MNI GLOBAL WEEK AHEAD: RBA and BOC In Headlights

Preliminary December Michigan Sentiment index on Friday the stand out. In the coming week for data. The focus will largely turn to the RBA and BOC interest rate decisions.

MONDAY

Final Services PMIs: First prints for Italy and Spain Services PMIs will likely show around one-point upticks, lifting Spain back into expansive territory. New orders have continued to fall (albeit less steeply) and service-sector downturns are generally easing across the bloc with outlooks appearing to be beyond the worst.

Eurozone Retail Trade: A weaker October print is anticipated for euro area retail sales. Consensus is looking for a -1.9% m/m (vs Sep +0.4%) and +3.0% y/y (vs Sep -0.6%) contraction. This follows a -2.8% m/m contraction posted by Germany for October.

Consumer Spending on both goods and services provided a vital boost to Q3 GDP, elevating growth to remain modestly expansive at +0.2% q/q. Nevertheless, a weaker October retail print could be the kickoff of muted holiday-season spending, which would signal a drag on growth into year-end.

US ISM Services: The ISM services index is expected to soften by one point to 53.4 in November, outpacing the weaker-than-anticipated ISM Manufacturing print of 49.0 released on Thursday. The Chicago PMI (produced with MNI) recorded a significant November plunge, flagging recession. As around 20% of the index represents service-based industry, the details in the Chicago data imply a more substantial ISM services slide for November.

Despite high inflation and even throughout the last winter Omicron wave, the US ISM services index has remained buoyant. Though as global demand winds down and consumers reconcile with substantially lower real income, eyes will be on the index to signal the onset of a more marked downturn.

US Factory/Durable Goods Orders: US durable goods orders are likely to be confirmed at a robust +1.0% m/m in October, whilst initial factory goods orders are projected to follow suit and improve to +0.7% m/m from +0.3% m/m in September. Ex-transport outlooks are more subdued, following the -0.1% m/m contraction in September.

TUESDAY

Australia Interest Rate Decision: The RBA is expected to lift rates by 25bp on Tuesday, but the focus will be on any tweaks to forward guidance that may signal the timing of a pause in its tightening campaign next year. A hike to 3.1% represents cumulative tightening of 300bps since May, with the impact evident in falling house prices and depressed consumer sentiment. See our RBA watch here.

Germany Factory Orders: A modest recovery to +0.5% m/m is anticipated for October factory orders in Germany, following the -4.0% m/m plunge in September. Capital and immediate goods will be closely watched to gauge investment outlooks ahead of a (mild) winter recession and high energy prices. Consumer goods should weaken from their strong September expansion, to come in line with falling retail demand.

US Trade Balance: The US trade deficit is seen depending by around 4bln to USD -77bln in October, after widening for the first time in six months in September. This follows the record deficit of USD -107bln in March. Lucrative US oil exports had recently underpinned improvements, yet muted global demand and the strong dollar are weakening the US export industry.

WEDNESDAY

Germany Industrial Production: Following Tuesday’s factory order data, German industrial production is projected to record a shaky start to Q4. October IP is forecast to contract by -0.6% m/m and -0.7% y/y, following a relatively robust September print. Supply-chains easing is providing support to auto production, however, energy-intensive production remains severely hampered by high energy prices. Survey data continues to signal that the German economy teeters on the edge of a recession.

Italy Retail Sales: Slowing retail sales are expected for Italy in October, after having expanded by +0.5% m/m in September.

Eurozone Final GDP: The final Q3 GDP should largely confirm a stronger-than-expected +0.2% q/q and +2.1% y/y expansion. Weak global demand and surging inflationary pressures emanating from the Ukraine war has led to substantially weakened EU growth outlooks according to the European Commission's November forecast. 2022 growth is anticipated to be stronger than initially expected, underpinned by strong consumer spending. However, this is likely to be short-lived. GDP should see weak growth of 0.3% in 2023 (below the 0.9% projected by the ECB).

Canada Interest Rate Decision: The BOC expected to slow the hiking cycle to 25bp at the December meeting, lifting rates to 4.00%. A 50bp hike remains a likely tail risk, with economists leaning towards the latter whilst markets are pricing around 29bp. This would bring rates to the same level as the Fed.

Fed Chair Powell noted on Wednesday that December may see the scale of rate hikes moderate, implying a lower terminal rate and cementing a 50bp December hike. This pivot suggests less pressure on central banks to play catch-up.

THURSDAY

No major data releases.

FRIDAY

US PPI: US factory-gate inflation should cool another 0.9pp to +7.1% y/y in the November print. Core PPI is set to followed suit, easing since March highs to +6.7% y/y in October with a 1pp step down to +5.7% y/y likely for November.

US Prelim Michigan Sentiment Index: The U. Michigan index is forecasted to hold steady at 56.8 in the December flash, as consumer confidence remains subdued. This remains above the low of 50.0 recorded in June yet confirms a pause in the Aug to Oct improvements. Weak consumer sentiment headed into the holiday season will likely see softer retail sales, as households grapple with less disposable income and uncertain economic outlooks. Inflation expectations will be closely watched, after ticking up again to 3.0% in the 5-10 -year November index. US CPI has slowed for four consecutive months, yet with core CPI only seeing initial relief underlying cost pressures will need to ease further to reinstate confidence in price stabilisation.

