By way of Goldman Sachs
The week past was one of improving sentiment for risky assets. The positive stream of data surprises out of the US continued with a sharp drop in initial jobless claims. The less positive Philly Fed print did not shake markets to a substantial extent. Optimism in Eurozone extended as well with the newsflow over the Greek PSI. Up until Friday (January 20) it appeared increasingly likely that an agreement could be imminent. However, on Saturday talks came once again to a stalemate due to ongoing disagreement over the level of sustainable coupons for the new Greek bonds.
This implies that the PSI deal will not be ready for approval during the European finance ministers meeting, starting on Monday. The market will look for any signal on the pace of discussions over the ESM pre-funding details and the fiscal compact. Flash PMIs in the Eurozone and the IFO will also be key to watch given market fears over the activity impact of tight fiscal policy linked to the Eurozone fiscal crisis.
Attention will likely shift to the US this week. Q4 GDP will likely exceed 3% mostly due to one-off drivers and less so due a genuine pick-up in final demand in our view. The FOMC statement and press conference are unlikely to lead to a change in US monetary policy. However, we will be focusing on the publication of the FOMC participants’ views of appropriate policy (specifically the path for the federal funds rate and guidance for the size of the balance sheet going forward). In addition, President Obama will give his State of the Union speech Tuesday night.
Monday 23rd January:
Ecofin Meeting: The Greek PSI, the ESM pre-funding schedule will be among other issues in the agenda.
Also Interesting: Euro-zone Consumer Confidence (Jan), Israel Monetary Policy Meeting (no change).
Tuesday 24th January:
Turkey Monetary Policy Meeting: We do not expect a change in the base rate but it will be interesting to assess the current CBRT thoughts on ongoing policy initiatives.
Hungary Monetary Policy Meeting: In response to currency risks, NBH is widely expected to raise interest rates by 50bp to 7.50%.
Euro-zone Flash Composite PMI (Jan): Consensus expects a print of 48.5, up from 48.3 in December.
Also Interesting: US Presidential State of the Union address, Japan CB Meeting, India CB Meeting, Russia IP.
Wednesday 25th January:
Germany Ifo (Jan): Consensus expects an improvement of the indicator to 107.5 after 107.2 in December.
UK GDP (Q4): We expect the GDP to fall by 0.2%qoq, below consensus of -0.1%, down from 0.6% in September.
FOMC Meeting: We expect no change, in line with consensus but, the Fed’s own forecasts for the Fed Funds rate will be published. There will be a press conference as well.
Also Interesting: BOE Minutes, Korea Q4 GDP, Singapore CPI, Thailand CB Meeting, Australia CPI.
Thursday 26th January:
US Durable Goods Orders (Dec): Consensus expects 2.0%mom after 3.7% in November.
US Initial Jobless Claims: After some big swings in recent readings, there will be more focus on these numbers than usual.
Also interesting: New Zealand Central Bank Meeting, Brazil COPOM Minutes (Jan).
Friday 27th January:
US GDP (Q4): We expect 3.2%qoq ann vs. consensus of 3.0% after 1.8% in Q3.
Also Interesting: Poland GDP and Swiss Kof survey.