MNI Global Week Ahead - US CPI and Several Central Banks

See below for the key events in Developed and Emerging markets next week:

Developed Markets

TUESDAY - RBA Decision

The RBA's last meeting of the year will be held over December 9-10. It is widely expected that it will leave rates unchanged at 4.35% despite the disappointing Q3 GDP result. We also expect its guidance to be little changed with the Board remaining "vigilant to upside risks to inflation" and "not ruling anything in or out". With October underlying inflation rising 0.3pp to 3.5% y/y, thus remaining "too high", it will still be "some time yet before inflation is sustainably in the target range", which it said in the November minutes would likely need "more than one good quarterly inflation outcome" for the Board to feel "confident". The market now has the first full rate cut at the April 1 meeting.

WEDNESDAY - US November CPI

Friday’s payrolls report should have largely taken a December pause off the table at the Dec 17-18 FOMC meeting, with a second 25bp cut mostly priced. That is barring a large upside surprise in US CPI on Wednesday, where it would presumably have to be followed by a blackout steer in preferred media channels as has been seen before. The early days for the Bloomberg survey sees consensus look for a 0.3% M/M seasonally adjusted increase in core CPI inflation for a broad continuation of recent strength after 0.28% M/M in October and 0.31% M/M in September. Housing, and the heavily-weighted OER in particular, came in stronger than expected in October and will be watched this month as it continues to struggle to return to pre-pandemic run rates. Supercore also remains in the spotlight: it surprised lower in October at 0.31% M/M after 0.40% M/M although that’s still a robust pace with a three-month annualized rate of 4.3%. However, supercore implications will continue to partly depend on the readthrough to core PCE which will have to wait until Thursday’s PPI report for some PCE-specific categories.

WEDNESDAY - BOC Decision

The last major release ahead of Wednesday’s decision from the Bank of Canda should firm up expectations of a second consecutive 50bp cut rather than reverting to a 25bp pace. Jobs growth was stronger than expected in November, but it failed to match a much stronger increase in the labour force with the combination driving a resumption of the upward trend in the unemployment rate for a new cycle high. That would see an overnight rate target of 3.25%, or 175bp of cuts since the start to the BoC's easing cycle in June. It would also leave the policy rate at the top of the BoC’s estimated neutral rate range of 2.25-3.25%. BoC-dated OIS currently prices 44bp of cuts having seen 38bp prior to the jobs report and inter-meeting lows at sub-30bps after the Trudeau government announced a fiscal stimulus package last month.

THURSDAY - Q4 Tankan Survey

The Q4 Tankan release on Friday will be one of the key final releases before the Dec BoJ outcome. Market expectations are relatively steady in terms of outcomes relative to Q3. Market focus will be on the outlook from large and small firms, as well as capex intentions. Q3 capex was better than forecast. This remains a key source of support for domestic growth, as the authorities aim for stronger real wages to boost the household consumption outlook.

THURSDAY - SNB Decision

While markets imply about a 50% chance of an outsized 50bp cut at Thursday's SNB meeting - which would take the policy rate down to 0.5% - analysts are a bit more cautious, with the median estimate looking for a regular 25bp move. With economic activity appearing surprisingly resilient to Eurozone growth concerns, the new governor could prefer to steer clear of outsized policy steps at this juncture. Nonetheless, inflation remains well below the SNB's Q4 estimate and CHF has appreciated in real, trade-weighted terms, which keeps the 50bp option as an outside chance. Outside of the rate decision itself, focus should be paid to any potential change to the SNB's FX communications.

THURSDAY - ECB Decision

The ECB is widely expected to deliver its third consecutive 25bp rate cut on Thursday, bringing the deposit rate to 3.00%. At the time of writing, only one of the 59 analysts surveyed by Bloomberg expect a larger 50bp cut, with ECB-dated OIS assigning just a ~5% implied probability of such a move. If a 25bp cut is delivered, focus will be on to what extent a 50bp cut was discussed, which President Lagarde may divulge in the press conference. Markets will also be attentive to any tweaks to the ECB's policy statement guidance. Focus will be on whether the ECB's pledge to keep policy rates "sufficiently restrictive" is altered, alongside possible changes to the banks "data-dependent and meeting-by-meeting" approach. Both the rate decision and guidance will be informed by the December projection round, compiled by Eurosystem staff (i.e. national central banks).

Emerging Markets

THROUGH THE WEEK - China November Inflation and Lending Data

Next week sees the release of the China CPI and PPI. PPI has been in deflation and surveys suggest that this is to occur with market survey suggesting a decline for November of -2.8% versus October's -2.9% and little scope for it to improve in the near term. CPI too is to remain very subdued at +0.4% up from last month of +0.3%. The inflationary impulse for this time of year is typically moderate. What is of more interest next week is further speculation around more stimulus. Also next week is the Aggregate financing and this is an area where the potential for early improvement exists as borrowers become more confident with the economy. Surveys suggest a modest pick up from last month as companies begin to invest for 2025.

WEDNESDAY - BCB Decision (Brazil)

The Copom is set to step up the hiking pace again next week after the government’s recent fiscal package disappointed market expectations, leading to a weaker FX and a new spike of inflation expectations, which is likely to bring renewed inflationary pressures. Analysts anticipate a 75bp hike to 12.0%, with risk of an even larger 100bp move if the central bank wishes to front-load the adjustment.

