In a somewhat quieter week for economic news, this week's focus is on BoE and SNB policy meetings as well as on inflation releases in US, UK, China and others. Other releases of note include retail sales in the US, UK and China along with industrial production in US, Eurozone & China.
Key events:
- Tuesday: UK Inflation Data
- Wednesday: UK Labour Market Report (Jul/Aug)
- Thursday: Bank Of England Decision, SNB Decision, US CPI (Aug), Australian Labour Report (Aug), UK Retail Sales (Aug)
As BofA previews the week's main events, watch for BoE and SNB meetings:
After a surprise hike from the BoC last week, we turn the attention to the BoE and SNB. At the BoE meeting on Thursday, consensus expects a 7-2 vote to leave rates unchanged. This said, given the GBP depreciation since the August meeting, the rhetoric will be less dovish and with the potential to challenge current rate hike pricing upwards. Again, the relevance of such rhetoric is purely confined to market communication: no rate hike is expected before 2019.
Also the SNB holds the monetary policy meeting on Thursday: our economists do not expect a policy change. The economic rationale for very accommodative policy remains. In fact, GDP growth has been disappointing and nominal wage dynamics remain subdued while the ECB has not meaningfully changed its policy stance, yet.
…and inflation releases in the US, UK and others
Economists expect US inflation to increase to 0.2% m/m, while headline inflation is set to rise to 0.4%, given Hurricane Harvey's impact on gasoline prices. UK inflation is expected to ome in somewhat hot at 0.5% m/m.
A detailed breakdown of key events by day, courtesy of Deutsche Bank:
- Monday is fairly quiet data wise with only Italy’s industrial production for July and France’s business industry sentiment index due.
- On Tuesday, in the UK, we’ve got August CPI, PPI and RPI data. Across Europe, France’s 2Q total payrolls and Italy’s 2Q unemployment rate are also due. Over in the US, there is the NFIB small business confidence reading and July JOLTS job openings.
- Turning to Wednesday, Japan’s August PPI will be out in the early morning. The Eurozone’s July IP and 2Q employment stats are also due. Elsewhere, there is the final reading on August inflation for Germany. Over in the UK, the ILO unemployment rate for July, claimant count rate and jobless claims change stats are due. In the US, PPI for August, monthly budget statement and MBA mortgage applications stats are also due.
- For Thursday, there will be numerous data out in early morning, including China’s August IP, fixed asset investment and retail sales data along with Japan’s final reading for July IP. In the UK, the RICS housing market survey will be out in the early morning. Then there is the BOE rate decision, asset purchase target as well as the retail sales data for August. In France and Italy, the final readings on the August inflation are also due. Over in the US, the August CPI report along with initial jobless claims data are due.
- Finally on Friday, the Eurozone’s trade balance stats for July are due. Then the US will release numerous data including IP for August, empire manufacturing survey, August retail sales, business inventories as well as the University of Michigan’s consumer sentiment index.
Away from the data, on Monday, in the UK the House of Commons will hold its first vote on PM Theresa May’s flagship Brexit legislation. On Tuesday, China Premier Li Keqiang will host an economic roundtable in Beijing that will include heads of the IMF, the World Bank and WTO. Turning to Wednesday, the EU Commission President Jean-Claude Juncker will deliver the state of the union address in France. Then onto Thursday, there is the BOE and Swiss monetary policy decisions. The ECB governing council member Jens Weidmann will also speak in Frankfurt. Finally, on Friday, EU finance ministers will hold Ecofin and Eurogroup meetings, the agenda includes: deepening of economic and monetary ties, development capital-markets union, tax and customs matters.
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In North America, the US docket will be backloaded next week. Thursday will bring the release of August’s CPI data with analysts looking for a headline 1.8% YY against the 1.7% seen last time out, while the core metric is expected to edge down to 1.6% YY from 1.7%. Commerzbank notes that “gasoline prices have risen markedly,” while positing that the latest price cuts for some goods and services such as hotel accommodation are unlikely to be sustainable.” While the FOMC expects the down-tick in inflation to be transitory, it is worth noting that the bulk of the Committee's voting members have sounded more sanguine of the chances of an additional rate hike in 2017. Influential permanent voter Bill Dudley was the latest to weigh in on the matter, noting that " inflation is below our 2% objective, this allows room for patience."
August’s US retail sales dataset will hit on Friday with analysts looking for the headline to come in up 0.1% MM, while the control group is expected to rise by 0.3% MM against prior readings of 0.6% for both metrics. Higher gasoline prices will likely inflate nominal sales values although auto sales experienced a relatively large fall during the month.
Away from the economic backdrop, tech heavyweight (and Dow Jones Industrial Average constituent) Apple (AAPL) is holding an event on Tuesday evening, with expectations for an announcement of a new iPhone.
