Key Events And Issues In The Coming Week

Below are the key events in the coming week:

Monday, 24 February

  • Israel MPC: GS and consensus have policy rate unchanged at 1.0%. Market pricing, by contrast, suggests there is a 55% probability of a 25bp rate cut over the next three months. While we acknowledge that there are downside risks to our view, especially in the near term following the soft January CPI print, we continue to believe that paying the front end provides an attractive risk-adjusted expected return.
  • Euro Area Harmonized CPI (Jan, final): consensus +0.7%yoy, previous +0.7%yoy (flash)
  • Germany IFO Business Survey (Feb): consensus 110.7, previous 110.6
  • Also interesting: Thailand Trade Balance (Jan), Taiwan IP (Jan)

Tuesday, 25 February

  • US Fed speakers: Tarullo (FOMC voter)
  • US Consumer Confidence (Feb): consensus 80.0, previous 80.7
  • US Richmond Fed Survey (Feb): consensus 3, previous 12
  • US FHFA House Price Index (Dec): consensus +0.3%, previous +0.1%
  • US S&P Case Shiller Home Price Index (Dec): consensus +0.6%, previous +0.9%
  • Germany GDP (Q4, final): consensus +0.4%qoq, previous +0.4%qoq
  • France Business Confidence (Feb): previous 94
  • Also interesting: Mexico CA Balance (Q4)

Wednesday, 26 February

  • US Fed speakers: Rosengren (non-FOMC voter)
  • Brazil MPC: GS and consensus expect a hike of 25bps in policy rate to 10.75%. We expect the post-meeting statement to leave the door open to extend the hiking cycle into the April 2 Copom meeting.
  • US New Home Sales (Jan): GS -2.0%, consensus -3.4%, previous -7.0%
  • Germany GFK Consumer Confidence (Mar): previous +8.2
  • UK GDP (Q4, prelim.): GS +2.8%yoy, consensus +2.8%yoy, previous +2.8%yoy
  • Also interesting: New Zealand Overseas Merchandise Trade (Jan), South Korea CA Balance (Jan)

Thursday, 27 February

  • US Fed speakers: Pianalto (FOMC voter), Lockhart (non-FOMC voter)
  • US Durable Goods Orders (Jan): consensus -1.5%, previous -4.2%
  • US Core Capital Goods Orders (Jan): consensus -0.2%, previous -0.6%
  • US Core Capital Goods Shipments (Jan): consensus -0.9%, previous +0.6%
  • US Initial Jobless Claims: GS 336K, previous 336K
  • Japan CPI (Jan): consensus +1.3%yoy, previous +1.6%yoy
  • Japan Unemployment Rate (Jan): consensus 3.7%, previous 3.7%
  • Japan IP (Jan): consensus +2.8%mom, previous +0.9%mom
  • Germany Harmonized CPI (Feb, flash): consensus +1.2%yoy, previous +1.2%yoy
  • Germany Unemployment Change (Feb): consensus -10K, previous -28K
  • Italy Business Confidence (Feb): previous 97.7
  • Spain GDP (Q4): consensus -0.1%yoy, previous -0.1%yoy
  • Brazil IGP-M Inflation (Feb): previous +5.66%yoy
  • Also interesting: Euro Area Consumer Confidence (Feb, final), Japan Retail Sales (Jan), Canada CA Balance (Q4), Switzerland GDP (Q4), Brazil GDP (Q4), South Korea IP (Jan)

Friday, 28 February

  • US Fed speakers: Stein (FOMC voter), Kocherlakota (FOMC voter), Plosser (FOMC voter), Evans (non-FOMC voter)
  • US U. of Michigan Consumer Sentiment (Feb, final): consensus 81.2, previous 81.2
  • US Chicago PMI (Feb): consensus 56.4, previous 59.6
  • US GDP (Q4, 2nd est.): consensus +2.5%, previous +3.2%
  • Euro Area Harmonized CPI (Feb, flash): consensus +0.7%yoy
  • Italy Harmonized CPI (Feb, flash): previous +0.6%yoy
  • Spain Harmonized CPI (Feb, flash): consensus +0.3%yoy, previous +0.3%yoy
  • UK BoE speakers: Carney (governor)
  • UK GFK Consumer Confidence (Feb): consensus -7, previous -7
  • Canada GDP (Q4): consensus +2.7%qoq ann., previous +2.7%qoq ann.
  • Turkey Trade Balance (Jan): previous USD-9.9bn
  • South Africa Trade Balance (Jan): previous ZAR+2.8bn
  • Also interesting: Euro Area Unemployment Rate (Jan), Switzerland KOF Leading Indicator (Feb), Sweden GDP (Q4), India GDP (Q4), Thailand CA Balance (Jan)

The above in table format:

Andthe key issues for the coming week from SocGen


January durable goods are expected to contract 2.9% with the adverse weather as the main suspect. With the extreme weather conditions having continued well into February, it will be April before the first batch of economic data (hopefully) not subject to extreme weather reemerges.

This week is also set to see a markdown of Q4 GDP by 0.6pp from the previous release to 2.6%. We look for the February Chicago PMI to deliver the bright spot of the week with a modest gain to 59.8 (from 59.6).

Hopes for a taper pause at the 18-19 March FOMC have been encouraged by the weaker data. Analysing recent indications from Fed officials, we believe the threshold for a pause is high and it would take a significant revision to the outlook for the Fed to steer away from the indicated path. Our expectation remains that the Fed will stay the course and taper $10bn in March.


Tuesday will see the release of the EU Commission’s winter economic forecast and we expect the baseline forecast to remain that of a gradual and multi-speed recovery with euro area real GDP growth forecast for 2014 close to the previous number of 1.1% but with the risk that the previous 2015 number of 1.7% will see some downward revision. The more important changes, however, are likely to be to the inflation outlook, notably for 2014 where the EU Commission previously forecast 1.5%. The ECB will deliver new forecasts in March, but already in December staff projections set 2014 inflation at 1.1% (with real GDP forecast at 1.1%).

Also of interest will be the Commission forecasts on public finances. Evidence suggests significant fiscal drift in the periphery, something we expect Commission forecasts to confirm.


The flash February HICP is set to clock in at 0.6%, down from 0.7% previously. Much of this decline reflects slower energy inflation and the core should remain unchanged at 0.8%. Lower headline inflation combined with weak M3 growth rates will fuel the debate on ECB. In our opinion, it will take further disappointment in activity data to push the ECB to ease further in March.


The official February PMI release is set to echo the trends of the HSBC index with a decline to 50 from 50.5 previously. This is fully in line with our call for Chinese GDP growth of 6.9% in 2014, but still far removed from a hard landing scenario.


With the continued deceleration of real economic activity, Brazil is very close to recession territory. With inflation expectations still hovering around 6%, we expect the BCB to pursue further tightening and look for a rate hike of 50bp this week to 11% followed two more rate hikes of 25bp at each of the two subsequent meetings. The Selic rate is thus set to reach 11.5% in Q2.

Source: Goldman, BofA, SocGen