THURSDAY - BCRP Decision (Peru)

With the BCRP signalling last month that a pause in the easing cycle is likely, the central bank is expected to stay on hold next week, at 5.0%. The recent up-tick in CPI inflation gives a reason to pause, while Governor Velarde also said that the increase in public spending is limiting the pace at which the central bank can cut interest rates.

Date	GMT/Local	Impact	Country	Event
09/12/2024	2350/0850	***	JP	GDP
09/12/2024	-		AU	Reserve Bank of Australia Meeting
09/12/2024	0001/0001	**	GB	KPMG/REC Jobs Report
09/12/2024	0130/0930	***	CN	CPI
09/12/2024	0130/0930	***	CN	Producer Price Index
09/12/2024	1300/1300		GB	BOE's Ramsden speech at OMFIF "Financial stability and the Bank of England's toolkit"
09/12/2024	-		JP	Economy Watchers Survey
09/12/2024	-		EU	ECB's Cipollone in Eurogroup meeting
09/12/2024	1500/1000	**	US	Wholesale Trade
09/12/2024	1600/1100	**	US	NY Fed Survey of Consumer Expectations
09/12/2024	1630/1130	*	US	US Treasury Auction Result for 26 Week Bill
09/12/2024	1630/1130	*	US	US Treasury Auction Result for 13 Week Bill
10/12/2024	0330/1430	***	AU	RBA Rate Decision
10/12/2024	0700/0800	***	DE	HICP (f)
10/12/2024	0700/0800	***	NO	CPI Norway
10/12/2024	0700/0800	**	SE	Private Sector Production m/m
10/12/2024	0900/1000	*	IT	Industrial Production
10/12/2024	1000/1000	*	GB	Index Linked Gilt Outright Auction Result
10/12/2024	1100/0600	**	US	NFIB Small Business Optimism Index
10/12/2024	-	***	CN	Trade
10/12/2024	-	***	CN	Money Supply
10/12/2024	-	***	CN	New Loans
10/12/2024	-	***	CN	Social Financing
10/12/2024	-		EU	ECB's De Guindos in ECOFIN meeting
10/12/2024	1330/0830	**	US	Non-Farm Productivity (f)
10/12/2024	1355/0855	**	US	Redbook Retail Sales Index
10/12/2024	1630/1130	*	US	US Treasury Auction Result for Cash Management Bill
10/12/2024	1700/1200	***	US	USDA Crop Estimates - WASDE
10/12/2024	1800/1300	***	US	US Note 03 Year Treasury Auction Result
11/12/2024	1000/1000	**	GB	Gilt Outright Auction Result
11/12/2024	1200/0700	**	US	MBA Weekly Applications Index
11/12/2024	1330/0830	***	US	CPI
11/12/2024	1330/0830	*	CA	Intl Investment Position
11/12/2024	1445/0945	***	CA	Bank of Canada Policy Decision
11/12/2024	1530/1030		CA	BOC Governor Press Conference
11/12/2024	1530/1030	**	US	DOE Weekly Crude Oil Stocks
11/12/2024	1800/1300	**	US	US Note 10 Year Treasury Auction Result
11/12/2024	1900/1400	**	US	Treasury Budget
12/12/2024	-		EU	European Central Bank Meeting
12/12/2024	-		CH	Swiss National Bank Meeting
12/12/2024	0030/1130	***	AU	Labor Force Survey
12/12/2024	0700/0800	***	SE	Inflation Report
12/12/2024	0830/0930	***	CH	SNB PolicyRate
12/12/2024	0830/0930	***	CH	SNB Interest Rate Decision
12/12/2024	1315/1415	***	EU	ECB Deposit Rate
12/12/2024	1315/1415	***	EU	ECB Main Refi Rate
12/12/2024	1315/1415	***	EU	ECB Marginal Lending Rate
12/12/2024	1330/0830	***	US	Jobless Claims
12/12/2024	1330/0830	***	US	PPI
12/12/2024	1330/0830	*	CA	Building Permits
12/12/2024	1330/0830	*	CA	Household debt-to-income
12/12/2024	1330/0830	**	US	WASDE Weekly Import/Export
12/12/2024	1345/1445		EU	ECB Monetary Policy Press Conference
12/12/2024	1500/1000	*	US	Services Revenues
12/12/2024	1530/1030	**	US	Natural Gas Stocks
12/12/2024	1800/1300	***	US	US Treasury Auction Result for 30 Year Bond
13/12/2024	2350/0850	***	JP	Tankan
13/12/2024	0001/0001	**	GB	Gfk Monthly Consumer Confidence
13/12/2024	0430/1330	**	JP	Industrial Production
13/12/2024	0700/0800	**	SE	Unemployment
13/12/2024	0700/0700	**	GB	UK Monthly GDP
13/12/2024	0700/0700	**	GB	Index of Services
13/12/2024	0700/0700	***	GB	Index of Production
13/12/2024	0700/0700	**	GB	Output in the Construction Industry
13/12/2024	0700/0700	**	GB	Trade Balance
13/12/2024	0700/0800	**	DE	Trade Balance
13/12/2024	0745/0845	***	FR	HICP (f)
13/12/2024	0800/0900	***	ES	HICP (f)
13/12/2024	0930/0930	**	GB	Bank of England/Ipsos Inflation Attitudes Survey
13/12/2024	1000/1100	**	EU	Industrial Production
13/12/2024	1330/0830	**	US	Import/Export Price Index
13/12/2024	1330/0830	**	CA	Monthly Survey of Manufacturing
13/12/2024	1330/0830	**	CA	Wholesale Trade