2023-10-07 14:58:39
Next week presents a make-or-break moment for expectations of a US Federal Reserve interest rate hike; The main event will be the September inflation report, which will be released on Thursday.
Both headline and core inflation are expected to record monthly increases of 0.3 percent in September, while headline inflation will fall year-on-year to 3.6 percent. The basic annual reading will decline from 4.3 percent to 4.1 percent. In September, gas prices were relatively stable, car prices rose, and some basic services were resilient, according to the Market Plus report.
US job growth increased in September, indicating that the labor market remains strong enough to prompt the Federal Reserve to raise interest rates once more this year, even though wage growth is trending toward moderation.
The Ministry of Labor said in its jobs report issued (Friday), which receives great attention, that non-agricultural jobs increased by 336,000 jobs last month. August data was also revised upward to show the addition of 227,000 jobs instead of the previous 187,000.
Economists polled by Archyde.com expected jobs to increase by 170,000. Estimates ranged between 90,000 and 256,000.
The increase came more than expected despite the preliminary jobs data for September tending to the lower level due to issues related to adjusting for seasonal factors related to the return of workers in the education sector to their jobs following the summer vacation.
The current strength of the labor market, 18 months following the US Federal Reserve began raising interest rates, indicates that monetary policy may remain tight for some time.
The unemployment rate remained unchanged at an 18-month high, 3.8 percent.
As for next week, before Wall Street closes in on Thursday’s CPI release and weekly jobless claims, traders will pay close attention to Wednesday’s Producer Price Index release.
On Friday, the University of Michigan sentiment report will be closely watched, with a focus on near-term inflation expectations.
Last month, “consumers” saw prices rise by 3.2 percent in 12 months, the lowest level since 2021.
Clarity is expected on who will be the front-runner to become Speaker of the House, who will play a crucial role in avoiding a federal government shutdown in mid-November.
Earnings for banks, such as JPMorgan, Wells Fargo, BlackRock, and Citigroup, will begin publication on Friday. Many seem to expect the financials to highlight a much weaker consumer given the rise in delinquencies and the depletion of excess savings.
Federal Reserve officials will participate in 14 calls throughout the week, most of which will speak following the inflation report.
Euro-zone
A very quiet week for the Eurozone, with European Central Bank President Christine Lagarde likely among the few highlights. The release of the ECB meeting minutes on Thursday is likely to be the main event of the week given the potential debate over whether to raise interest rates or keep them at their current level.
United kingdom
Next week’s UK GDP data for August is unlikely to make much of a difference at the Bank of England’s November meeting, for two reasons: One is that it has been unhelpfully choppy lately, and this appears not to be entirely (or even partly) related to the holiday. Additional drains in May. The unusual rise in manufacturing in June was partially reversed in July, and the increasing impact of strikes on the numbers also occurred.
Russia
Wednesday’s inflation data is the highlight release next week, and is once once more expected to rise, this time to 5.8 percent. Pressure will mount on the central bank to continue raising interest rates as inflation rises at that rate, and the ruble remains near its lowest levels in 18 months.
China
China’s financial markets will return to work following the Golden Week holiday. On Wednesday, monetary supply data, new yuan loans, and auto sales data for September will be released.
Key consumer and producer price inflation data for September will be released on Friday, and is expected to rise to 0.2 percent year-on-year from 0.1 percent in August. This would be the second straight month of year-over-year growth in consumer prices.
This is a similar forecast to the producer price index; Its negative growth is expected to shrink slightly to -2.4 percent on an annual basis from -3 percent in August. This will be the third straight month of slowdown in product shrinkage.
Trade balance data for September will also be released on Friday, and the trade surplus is expected to expand slightly to $70 billion from $68.36 billion. Consensus for export growth is almost unchanged at -8.3 percent y/y versus -8.8 percent in August, while import growth is expected to contract less strongly to -6 percent y/y from -7.3 percent in August.
Japan
On Tuesday, current account data will be released which is expected to show an additional surplus of 3.091 trillion yen from 2.772 trillion yen.
Bank lending and producer price index data for September will also be released on Wednesday. Bank lending is expected to fall to 2.4 percent year-on-year from 3.1 percent in August. This would be the lowest growth rate since September 2022. The producer price index is expected to slow further in September to 2.3 percent year-on-year from 3.2 percent in August.
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