Following the FOMC surprise, no less than twelve Fed speeches will provide some "clarifications" on where the Fed now stands. It is very likely that this subject will continue to dominate the discussions of market participants. At the same time, US data will get scrutinized after the recent weakening and to see how warranted the Fed's concerns were. Two US consumer sentiment surveys, durable goods orders, and the third reading of Q2 GDP are important. In addition, monthly consumption and income data for August provide more information on the third quarter and of course there will be interest in the latest weekly claims numbers after some distortions in recent readings.
Five central banks will announce monetary policy decisions this week, but we expect only the Hungarian central bank to cut policy rates, by 20bps to 3.60%, slightly below consensus. Monetary policy in Israel, the Czech Republic, Taiwan and Nigeria is expected to remain unchanged.
The week starts with the first batch of Flash PMIs in the Eurozone and China. In addition, inflation data is due for release in major economies.
On the EM side, there could be some focus on the Brazilian current account position, given the importance of external deficits for FX performance in recent months.
Monday, Sep 23
- 3 Fed speakers: Lockhart (non-voter), Dudley (FOMC voter), Fisher (non-voter)
- Israel MPC: Consensus have it unchanged at 1.25%
- Euro Area PMIs (Sep, Flash): Consensus 51.8, previous 51.5 (Composite)
- Argentina Trade Balance: Consensus USD+600bn, previous USD+770bn
- Also interesting: Malaysia FX reserves (Sep), Mexico Retail Sales (Jul), China Flash PMI
Tuesday, Sep 24
- 2 Fed speakers: Pianalto (non-voter), George (FOMC voter)
- Nigeria MPC: Consensus have it unchanged at 12%.
- Hungary MPC: consensus 3.70%, previous 3.80%.
- US HFHA and Case Shiller House Price Indexes (Jul)
- US Consumer Confidence Survey: Consensus 80.0, previous 81.5
- US Richmond Fed Survey: consensus 11, previous 14
- Germany IFO Business Survey: consensus 108.0, previous 107.5
- Brazil Current Account (Aug): Consensus USD-5.1bn, previous USD-9.0bn
- Also interesting: Mexico Inflation (Sep), Poland Retail Sales (Aug), New Zealand Trade Balance (Aug)
Wednesday, Sep 25
- US Durable Goods Orders: Consensus -0.2%, last -7.3%
- US New Home Sales (Aug): Consensus +6.6%mom, previous -13.4%mom
- Germany GFK Consumer Confidence (Oct): consensus +7.0, previous +6.9
- Mexico Real GDP (Aug): Previous -0.39%yoy
- Also interesting: Philippines Trade Balance (Jul), France Business Confidence (Sep), Sweden NIER Business and Consumer Survey (Sep)
Thursday, Sep 26
- 2 Fed speakers: Stein (FOMC voter), Kocherlakota (non-voter)
- Taiwan MPC: consensus has it unchanged at 1.875% yoy
- Czech Republic MPC: GS and consensus have rate unchanged at 0.05%. At the same time, we expect the Board to reiterate its dovish stance and preference for lower rates, and reiterate that it will not normalise rates until there is a significant increase in inflation risks.
- US GDP (Q2, 3rd estimate): Consensus +2.6%, previous +2.5%
- US Initial Jobless Claims (21 Sep): Consensus 325K, previous 309K. Jobless claims have been distorted downward in recent weeks due to claims processing delays in California. The delays were caused by a computer system changeover. A Labor Department spokesperson noted that claims may continue to be distorted for several weeks, while California's Employment Development Department stated that as of September 18 there remained a significant backlog of unprocessed claims. As a result of recent distortions, the signal from jobless claims on the underlying strength of the labor market is significantly clouded.
- UK GDP (Q2, revised): Consensus +0.7%qoq, previous +0.7%qoq (Q2, first release)
- Italy Retail Sales (Jul): consensus -2.8%yoy, previous -3.0%yoy
- Mexico Trade Balance (Aug): previous USD-1.4bn
- Also interesting: US Kansas City Fed Survey (Sep), US Pending Home Sales (Aug), Brazil Inflation Report, Taiwan IP
Friday, Sep 27
- 5 Fed speakers: George (FOMC voter), Evans (FOMC voter), Rosengren (FOMC voter), Evans (FOMC voter), Dudley (FOMC voter) Colombia MPC: GS and consensus have rate unchanged at 3.25%yoy
- Japan CPI (Aug): GS +0.7%, consensus +0.8%, previous +0.7%. There are several electricity power companies planning to raise tariff from September, and together with a series of food price hikes, we expect inflation to accelerate further in the coming months.
- US Personal Consumption (Aug): Consensus +0.3%, previous +0.1%
- US Personal Income (Aug): Consensus +0.4%, previous +0.1%
- US PCE Core Price Index (Aug):
- US University of Michigan Consumer Sentiment Index (Sep)
- Euro Area Consumer Confidence (Sep)
- UK GFK Consumer Confidence (Sep)
- Italy Business Confidence (Sep)
- Brazil Bank Lending (Aug): Previous +16.1%yoy
- Brazil IGP-M Inflation (Sep): Consensus +4.31%yoy, previous +3.85%yoy
- Russia Current Account Balance (Q2, Final release): previous USD+6.9bn
- Hungary Current Account Balance (Q2): Consensus EUR+520mn, previous EUR+549mn
- Also interesting: Spain Harmonized Inflation (Sep, Flash), Germany Harmonized Inflation (Sep), Thailand FX Reserves (Sep)
A visual summary of the above via SG:
SocGen lays out the key issues for the week ahead:
LOTS OF FEDSPEAK
After last week’s surprise decision by the FOMC not to taper, this week’s busy calendar of Fedspeak will be given close scrutiny. Our central scenario now is for the Fed to taper at the 17-18 December meeting as detailed by Chief US economist, Aneta Markowska, in Friday’s edition of On Our Minds. The risk is increasingly for markets to perceive the Fed as falling behind the tightening curve.
MARKET ISSUES: The Fed’s decision not to taper has heightened market uncertainty and as a result we see greater market volatility ahead. The ongoing debate on the debt ceiling, moreover, could prove an additional source of volatility near-term.
EURO AREA MATURING SENTIMENT
After several gains, we expect both the IFO and INSEE business confidence indicators gains to flatten out in September reflecting our expectations that the recent upward cycle is maturing. Indeed, hard data released over the past weeks have generally been disappointing relative to the hopes fuelled by the survey data.
MARKET ISSUES: Focus over the coming weeks will be, as discussed above, on the stance of fiscal policy in 2014. Key topics for euro area policymakers included finding solutions to the Greek funding gap and preparing an additional package for Portugal. Banking union, moreover, requires additional bold steps to fix broken credit channels. Sadly we see little suggestion that this will come quickly leaving the most likely timing for possible direct bank recapitalisation by the ESM as the turn of the year 2015.
Source: Goldman, SocGen