Date	GMT/Local	Impact	Flag	Country	Event
03/12/2022	0230/0330			EU	ECB Lagarde at Bank of Thailand Roundtable
05/12/2022	2200/0900	*		AU	IHS Markit Final Australia Services PMI
05/12/2022	0030/0930	**		JP	IHS Markit Final Japan Services PMI
05/12/2022	0145/0945	**		CN	IHS Markit Final China Services PMI
05/12/2022	0145/0245			EU	ECB Lagarde at Central Bank Governors IMF Seminar
05/12/2022	0700/0200	*		TR	Turkey CPI
05/12/2022	0815/0915	**		ES	IHS Markit Services PMI (f)
05/12/2022	0845/0945	**		IT	IHS Markit Services PMI (f)
05/12/2022	0850/0950	**		FR	IHS Markit Services PMI (f)
05/12/2022	0855/0955	**		DE	IHS Markit Services PMI (f)
05/12/2022	0900/1000	**		EU	IHS Markit Services PMI (f)
05/12/2022	0930/1030	*		EU	Sentix Economic Index
05/12/2022	0930/0930	**		UK	IHS Markit/CIPS Services PMI (Final)
05/12/2022	1000/1100	**		EU	retail sales
05/12/2022	-			EU	ECB Panetta at Eurogroup Meeting
05/12/2022	1330/0830	*		CA	Building Permits
05/12/2022	1445/0945	***		US	IHS Markit Services Index (final)
05/12/2022	1500/1000	***		US	ISM Non-Manufacturing Index
05/12/2022	1500/1000	**		US	factory new orders
05/12/2022	1630/1130	*		US	US Treasury Auction Result for 26 Week Bill
05/12/2022	1630/1130	*		US	US Treasury Auction Result for 13 Week Bill
06/12/2022	0001/0001	*		UK	BRC-KPMG Shop Sales Monitor
06/12/2022	0330/1430	***		AU	RBA Rate Decision
06/12/2022	0700/0800	**		DE	Manufacturing Orders
06/12/2022	0830/0930	**		EU	IHS Markit Final Eurozone Construction PMI
06/12/2022	0830/0930			DE	S&P Global Germany Construction PMI
06/12/2022	0930/0930	**		UK	IHS Markit/CIPS Construction PMI
06/12/2022	1000/1000	**		UK	Gilt Outright Auction Result
06/12/2022	1130/1130	**		UK	Gilt Outright Auction Result
06/12/2022	-			EU	ECB de Guindos at ECOFIN Meeting
06/12/2022	1330/0830	**		US	Trade Balance
06/12/2022	1355/0855	**		US	Redbook Retail Sales Index
06/12/2022	1400/1500			EU	ECB Publication of Monthly APP/PEPP update
06/12/2022	1500/1000	*		CA	Ivey PMI
07/12/2022	0430/1000			IN	India RBI Rate Decision
07/12/2022	0645/0745	**		CH	Unemployment
07/12/2022	0700/0800	**		DE	Industrial Production
07/12/2022	0700/0800	***		SE	GDP
07/12/2022	0700/0800	**		SE	Private Sector Production
07/12/2022	0710/0810			EU	ECB Lane Speech at China FX Global Perspective
07/12/2022	0745/0845	*		FR	Foreign Trade
07/12/2022	0745/0845	*		FR	Current Account
07/12/2022	0900/1000	*		IT	Retail Sales
07/12/2022	1000/1000	*		UK	Index Linked Gilt Outright Auction Result
07/12/2022	1000/1100	*		EU	Employment
07/12/2022	1000/1100	***		EU	GDP (final)
07/12/2022	1200/0700	**		US	MBA Weekly Applications Index
07/12/2022	-	***		CN	Trade
07/12/2022	1300/1400			EU	ECB Panetta Speech at at LBS-AQR Insight Summit
07/12/2022	1330/0830	**		US	Non-Farm Productivity (f)
07/12/2022	1500/1000	***		CA	Bank of Canada Policy Decision
07/12/2022	1530/1030	**		US	DOE weekly crude oil stocks
07/12/2022	2000/1500	*		US	Consumer Credit
08/12/2022	0001/0001			UK	RICS House Price Balance
08/12/2022	1200/1300			EU	ECB Lagarde Intro at European Systemic Risk Board Conf
08/12/2022	1330/0830	**		US	Jobless Claims
08/12/2022	1330/0830	**		US	WASDE Weekly Import/Export
08/12/2022	1500/1000	*		US	Services Revenues
08/12/2022	1530/1030	**		US	Natural Gas Stocks
08/12/2022	1730/1230			CA	BOC Deputy Kozicki speech
09/12/2022	0130/0930	***		CN	CPI
09/12/2022	0130/0930	***		CN	Producer Price Index
09/12/2022	0700/0800	*		NO	CPI Norway
09/12/2022	0745/0845	**		ES	Industrial Production
09/12/2022	0930/0930			UK	BoE/Ipsos Inflation Next 12 Months
09/12/2022	1330/0830	***		US	PPI
09/12/2022	1500/1000	***		US	University of Michigan Sentiment Index (p)
09/12/2022	1500/1000	**		US	Wholesale Trade
09/12/2022	1700/1200	***		US	USDA Crop Estimates - WASDE