Below are the most important global events likely to impact currency and bond markets over the next week starting September 30th.
Investors are keeping an eye on the pace at which the Federal Reserve will cut interest rates following a large rate cut earlier this month, and the U.S. jobs report will likely be in the spotlight.
In Europe, all eyes will be firmly on euro zone inflation data as speculation grows that the European Central Bank could cut interest rates again in October.
In Asia, the focus will be on purchasing managers' surveys and inflation data, with a close eye on the possibility of further stimulus announcements from China.
us
After the Federal Reserve recently implemented its first major interest rate cut of 50 basis points in September, future job market statistics, especially the September non-farm payrolls numbers due out on Friday, will give investors a sense of how far they will go. There will be a lot of interest as they try to determine how quickly they will cut interest rates. Interest rates will go down from here.
Currently, U.S. money markets are pricing in almost 75 basis points of rate cuts at the Fed's remaining two meetings in 2024, in November and December. This suggests that one of them will be another half-point rate cut, although many analysts continue to expect the Fed to opt for the more common quarter-point rate cut.
“The Fed may be forced to act more aggressively on easing policy if the employment side of its mission is at risk,” Ellie Henderson, an economist at Investec, said in a note.
He said that while August's employment report “did not suggest an implosion”, the previous downward revision reinforced the impression that the labor market was still cooling.
Ahead of Friday, investors will be watching for further clues about the health of the job market, including the release of JOLTS' August jobs report on Tuesday, ADP private payrolls data on Wednesday, and weekly unemployment claims numbers on Thursday. .
Other data likely to attract attention will be ISM's September Activity Survey for manufacturing on Tuesday and services on Thursday, which will provide the latest snapshot of the state of the US economy. Although the service sector is expected to expand slightly, the manufacturing industry is expected to continue shrinking.
“Globally, the outlook for manufacturing remains one of weakness,” UniCredit Research analysts said in a note. “However, regional surveys such as the Empire State Manufacturing Survey show signs of recovery, with increases in new orders and shipments. is shown,” he said.
August durable goods order statistics are scheduled to be released on Thursday.
The U.S. Treasury auctions Treasury bills. No bond or bond auctions are planned.
eurozone
Speculation grows among analysts and investors that the European Central Bank may opt for a rate cut at its October meeting and a series of rate cuts, with all eyes set on preliminary euro zone inflation data for September to be released on Tuesday. are gathering.
This comes after provisional inflation data from France and Spain were significantly lower than expected.
Franziska Palmas, senior economist at Capital Economics, said in a note: “September inflation data from France and Spain almost point to a significant decline in headline interest rates across the eurozone…below the 2% target. This makes an October rate cut more likely than before.
Ahead of that, preliminary inflation figures from Germany and Italy on Monday will be closely watched for clues about the outcome for the eurozone as a whole. Eurozone producer price data for August, released on Thursday, will provide an indication of inflationary pressures in the pipeline.
Final purchasing managers surveys for France, Germany and the euro area will be released on Tuesday for manufacturing and Thursday for services, while France's August industrial production data will be released on Friday.
“European industrial data remains weak, but industrial production in France is likely to recover by 0.5% month-on-month in August, compared to a 0.5% month-on-month decline in July. It has been noted that production activity has increased in chemicals, “pharmaceuticals and wood/paper,'' HSBC economists said in a note.
Germany will auction 4 billion euros ($4.47 billion) of October 2029 federal bonds (bobbles) on Tuesday and 4.5 billion euros of August 2034 federal bonds on Wednesday. Spain will issue three regular bonds and one inflation-linked bond on Thursday. France also plans to auction 10 billion to 12 billion euros of long-term debt, including green bonds, on Thursday.
England
Final estimates for Britain's second-quarter gross domestic product (GDP) will be published on Monday, providing further details along with current account data.
HSBC economists said in a note that the announcement incorporates Blue Book 2024 amendments to GDP growth rates for 2021 and 2022, with new industry weightings for 2022 on quarterly growth rates for 2023 and 2024. He said that it may attract more attention than usual because it is applied.
“The final forecast is expected to remain unchanged from the preliminary figure of 0.6% compared to the previous quarter.''
