Key Events And Issues In The Coming Week

Last week, the main area of focus was the political situation in the US where Democrats and Republicans finally agreed upon a short term fix to reopen the government and extend the debt ceiling. The conclusion of this saw equity markets rally to all time highs in Europe and the US, with the USD continuing to slide as markets turn their attention to the Fed’s QE programme and push back expectations of when the central bank will begin to pull back on asset purchases.

With the government now reopen, attention will turn to the numerous data releases that were delayed but will now take place over the next two weeks, including the jobs report which is due on Tuesday. The release of this report will once again be used to help predict when the Fed will begin to taper QE however, recent comments from Fed members have suggested that October is likely to be too soon trim bond buying due to the lack of key macroeconomic data and the unknown economic impact as a result of the government closing for 16 days. Most recently, Fed’s Evans suggested it is not yet time to remove monetary accommodation and said he sees tapering postponed after the shutdown. Expectations on Tuesday are for an increase of 180K jobs for the month of September and the number will be used to evaluate the momentum of the economy prior to the shutdown of the government.

However next month’s report could be perceived as more important as it appears tapering is off the table this month, and the report will be an assessment of the damage done from the closure of numerous government departments.

Elsewhere next week, approximately 25% of companies in the S&P 500 are due to report their earnings, including McDonald’s, Microsoft, Caterpillar, Amazon and the best performing company in the index this year, Netflix. Subscriber additions will be one of the key figures for Netflix, with growth expected from Q2 due to seasonality, however there is not expected to be large growth from the same quarter in 2012. As a guide, of the approximately 100 companies in the S&P 500 to have reported this quarter, 69% have topped earnings expectations while only 53% have beaten revenue expectations, compared to four-year averages of 73% and 59% respectively.

In fixed income markets, supply dries up in the Eurozone this week following last week’s EUR 14.4bln of mostly shortdated supply, with only a EUR 2bln German Buxl auction on Wednesday. Not only is supply notably lower in the Eurozone but there are also numerous payments as France pays EUR 37bln in coupons and principals at the end of the week and Austria is due to pay out over EUR 13bln on Monday, which could support core fixed-income throughout the week. Furthermore, there is also a lack of conventional supply out of the US although the US Treasury is to issue USD 7bln in 30y TIPS on Thursday, as well as detailing next week’s supply in 2-, 5- and 7-year notes.

Monday, Oct 21

  • US Existing Home Sales (Sep): consensus -3.3%mom, previous +1.7%mom
  • Japan Trade Balance (Sep): consensus JPY-918.6bn, previous JPY-962.8bn
  • Mexico Retail Sales (Aug): previous +1.3%yoy
  • Also interesting: Taiwan Export Orders (Sep), Hong Kong CPI (Sep)

Tuesday, Oct 22

  • US Non-Farm Payrolls (Sep): Consensus 180K, previous 169K
  • US Unemployment Rate (Sep): Consensus 7.3%, previous 7.3%
  • US Richmond Survey (Oct): previous flat
  • Switzerland Trade Balance (Sep): previous CHF+1.86bn
  • Argentina Trade Balance (Sep): Consensus $+800mn, previous $+568mn

Wednesday, Oct 23

  • Canada MPC: consensus has policy rate unchanged at 1%.The BoC’s policy stance should remain very much on hold.
  • UK MPC minutes (Oct)
  • Euro Area Consumer Confidence (Oct, Flash): consensus -14.5, previous -14.9
  • US FHFA House Price Index (Aug): consensus +0.8%mom, previous +1.0%mom
  • South Africa CPI (Sep): Consensus +5.90%yoy, previous +6.40%yoy
  • Australia CPI (Q3): Consensus +1.8%yoy, previous +2.4%yoy
  • Taiwan IP (Sep): consensus +0.1%yoy, previous -0.7%yoy
  • Also interesting: Singapore CPI (Sep), New Zealand Trade Balance (Sep)

Thursday, Oct 24

  • Sweden MPC: Consensus have policy rate unchanged at 1%
  • Norway MPC: Consensus have deposit rate unchanged at 1.50%
  • Philippines MPC: Consensus have policy rate unchanged at 3.50%yoy
  • UK CB Carney speaks in London
  • Euro Area PMIs (Oct, Flash)
  • US Initial Jobless Claims (Oct 18): consensus 340K, previous 358K
  • US New Home Sales (Sep): Consensus 1.0%mom, previous +7.9%mom
  • US Kansas Fed Survey (Oct)
  • Mexico Real GDP (Aug): Previous +1.69%yoy
  • Also interesting: Spain Unemployment Rate (Q3), Honk Kong Trade Balance (Sep), Mexico Inflation (15 Oct)

Friday, Oct 25

  • Mexico MPC: Consensus expects a cut of 25bps in policy rate to 3.50%yoy. In addition, there is a probability of a more assertive 50bps cut-and-hold particularly if Thursday’s 1H October inflation prints significantly below expectations
  • Euro Area ECB Asmussen speaks in Milan
  • US Core Capital Goods Orders (Sep): consensus +0.7%, previous +1.5%
  • US Durable Goods Orders (Sep): consensus +2.0%, previous +0.1%
  • US Michigan Consumer Sentiment (Oct, final): consensus 75.0, previous 75.2
  • Japan core CPI (Sep): consensus +0.7%yoy, previous +0.8%yoy. Together with a series of food price hikes from October, we expect inflation to creep up further in the coming months.
  • Germany IFO Business Survey (Oct): consensus 108.0, previous 107.7
  • UK GDP (Q3): previous +0.7%qoq
  • Brazil CA Balance (Sep): Consensus $-2.9bn, previous $-5.5bn
  • Mexico Trade Balance (Sep): previous $-0.23bn
  • Also interesting: Philippines Trade Balance (Aug), Thailand Trade Balance (18 Oct), South Korea GDP (Q3), Singapore IP (Sep), Sweden Business and Consumer Surveys (Oct), Brazil FDI Inflows (Sep)

Key Issues in the Week Ahead:


On Tuesday, we finally get the long-awaited update on the US employment situation in September. We expect a strong reading of
240,000 net new jobs, well above the 148,000 average posted over the June-August period and consensus (180,000). We also expect the unemployment rate to fall to 7.1%. Such strong readings would again ignite a debate on an imminent start of US tapering, but given that the full impact of the recent shutdown may take some further time to emerge, we continue to see tapering in Q1 next year.


PMIs have recently shown mixed results, with some weakness apparent in manufacturing. This week’s flash PMIs in Germany, France and the euro area (out Wednesday) are likely to show similarly mixed results. For manufacturing, we expect onlya marginal improvement in line with consensus, while for services we expect a slight drop, in contrast to consensus which sees unchanged conditions. Overall, this should be in line with the expectations for a weak, uneven and fragile recovery in the euro area.

Source: Goldman, RanSquawk, SocGen


via Zero Hedge Tyler Durden

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