications Index
01/02/2023	-	***		US	Domestic-Made Vehicle Sales
01/02/2023	1315/0815	***		US	ADP Employment Report
01/02/2023	1445/0945	***		US	IHS Markit Manufacturing Index (final)
01/02/2023	1500/1000	***		US	ISM Manufacturing Index
01/02/2023	1500/1000	*		US	Construction Spending
01/02/2023	1500/1000	**		US	JOLTS jobs opening level
01/02/2023	1500/1000	**		US	JOLTS quits Rate
01/02/2023	1530/1030	**		US	DOE weekly crude oil stocks
01/02/2023	1900/1400	***		US	FOMC Statement
02/02/2023	0030/1130	*		AU	Building Approvals
02/02/2023	0700/0800	**		DE	Trade Balance
02/02/2023	1200/1200	***		UK	Bank Of England Interest Rate
02/02/2023	1200/1200	***		UK	Bank Of England Interest Rate
02/02/2023	1315/1415	***		EU	ECB Deposit Rate
02/02/2023	1315/1415	***		EU	ECB Main Refi Rate
02/02/2023	1315/1415	***		EU	ECB Marginal Lending Rate
02/02/2023	1330/0830	*		CA	Building Permits
02/02/2023	1330/0830	**		US	Jobless Claims
02/02/2023	1330/0830	**		US	WASDE Weekly Import/Export
02/02/2023	1330/0830	**		US	Preliminary Non-Farm Productivity
02/02/2023	1345/1445			EU	ECB Press Conference following Rate Decision
02/02/2023	1500/1000	**		US	factory new orders
02/02/2023	1530/1030	**		US	Natural Gas Stocks
02/02/2023	1830/1930			EU	ECB Lagarde Speech at Franco-German Business Awards
03/02/2023	2200/0900	*		AU	IHS Markit Final Australia Services PMI
03/02/2023	0030/0930	**		JP	IHS Markit Final Japan Services PMI
03/02/2023	0145/0945	**		CN	IHS Markit Final China Services PMI
03/02/2023	0700/0800	*		NO	Norway Unemployment Rate
03/02/2023	0745/0845	*		FR	Industrial Production
03/02/2023	0815/0915	**		ES	S&P Global Services PMI (f)
03/02/2023	0845/0945	**		IT	S&P Global Services PMI (f)
03/02/2023	0850/0950	**		FR	IHS Markit Services PMI (f)
03/02/2023	0855/0955	**		DE	IHS Markit Services PMI (f)
03/02/2023	0900/1000	**		EU	IHS Markit Services PMI (f)
03/02/2023	0930/0930	**		UK	S&P Global Services PMI (Final)
03/02/2023	1000/1100	**		EU	PPI
03/02/2023	1215/1215			UK	BOE Pill & Shortall MPR National Agency Briefing
03/02/2023	1300/1400			EU	ECB Elderson Speech at Climate Outreach Event
03/02/2023	1330/0830	***		US	Employment Report
03/02/2023	1445/0945	***		US	IHS Markit Services Index (final)
03/02/2023	1500/1000	***		US	ISM Non-Manufacturing Index