The Week’s Key Events: European Inflation, US CapEx And Non-Stop Fed Speakers

Beyond the plethora of central bank speakers, market focus will concentrate on Eurozone inflation and US data releases, including durable goods, home sales, and the personal income and spending report on Friday. We also get China PMIs, Japanese CPI and industrial production, the RBNZ meeting and Brexit negotiations (4th). Additionally, there will be monetary policy meetings in Mexico, Colombia, Czech Republic, Thailand and Egypt.

Watch for Eurozone inflation and US data: In the Eurozone, Thursday’s Spanish and German inflation releases are followed by Eurozone CPI the next day. BofA economists expect the latter to come in at 1.6% y/y in September up from 1.5% in August, as strength in oil is balanced by weaker food prices. They maintain a bearish view on core CPI, with expectations unchanged at 1.2% y/y, and do not see a sustained wages upswing, instead special factors explaining recent data.

In the US the main data releases include PCE, home sales, durable goods, personal income and the final print for 2Q GDP. Core PCE is expected to increase 0.2% m/m in August while consensus expects new home sales at 588k. The impact of Hurricane Harvey and Irma prevented a recovery from July’s decrease. Durable goods orders are expected at 1.0% m/m in August, supported by aircraft and motor vehicles. Expected a final 2Q GDP print of 3.1% q/q saar. Finally, August personal income is expected to come in at 0.2%. Additionally, we get the latest Chicago PMI and U.Mich. sentiment prints.

Central bank speakers in the spotlight

Two to look out for are Draghi on Monday, presenting the ECB perspective on economic and monetary developments, and Yellen on Tuesday, speaking about inflation, uncertainty and monetary policy. There is no change expected during the RBNZ meeting.

A full summary of the key events in the coming week is shown in the following BofA chart below.

DB’s Jim Reid breaks down the week’s key event on a daily basis:

• Today starts with Germany’s IFO indicators on business climate, expectations and current assessment. Over in the US, there is the Chicago Fed National and Dallas Fed manufacturing activity index.
• Onto Tuesday, Japan’s services producer price index will be out early in the morning. Then in France, there is manufacturing and business confidence indicators. In the UK, finance loans for housing are due. Over in the US, there is the CB consumer confidence index, Richmond Fed manufacturing index, CoreLogic house price data for key cities as well as new home sales data.
• Turning to Wednesday, Italy’s July industrial orders along with confidence indicators on manufacturing, consumer and economic sentiment will be due. France’s consumer confidence and the Eurozone’s M3 money supply data are also due. Over in the US, there is durable and capital goods orders for August, pending home sales and MBA mortgage applications.
• For Thursday, Germany’s September CPI (with state based CPI data) and GfK consumer confidence readings will be due. For the Eurozone, there is a range of confidence indicators including: consumers, business climate, economy and industrial. Over in the US, there is the third reading of 2Q GDP, Core PCE and personal consumption. Elsewhere, the Kansas City Fed manufacturing activity index, August wholesale inventories and stats on continuing claims and initial jobless claims are also due.
• Finally on Friday, there will be numerous data out of Japan early in the morning, including: August national CPI, IP, jobless rate, retail sales and vehicle production. Further, China’s Caixin China PMI manufacturing index and UK’s GfK consumer confidence will also be out early. Then we have CPI for the Eurozone along with CPI & PPI for France and Italy. In Germany, there is unemployment change for  September. In the UK, there is the final reading of 2Q GDP along with mortgage approvals and money supply M4 stats. Over in the US, there is PCE core for August, personal income and spending, the Chicago PMI along with the University of Michigan consumer sentiment index.

Onto other events, this week we have quite a few central bank speakers.

• Today, on the political front, Germany’s Merkel will comment on the election results, while Japan’s Abe is expected to announce a snap general election. Elsewhere, the UK Labour party conference will begin, while the next round of Brexit talks between EU and the UK will also begin. Moving onto central bankers. In the US, there are three Fed speakers, including Dudley, Evans and Kashkari. In Europe, ECB’s Draghi, Mersch and VP Constancio will also speak, while the ECB’s Coeure will chair a panel in Frankfurt.
• On Tuesday, there is the BOJ Minutes for its July meeting. In the US, the Fed’s Mester and Bostic will speak. Further, Mrs Yellen will speak on inflation, uncertainty and monetary policy. Back in the Europe, UK’s PM May and EU president Tusk will meet to discuss Brexit, while France’s Macron will outline his plans to reform the EU.
• Turning to Wednesday, we have three more Fed speakers, including: Bullard, Brainard and Rosengren.
• Then onto Thursday, we have two more Fed speakers, including George and Fischer. In the UK, the BOE will hosts the “20 years on” independence conference from the government, with BOE’s Carney, Praet and Lautenschlaeger due to speak.
• Finally, on Friday, there is BOJ’s summary of opinions for its September meeting. In the UK, IMF’s Lagarde, BOE’s Broadbent and Draghi will speak at the BOE conference. Over in the US, the Fed’s Harker will speak and round out the Fed speakers for the week.

Finally, here is Goldman’s focus only on the US, in which it notes that the key economic releases this week are the durable goods report on Wednesday and the personal income and spending report on Friday. There are several speaking engagements by Fed officials this week, including a speech by Chair Yellen on Tuesday.

