Next week, all eyes will be on the inflation readings from US, UK and New Zealand, as the markets continue to digest tightening actions from the FOMC and BoE, while the blowout US jobs report boosted expectations for further 25 bp increases in March and May. Central banks acknowledged that there is a lot of uncertainty around the inflation outlook and that they need to see more evidence that inflation will slide. Fed funds futures inched slightly higher, continue to reflect a rate cut by the end of the year despite FOMC protestations. The data calendar also features labour data from Australia, which is key for the future of RBA monetary policy, Japan’s latest GDP report and rate decisions from China.
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Monday – 13 February 2023
Consumer Price Index (CHF, GMT 07:30) – The inflation for January is expected at 0.3{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} m/m from -0.2{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} m/m.Gross Domestic Product (JPY, GMT 23:50) – GDP for Q4 is expected high at 0.5{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} q/q and headline at 2.0{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} y/y from -0.8{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} y/y.
Tuesday – 14 February 2023
Consumer Price Index Expectations (NZD, GMT 02:00) – The Inflation Expectations released by the Reserve Bank of New Zealand measures business managers´ expectations of annual CPI 2 years from now.Average Earnings (GBP, GMT 07:00) – Average Earnings including bonus for December are expected to increase 6.2{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} from 6.4{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} (3Mo/Yr). The ILO unemployment rate is expected to steady to 3.7{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d}.Gross Domestic Product (EUR, GMT 10:00) – GDP for Q4 is expected unchanged at 0.1{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} q/q and headline at 2.1{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} y/y from 1.9{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} y/y.Consumer Price Index and Core (USD, GMT 13:30) – The US inflation in October is expected grow by 0.4{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} for the headline and 0.3{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} for the core in January, after respective December figures of -0.1{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} and 0.3{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d}. CPI gasoline prices look poised to climb 3{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} in January. We expect dissipating upward pressure on core prices into 2023 as disruptions from global supply chain bottlenecks and the war in Ukraine subside. As-expected January CPI figures would result in a pullback in the y/y headline rise to 6.2{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} from 6.5{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} in December, versus a 40-year high of 9.1{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} in June. A sharp moderation in y/y gains for all the inflation gauges could be seen through early-2023 that will trim pressure on the Fed to tighten monetary conditions.
Wednesday – 15 February 2023
RBA Governor Lowe Speech (AUD, GMT 01:00) Consumer Price Index and Core (GBP, GMT 07:00) – UK inflation is expected to ease for January on a monthly basis to -0.4{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} m/m from 0.4{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} m/m, with headline pulling back to 10.3{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} y/y from 10.5{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} y/y. The UK seems that it has escaped recession in 2022. Data for activity in the last quarter of 2022 showed GDP unchanged compared to the third quarter. After a -0.2{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} q/q contraction in Q3 that means for now the UK economy managed to escape a technical recession. The growth outlook is also looking better than anticipated at one point, but the BoE’s projection still see activity down this year and next.Retail Sales (USD, GMT 13:30) – January US retail sales is forecasted to grow by 1.4{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} for the headline and 0.7{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} for the ex-auto measure, after December declines of -1.1{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} for both headline and core. Energy-led price declines have depressed nominal sales since Q2.Industrial Production (USD, GMT 14:15) – Industrial production is projected to rebound 0.7{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} in January after a -0.7{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} December drop. In January manufacturing is anticipated to rise by 1.6{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d}, mining at by 1.0{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d}, but utilities to plunge by -6.0{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} from a record high. We expect the vehicle assembly rate to pop to 10.4 mln from 10.0 mln, with continued restraint from ongoing semiconductor shortages. Mining output should continue to trend higher, though the climb in the Baker-Hughes rig count reversed course in January.
Thursday – 16 February 2023
Employment data (AUD, GMT 00:30) – Australian employment change should grow by 15K from the contraction seen in December at -14.6K, while the unemployment rate should be unchanged at 3.5{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} m/m. According to RBA, wages are expected to climb above 4{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} in the middle of the year and peak at 4.25{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} later in 2023. The report stressed that “inflation in Australia is too high and is broadly based”. It added that “given the current tightness in the labor market there are upside risks to wages growth.” “Price and wage-setting behavior could become more sensitive to strong demand and high inflation”. The forecasts are based on a cash rate that peaks at 3.75{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} in the second half of this year, before declining to 3{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} by mid-2025. In its latest meeting, RBA increased its official rate to 2.35{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} amid inflation fears.Building Permits & Housing Starts (USD, GMT 13:30) – Housing starts are expected to fall -1.4{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} to a 1.388 mln pace in January from 1.382 mln in December, versus a 2-year low of 1.377 mln in July of 2022. Permits are expected to rebound to 1.360 mln after a dip to a 2-year low of 1.337 mln in December. Pending home rebounded 2.5{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} in December after a -2.6{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} dip in November to a 3-year low.PPI & Philly Index (USD, GMT 13:30) – The January PPI figures is forecasted to 0.5{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} for the headline and 0.2{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} for the core, following respective swings of -0.5{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} and 0.1{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} in December. Overall, the massive PPI climb since the start of 2021 exceeded the uptrend in headline and core CPI data, and both sets of gains have chased outsized increases in the trade price measures. The Philly Fed index is expected to improve to -6.0 from -8.9 in January. The various producer sentiment measures have moderated substantially from remarkably lofty peaks for most measures in November of 2021, with many of the various component categories now in contraction territory. Producers are facing big headwinds from elevated interest rates and recession fears but have benefited from the need to rebuild inventories into 2023 following a prolonged period of supply chain disruptions.RBA Governor Lowe Speech (AUD, GMT 22:30)
Friday – 17 February 2023
Retail Sales (GBP, GMT 07:00) – January Retail Sales are expected to contract by -0.5{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} m/m from -1{1ee39e3acc10434a15a890fd51cf667ef170c7688a3ed9fdd4a0306036aeb20d} m/m.
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Andria Pichidi
Market Analyst
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