With better US labor market data, the key event in the upcoming week could well be the Yellen nomination hearing in the Senate Banking Committee. Yellen will likely deliver brief prepared remarks followed by questions from members of the committee. Yellen is expected to be relatively circumspect in discussing potential future Federal Reserve policy decisions in the hearings. Nonetheless, the testimony may help clarify her views on monetary policy and the current state of the economy. Yellen has not spoken publicly on either of these topics since the spring of this year. In addition to the nomination hearing, there will be a series of Fed speeches again, including one by Chairman Bernanke.
The pure macro data schedule is fairly quiet with the exception of a flurry of GDP releases in the second half of the week, including in Japan, the Eurozone, France, Germany, Czech Republic, Hungary, Italy, Poland, Malaysia, Peru and Hong Kong. In this list the first two will be the most important. From an FX point of view we will have a look at the US trade balance, though it is unlikely that there has been much change compared to last month’s deficit.
Monday, Nov 11
- Israel MPC minutes
- India Trade Balance (Oct): previous $-6.8bn
- Hungary Trade Balance (Sep, prelim.): previous EUR+613mn
- Malaysia IP (Sep): consensus 2.0%, previous +2.3% yoy
- Mexico IP (Sep): consensus -0.5% yoy, previous -0.7% yoy
- Also interesting: Norway CPI (Oct), Czech Republic CPI (Oct)
Tuesday, Nov 12
- Indonesia MPC: consensus unchanged at 7.25%
- Fed speakers: Kocherlakota (FOMC non-voter), Lockhart (FOMC non-voter)
- ECB speakers: Asmussen, Nowotny
- Germany Harmonised CPI (Oct, final): previous +1.3%yoy (Flash)
- UK CPI (Oct): consensus +0.3%mom, previous +0.4%mom
- India CPI (Oct): previous +9.8%yoy
- India IP (Oct): previous +0.6% yoy
- Israel Trade Balance (Oct): previous $1.8bn
- Poland Current Account Balance (Sep): consensus EUR-823mn, previous EUR-719mn
- Czech Republic Current Account Balance (Sep): consensus CZK -1.0bn, previous CZK-14.24bn
- Also interesting: UK RICS Housing Market Survey (Oct), Italy Harmonised CPI (Oct, final), Sweden CPI (Oct), Hungary CPI (Oct, final)
Wednesday, Nov 13
- Japan Machinery Orders (Sep): consensus -2.0%mom, previous +5.4%mom
- South Korea MPC: We and consensus expect the repo rate to remain unchanged at 2.5%
- Fed speakers: Fisher (FOMC non-voter), Pianalto (FOMC non-voter), Chairman Bernanke
- UK Bank of England Inflation Report (Nov)
- Hungary MPC minutes
- US Federal Budget Balance (Oct)
- UK Unemployment (Sep): consensus 7.6%, previous 7.7%
- Euro Area IP (Sep): previous -2.1%yoy
- Turkey Current Account Balance (Sep): consensus $-2.73bn, previous $-2.0bn
- Indonesia Current Account Balance (Q3): last -4.4% of GDP
- Also interesting: Spain Harmonised CPI (Oct, final), Brazil retail sales (Sep)
Thursday, Nov 14
- Fed speakers: Plosser (FOMC non-voter), Janet Yellen testifies in front of the Senate Banking Committee ahead of her nomination to lead the Federal Reserve.
- Japan Real GDP (Q3, adv.): previous +3.8%. Among the demand components, public fixed investment and housing investment are expected to accelerate, but consumption is likely to dip on weather effects. Exports have also slowed, where we expect net export contribution to turn negative for the first time in three quarters.
- US Initial Jobless Claims: consensus 330k, last 336k
- US Trade Balance (Sep): consensus -$39.0bn, last -$38.8bn
- US Unit Labour Costs (Q3, prelim.): consensus +0.4%, last flat
- US Business Inventories (Sep): consensus +2.0%, last +2.3%
- US Empire Manufacturing (Nov): consensus +5.0, last +1.5
- Euro Area Real GDPs (Q3): consensus +0.1% qoq, previous 0.3% qoq
- UK Retail Sales ex-Autos (Oct): consensus -0.1%mom, previous +0.7%mom
- Also interesting: Japan Reuter Tankan (Nov), Czech Republic Real GDP (Q3), Hungary Real GDP (Q3), France Harmonised CPI (Oct), Canada New Housing Price Index (Sep)
Friday, Nov 15
- US Empire Manufacturing Index (Nov): Consensus +5.0, last +1.5
- US IP (Oct): consensus +0.2% mom, last +0.6%
- Euro Area Harmonised CPI (Oct, final): After the weak preliminary reading and the ECB response the final numbers are worth a look to see if the initial weakness has been confirmed.
- Malaysia GDP (Q3): consensus +4.7%, previous +4.3%
- Also interesting: Argentina Real GDP and CPI (Oct), Ukraine Trade Balance (Sep), Malaysia Real GDP (Q3), Israel CPI (Oct), Poland Core Inflation (Oct)
In table format from SocGen:
And again from SocGen, here are the top issues for the week ahead:
EURO AREA RECOVERY SHORT-LIVED
GDP reports for the third quarter from France, Germany and Italy are in our view likely to indicate that economic growth in the euro area as a whole remains elusive. After the 0.3% qoq expansion in Q2 for the euro area as a whole, we expect stagnation in Q3. To a considerable extent this will be the reflection of a renewed and sharp contraction in Italy, but slower growth will also be driven by stagnation in France and weaker growth in Germany, the euro area’s supposed growth engine that has consistently fallen short of actually fulfilling that role.
JAPAN GDP TO RAISE DOUBTS ON ABENOMICS
Although economic growth in Japan will almost certainly have been notably stronger than in the euro area, Q3 data on Thursday are nevertheless expected to point to a sharp slowdown from the first half of the year when GDP expanded at an average quarterly annualized pace of 3.9%. We expect growth of a mere 2.0% annualized (0.5% qoq), and that is above consensus (0.4% qoq). The marked slowdown is likely to give rise to doubts that Abenomics provided only a short-term fillip to the Japanese economy. We disagree with this interpretation, and expect GDP to re-accelerate in Q4 and Q1, ahead of the April 2014 consumption tax hike. That said, the crucial so-called ‘third arrow’ of structural reforms to boost Japan’s growth potential remains vague. Mr Abe has made the right noises, for example his Wall Street Journal editorial about Womanomics, and has made some promising moves, such as entering into various free trade negotiations which will require opening up key sectors of the Japanese economy, but few concrete proposals have been formulated, let alone implemented. Markets will not be patient forever.
CHINA CP PLENARY MEETING TO STRESS REFORM
On Tuesday China’s Communist Party will conclude its plenary meeting with a statement that is likely to stress continued structural reforms especially in the area of financial market and corporate sector liberalisation, and perhaps fiscal reforms and changes to the Hukou system. However, detailed reform proposals are unlikely to be specified, and clarity about the content of the behind closed doors discussions is only likely to emerge when new policies are presented and implemented in coming weeks and months. Meanwhile, latest indicators suggest the economy has maintained solid momentum in Q4, but beyond that we continue to expect slowing growth.
Source: Goldman, Socgen
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