A Look At The Week Ahead: All Eyes On Chinese CPI And Lending Growth Data
A summary of next week's key events:
In the early part of the week (Monday – Tuesday) China will release key lending growth data. Goldman expects the amount of CNY loans made in January to be around Rmb1.1 trillion, up from Rmb480 billion in December. The yoy growth of CNY loans is expected to fall to 18.5% yoy in January from 19.7% yoy in December. Also, January net exports are expected to decline to US$9.8 billion vs.US$13.1 billion in December. Meanwhile China CPI is expected to continue to rise to 5.3% from 4/6% previously.
Beyond China we get two important pieces of data this week. First, Eurozone GDP growth data will be interesting to watch on Tuesday, in particular the growth breakdown. Second and more important, the Philly Fed will give further information over the momentum in the US economic recovery on Thursday.
A set of interesting events will dominate the political agenda, including the first G20 gathering under the French presidency, with a meeting of finance ministers and central bankers in Paris on Friday. President Sarkozy has already circulated a number of ambitious ideas on how to reform the international financial system, though it will likely take some time for a policy consensus to build. The Eurogroup/Ecofin will meet on Monday and Tuesday to discuss among other things the Competitiveness Pact suggested by Germany and France; progress is likely to be very slow.
FOMC and BOE MPC minutes will shed more light in the monetary authorities’ inflation and growth outlook for the US and the UK.
Eurozone IP (Dec): GS expects a 0.1% increase very close to consensus estimates. December industrial production numbers are expected to exhibit weather related volatility across most countries.
RBA Board Minutes: No major surprises are expected, though it will be interesting to watch the RBA take on consumer weakness.
China CPI (Jan) Goldman expects CPI to rise to 5.3% yoy vs 4.6% the previous month. Consensus expects a print of 5.4%. Food continues to push headline inflation higher in China and in addition inflation generalization metrics also point to broader inflation pressures in China.
Eurogroup/Ecofin Meeting Starts: The progress in the discussions over the European Competitiveness Pact will likely be rather slow.
Fed Speakers: NY Fed President Dudley speaks.
Eurozone GDP Numbers (Q4 Provisional): Given the recent upside moves in Eurozone front end rates it is important to watch the pace of recovery in core EUR countries and especially Germany. Composition of Germany growth will be interesting for signs of domestic demand recovery.
US Retail Sales ex Autos: Goldman expects significant gains of 0.9% mom above consensus of 0.6% for core retail sales mostly on the back of the payroll tax cut and higher gasoline prices.
US Empire Survey: Consensus expects a reasonably strong print of about 15, higher than last month’s print around 12.
Turkey Monetary Policy Meeting It is key to watch whether the CBRT tries further macro-prudential measures to control lending. Further continuation of the current loose policy stance which is geared towards addressing external imbalances by disallowing FX strength, would support our long EURTRY trade recommendation
UK CPI Another elevated print of about 4.3% yoy is about to be released. Consensus expects a reading closer to 4%.
Sweden MPC Meeting A 25bps hike to 1.5% is expected. Market is already discounting the hike.
Also Interesting: US TIC flows, Israel & Poland CPI (Jan), German ZEW, Hungary & Czech Q4 GDP.
UK BOE Inflation Report: It will be interesting to see the BOE’s assessment over the inflation outlook following the yet again elevated CPI prints that will come out earlier this week.
US FOMC Minutes: Minutes will include interesting updates on the Fed’s forecasts for growth, inflation and unemployment.
US IP: Consensus for a print of 0.5% mom.
US PPI: Ex food and energy, consensus expects a 0.2% monthly increase.
US Housing Starts: Consensus expectations of 2.1%.
Also interesting: Israel GDP (Q4), South Africa CPI & Retail Sales (Jan), UK labour market data, Poland employment (Jan).
US CPI (Jan): Core and headline inflation will continue to diverge with core inflation staying well behaved at 0.14% mom and headline inflation rising to 0.37%. Consensus expects prints around 0.1 and 0.3% respectively.
US Philly Fed (Feb): Consensus expectations of about 21.
US weekly jobless claims: The recent decline in jobless claims was partly due to weather related distortions. But it is important to keep following the data to gauge the size of the effect.
Chile Monetary Policy Meeting: After the ongoing deterioration in inflation expectations, the Central Bank is expected to resume its policy normalization campaign by hiking 25bps. The curve is extremely steep and priced for a steep hiking campaign ahead and the currency trades at strong levels.
Also interesting: Sweden CPI (Jan), Japan Monetary Policy Meeting, Norway Q4 GDP.
Hungary Gross Wages The National Bank of Hungary has hiked rates to prevent capital flight from Hungary. Whether the rate hiking campaign extends depends on whether inflation will remain sticky. Watching wage data is key in that sense.
G20 Meeting Finance ministers and central bank governors will meet in Paris to discuss global macro issues including for example the global monetary system & rising commodity prices. Bernanke will also speak on a panel at the Bank of France.
Also interesting: Canada CPI, Malaysia Q4 GDP, UK retail sales (Jan).
From Goldman Sachs
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