Bank of England statistics on consumer credit, mortgage lending and mortgage approvals for August will also be released on Monday. Britain's final Purchasing Officers survey for September is due to be released on Tuesday for manufacturing and on Thursday for services.
The UK Debt Administration will auction off the October 2043 gold leaf on Tuesday and the July 2029 gold leaf on Wednesday.
Switzerland
Swiss inflation figures for September will be released on Thursday. These developments come after the Swiss National Bank cut interest rates again in its recent meeting and revised down its inflation outlook due to the strong Swiss franc.
scandinavia
Denmark will hold a bond auction on Wednesday, while Sweden will sell inflation-linked bonds on Thursday.
Poland
The National Bank of Poland will announce its interest rate decision on Wednesday, with the policy rate expected to remain unchanged at 5.75% again as economic growth remains relatively strong and inflation risks further rise, analysts said.
The focus will be on the central bank's indications about the timing of the expected start of interest rate declines into next year.
Economist Agata Urbanska Ginner said in a note that HSBC now expects a rate cut in March 2025, following comments from central bank officials and faster and deeper rate cuts by major central banks. said.
“If the government extends the electricity price freeze or the zloty increases, we see a risk of more front-loaded easing, with initial reductions exceeding 25 basis points. Conversely, we see strong wage growth. “With core inflation and strong consumption growth slowing down, the pace of cuts could lead to an economic downturn,” she said.
australia and new zealand
It will be a relatively quiet week for Australian bonds due to the lack of any major Reserve Bank-related events, but Tuesday saw the release of some key data that will shape the market discussion.
August retail sales will be the latest update on consumer demand, which is important for the outlook for interest rates.
High interest rates have hurt consumer spending this year, pushing down gross domestic product growth and increasing pressure on the RBA to cut interest rates by the end of the year.
A sharp drop in retail sales would further heighten concerns about an economic contraction in the third quarter.
Still, economists expect the income tax cut to support consumer demand and give the economy further momentum in the final months of the year.
The RBA has so far ruled out any short-term interest rate cuts, arguing that demand outstrips supply in the economy.
Japan
The week in Japan begins with August retail sales and industrial production data. On Tuesday, employment market data will be released, as well as the Bank of Japan's Tankan survey and summary of its opinions.
The main event was the Tankan survey, which measures Japan's business confidence. According to a survey of economists by data provider Quick, the Divergence Index, which measures sentiment among major manufacturers, is expected to remain unchanged at +13. Although the negative effects of production suspensions at some automakers have eased, the strong yen, slowing Chinese economy and natural disasters may have dampened optimism.
Economists at HSBC said industrial production was likely to decline in August, due in part to disruption from the typhoon. “Near-term manufacturing confidence, as reflected in the manufacturing PMI, appears to have stalled as an uncertain external environment and exchange rate movements are likely to weigh on the outlook,” it added. .
On Thursday, all eyes will be on Bank of Japan policy committee member Akira Noguchi, who is scheduled to give a speech to local leaders in southern Nagasaki prefecture. Noguchi, known as a dovish BOJ board member, opposed the July interest rate hike to 0.25%.
The Ministry of Finance plans to auction 2.6 trillion yen ($17.95 billion) in two-year government bonds on Monday and 2.6 trillion yen in 10-year government bonds on Thursday.
Potential political developments, such as the selection of the next prime minister's cabinet, may also come into focus.
China
China's holidays have been cut short this week, and official announcements and statistics will be in the spotlight even more than usual as policymakers take unprecedented and drastic measures to boost the economy.
President Xi Jinping's speech will be closely watched as a further signal of the next move in the policy pipeline.
On the data side, all eyes are on September's official and private PMI survey, which will be released in full on Monday.
China's official manufacturing PMI likely rose slightly in September, but continues to suggest a contraction in activity, according to a Wall Street Journal poll of economists. We expect it to be 49.3 compared to 49.1 in August as the real estate recession continues to weigh on us.
Private Caixin PMI indicators may look brighter after returning to growth in August. Caixin PMI compiled by S&P Global has a high weight of private companies and export-oriented companies.
Asia PMI
(Read More) Dow Jones Newswires
Eastern Time, September 29, 2014
