Key Events And Issues In The Coming Week
The middle of the month brings a mixture of second-tier macro numbers punctuated by the market-moving (and Taper-cementing) retail sales report. We get IP, CPI and PPI from the US this coming week. In terms of hard activity numbers, US retail sales on Tuesday will be the highlight which as a reminder is, in addition to Jackson Hole, seen as one of two key pre-Taper catalysts to keep an eye on. Outside the US, the key data will be the quarterly publication of German, French and Eurozone GDP, as well as Japanese GDP, which has already been released (weaker real growth, higher inflation). The second week of the month also tends to show the first survey results with the Phily Fed and Empire surveys on Thursday. In Germany the ZEW will come on Tuesday. Finally, from an FX point of view, we will be focused on balance of payments related data, with the trade balance in India and TIC data in the US. After a few very weak TIC releases in recent months we would expect more evidence of weak capital inflows into the US.
The Week Ahead
Monday 12th August
- US Federal Budget Balance (Jul)
- Japan GDP – Provisional (Q2)
- India Trade Balance
- Also interesting: Poland Current Account Balance, Czech Republic Current Account Balance, Israel Minutes of MPC Meeting
Tuesday 13th August
- US Retail Sales (Jul): Previous +0.4%
- US Import Prices (Jul): Previous -0.2%
- Chile Monetary Policy Meeting: GS Forecast 5.0%, Previous 5.0%
- Euro Area Industrial Production (Jun): Previous -1.3% yoy
- RBI Rajan speaks at Chicago Booth
- Fed’s Lockhart speaks on Monetary Policy in AtlantaGermany ZEW Survey
- Also interesting: US Business inventories, UK CPI, Germany Harmonized CPI, Spain Harmonized CPI, Sweden Consumer Prices – CPIF, Israel Trade Balance
Wednesday 14th August
- Euro Area GDP (Q2): Previous -1.1% yoy
- US Producer Prices (Jul): Previous +0.8%
- UK Minutes of MPC Meeting
- UK Labour Market data
- France, Germany GDP
- Also interesting: France Harmonized CPI, Czech Republic GDP, Hungary GDP, Poland GDP, Australia Consumer Confidence.
Thursday 15th August
- US Consumer Prices (Jul): +0.5%
- US initial jobless claims
- US Industrial Production (Jul): Previous +0.3%
- US TIC data
- US Philadelphia Fed and Empire Surveys
- Also interesting: Israel Consumer Prices, Argentina Consumer Price Index
Friday 16th August
- US Non-Farm Productivity (Q2–Prel): Previous +0.5%
- Euro Area Harmonized CPI (Jul - Final): Previous +1.6% yoy
- Fed’s Bullard speaks on Monetary Policy in Paducah, Kentucky
- U. of Michigan Consumer Sentiment
- Also interesting: US Unit Labour costs, US Housing Starts, Poland Core inflation, Venezuela Real GDP
SocGen presents the above visually:
And despite peak vacation season, here are some of the key issues and question for the weeks and quarter ahead from SocGen:
HARD DATA ON Q2 GDP AND PROSPECTS FOR Q3
The series of Q2 GDP releases will start with data for Japan. Abenomics should have generated a further acceleration from 1.0% qoq to 1.2% qoq. The data for this quarter will be crucial for the fiscal policy outlook. The government has said that it will assess the second estimate due on 9 September to inform its decision on whether to proceed with the planned consumption tax hike planned for April 2014.
We have already commented above on the French and German GDP data. Looking forward to Q3, the German Zew should record an increase in August, as should the suite of PMIs for both France and Germany, adding to our conviction that, whilst patchy and uneven, a gentle recovery is finally under way in the euro area.
BOE MPC MINUTES – WAS THE VOTE UNANIMOUS?
The market expects a unanimous vote for the launch of forward guidance but there is a tiny risk that a hawk dissented. The market impact of such a vote would be enormous as it would throw into doubt the signal of unchanged rates until late 2016.
IS THE CHINESE ECONOMY SHOWING SIGNS OF A REBOUND?
Over the past week, there have been one or two more encouraging signs that Chinese activity might be showing more buoyancy but for us the answer is that “the jury is still out.” The slowing of growth to 7.5% yoy led markets to fear that a more protracted cooling was in prospect. Since then July industrial production posted another big upside surprise and trade growth also rebounded. It is therefore tempting to conclude that the nascent deceleration has been stopped in its tracks. Certainly, these early firmer July data point to a stronger Q3 but beyond that, things look more uncertain. Credit growth is still declining and property sales are starting to fall. Liquidity tensions remain. So, as our China Economist Wei Yao, puts it: some sun in Q3, but big clouds likely to come afterwards.
MARKET ISSUES World financial markets are still very sensitive to fears of a China slowdown. Just as one example, the RBA cut interest rates last week and lowered its growth forecast as mining investment plans were being scaled back, partly on forecasts of a medium term deceleration in Chinese growth, which is our view as well.
Source: Goldman, SocGen
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