The upcoming week is comparatively less loaded with policy events, though the ongoing fiscal cliff negotiations in the US remain one of the key developments to follow. Important is also the FOMC meeting on Wednesday, where Goldman and everyone else now expect the Fed to increase their monthly asset purchase target under the QE3 program to $85bn per month, up from $45bn per month; this will keep the pace of asset purchases constant after the Operation Twist expires at the end of December, as Zero Hedge predicted the day QE3 was announced. There are is a handful of other central bank meetings in emerging economies (Russia, Indonesia, South-Korea, Philippines, Chile) although consensus expects no change to the base-rate in most cases. On the data front industrial production numbers for October will be released around the world including in the Euro-area, US and China. We also get the US retail sales number and December flash PMIs for the Euro-area and China.
The Week Ahead
Monday December 10
- Russia MPC: We and consensus expect the overnight auction-based repo to remain unchanged at 5.50% from November.
- Also Interesting: Japan GDP, Turkey GDP, Sweden IP, France & Italy IP, Italy & Spain GDP, Czech CPI, Norway CPI, China Trade Balance, Israel MPC Minutes.
Tuesday December 11
- US Trade Balance (October): Consensus expects -42.5bn for October, a slight worsening from -41.5bn in September.
- Indonesia MPC: Consensus expects no change to the reference rate currently at 5.25%
- Also Interesting: Turkey CA, Hungary CPI, Japan Machinery Orders.
Wednesday December 12
- UK ILO Unemployment Rate (October): Consensus expects 7.9% up from 7.8% in September
- US FOMC Meeting: We expect that the FOMC will increase the monthly QE purchases to $85bn per month from $40bn per month to keep pace with the purchases under the Operation Twist program which expires at the end of December.
- Also Interesting: India IP, Germany HCPI, Euro Area IP, UK employment growth, Israel trade balance, Russia trade balance, Mexico IP, Brazil monthly GDP.
Thursday December 13
- South Korea MPC: Consensus expects no change to the 7-day repo rate currently at 2.75%.
- Philippines MPC: Consensus expects no change to the overnight borrowing rate currently at 3.5%.
- US Retail Sales (November): We expect 0.6%mom, Consensus expects 0.5%mom, up from -0.3%mom in October
- BOJ Tankan (December)
- Also Interesting: Swiss CB meeting, Poland CA, Spain HCPI, Czech CA, Italy HCPI, Poland CPI, Brazil Retail Sales, US Initial Jobless Claims, Chile MPC
Friday December 14
- US CPI (November): We expect 0.26%mom, consensus expects -0.2%mom down from 0.1%mom in October
- US IP (November): We and consensus expect 0.2%mom up from -0.4%mom in October
- Also Interesting: China Flash PMI, Japan IP, Euro-area Flash Manufacturing PMI, Euro-area CPI, Israel CPI, Argentina CPI, Mexico MPC Minutes, India Wholesale Prices.
Source: Goldman Sachs