Other releases of note during the week: Tuesday US JOLTS Job Openings (Jul) Wednesday US PPI (Aug) Friday US Industrial Production (Aug) Manufacturing Production (Aug) Business Inventories (Jul) US University of Michigan Consumer Sentiment (Aug, P)
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Finally, here is Goldman with a full review of the key US events together with consensus estimates:
The key economic releases this week are the CPI report on Thursday and retail sales as well as industrial production on Friday. There are no scheduled speaking engagements by Fed officials this week.
Monday, September 11
- There are no major economic data releases.
Tuesday, September 12
- 06:00 AM NFIB small business optimism, August (consensus 104.9, last 105.2)
- 10:00 AM JOLTS job openings, July (consensus 5,975k, last 6,044k)
Wednesday, September 13
- 08:30 AM PPI final demand, August (GS +0.3%, consensus +0.3%, last -0.1%); PPI ex-food and energy, August (GS +0.1%, consensus +0.2%, last -0.1%); PPI ex-food, energy, and trade, August (GS +0.1%, consensus +0.1%, last flat): We estimate a 0.3% increase in headline PPI, reflecting stronger core producer prices and higher gas prices in the second half of the month. We expect a smaller 0.1% increase in the PPI ex-food, energy, and trade services category. In the July report, the producer price index declined against expectations for an increase, due to broad-based weakness in prices across core, energy, and trade services categories.
- 03:00 PM Monthly budget statement, August (consensus -$130.0bn, last -$42.0bn)
Thursday, September 14
- 8:30 AM CPI (mom), August (GS +0.36%, consensus +0.3%, last +0.1%); Core CPI (mom), August (GS +0.20%, consensus +0.2%, last +0.1%); CPI (yoy), August (GS +1.9%, consensus +1.8%, last +1.7%); Core CPI (yoy), August (GS +1.6%, consensus +1.6%, last +1.7%): We expect a 0.20% increase in August core CPI (mom sa), which would leave the year-over-year rate unchanged at 1.7%. Our forecast reflects stabilization in new and used car prices, a boost in the communications category from Verizon cell phone plan price hikes, and a rebound in lodging following an unexpected drop in July. We estimate a 0.36% increase in headline CPI, primarily reflecting higher energy prices. This would leave the year-over-year rate two tenths higher at 1.9%.
- 08:30 AM Initial jobless claims, week ended September 9 (GS 315k, consensus 300k, last 298k); Continuing jobless claims, week ended September 2 (consensus 1,950k, last 1,940k): We estimate initial jobless claims rose 17k to 315k in the week ended September 9, reflecting a rise in Texas filings related to Hurricane Harvey. Continuing claims – the number of persons receiving benefits through standard programs – edged lower in the week ending September 2, and consensus expects a 10k rebound.
Friday, September 15
- 08:30 AM Retail sales, August (GS -0.1%, consensus +0.1%, last +0.6%); Retail sales ex-auto, August (GS +0.3%, consensus +0.5%, last +0.5%); Retail sales ex-auto & gas, August (GS +0.1%, consensus +0.3%, last +0.5%); Core retail sales, August (GS +0.2%, consensus +0.3%, last +0.6%): We estimate core retail sales (ex-autos, gasoline, and building materials) rose 0.2% in August, reflecting some mean reversion following above-trend growth in the non-store category due to record sales on Amazon Prime Day and late-month hurricane disruptions. We estimate a relatively firm increase of 0.3% in the ex-auto component, which is likely to be boosted by gas prices, and we forecast a smaller increase of 0.1% in the ex-auto ex-gas component. Weaker unit auto sales should weigh on the headline measure, where we forecast a 0.1% decline.
- 08:30 AM Empire state manufacturing survey, September (consensus +18.0, last +25.2)
- 09:15 AM Industrial production, August (GS +0.1%, consensus +0.1%, last +0.2%); Manufacturing production, August (GS +0.5%, consensus +0.4%, last -0.1%); Capacity utilization, August (GS +76.8%, consensus +76.8%, last +76.7%): We estimate industrial production increased 0.1% in August, as a rebound in manufacturing production was likely partly offset by weakness in the utilities category. We expect manufacturing production rose 0.5%, reflecting a combination of stronger auto production and general improvement in other manufacturing categories.
- 10:00 AM Business inventories, July (consensus +0.2%, last +0.5%)
- 10:00 AM University of Michigan consumer sentiment, September preliminary (GS 94.5, consensus 95.0, last 96.8): We expect the University of Michigan consumer sentiment index to move down to 94.5 in the preliminary estimate for September after a rebound in August to 96.8. The Conference Board’s consumer confidence index strengthened in August to a new cycle high but our forecast for a moderate decline reflects the potential for news around Hurricane Harvey and Irma to weigh on responses.
Source: BofA, RanSquawk, Goldman, DB