Monday, September 25

• 08:30 AM New York Fed President Dudley (FOMC voter) speaks: New York Federal Reserve President William Dudley will give a speech on workforce development at Onondaga Community College in Syracuse, NY. Audience Q&A is expected.
• 10:30 AM Dallas Fed manufacturing survey, September (GS, consensus 11.5, last 17.0)
• 12:40 PM Chicago Fed President Evans (FOMC voter) speaks: Chicago Federal Reserve President Charles Evans will deliver a speech on the US economy and monetary policy at the Economic Club of Grand Rapids Luncheon Meeting in Michigan. Audience and media Q&A is expected.
• 06:30 PM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Federal Reserve President Neel Kashkari will participate in a town hall event in Grand Forks, North Dakota. Audience Q&A is expected.

Tuesday, September 26

• 09:00 AM S&P/Case-Shiller 20-city home price index, July (GS +0.4%, consensus +0.2%, last +0.1%); We expect the S&P/Case-Shiller 20-city home price index to increase 0.4% in July, following a 0.1% increase in the prior month. The measure still appears to be influenced by seasonal adjustment challenges, and we place more weight on the year-over-year increase, which was 5.7% in June.
• 09:30 AM Cleveland Fed President Mester (FOMC non-voter) speaks: Cleveland Federal Reserve President Loretta will moderate a panel discussion on the global outlook at the NABE’s Conference on “Prospects for Growth: Reassessing the Fundamentals” in Cleveland, Ohio.
• 09:30 AM Chicago Fed President Evans (FOMC voter) speaks: Chicago Federal Reserve President Charles Evans will give opening remarks at the 17th Annual Chicago Payments Symposium.
• 10:00 AM New home sales, August (GS +2.0%, consensus +3.3%, last -9.4%): We estimate new home sales rebounded just 2.0% in August, following a 9.4% drop in the prior month. While the level of new home sales looks depressed relative to single-family building permits, we note that Hurricane Harvey may have disrupted sales activity in the South region.
• 10:00 AM Conference Board consumer confidence, September (GS 119.5, consensus 120.0, last 122.9): We estimate that the Conference Board consumer confidence index pulled back 3.4pt in September following a 5.6pt increase over the previous two months. Our forecast reflects sequential deterioration in higher frequency consumer surveys as well as scope for hurricane related weakness.
• 10:00 AM Richmond Fed manufacturing survey, September (consensus 13, last 14)
• 10:30 AM Fed Governor Brainard (FOMC voter) speaks: Federal Reserve Governor Lael Brainard will give a speech on labor market disparities at a conference hosted by the Board of Governors, which will feature research on labor market outcomes in Washington D.C. No Q&A is expected.
• 12:45 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will be giving a speech titled “Inflation, Uncertainty, and Monetary Policy” at the National Association for Business Economics’ annual meeting. Audience Q&A is expected. At the press conference following the FOMC meeting last week, Yellen downplayed the significance of the weak core inflation data.
• 12:30 PM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Federal Reserve President Raphael Bostic will give a speech on the economic outlook and monetary policy to the Atlanta Press Club. Audience Q&A is expected.

 
Wednesday, September 27

• 08:30 AM Durable goods orders, August preliminary (GS +0.7%, consensus +1.0%, last -6.8%); Durable goods orders ex-transportation, August preliminary (GS +0.5%, consensus +0.2%, last +0.6%); Core capital goods orders, August preliminary (GS +0.4%, consensus +0.2%, last +1.0%); Core capital goods shipments, August preliminary (GS +0.1%, consensus +0.5%, last +1.2%): We expect durable goods orders to rise 0.7% in the August report, reflecting a modest increase in commercial aircraft orders and continued firming in core measures. Orders commentary from industrial companies remains encouraging, and we estimate durable goods orders ex-transportation increased 0.5%. We also estimate firmer core capital goods orders (+0.4%). However, manufacturing production growth disappointed in August, suggesting scope for hurricane-related disruption to shipments.
• 09:15 AM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Fed President Kashkari will give welcoming remarks at the “Tribal Community Perspectives on Higher Education” event in Minneapolis.
• 10:00 AM Pending home sales, August (GS flat, consensus -0.5%, last -0.8%): Regional data we collect on contract signings were mixed in August, and we estimate pending home sales were unchanged in August, following a 0.7% decline in July. We have found pending home sales to be a useful leading indicator of existing home sales with a one- to two-month lag.
• 02:00 PM Fed Governor Brainard (FOMC voter) speaks: Federal Reserve Governor Lael Brainard will give a speech on labor market disparities, similar to her earlier remarks on Tuesday, at an event hosted by the Kansas City Fed on “Banking and the Economy: A Forum for Minority Bankers”.
• 07:00 PM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Federal Reserve President Eric Rosengren will give a speech at the Money Marketeers event in New York City.

Thursday, September 28

• 08:30 AM GDP (third), Q2 (GS +3.0%, consensus +3.1%, last +3.0%); Personal consumption, Q2 (GS +3.3%, consensus +3.2%, last +3.3%): We do not expect a revision in the second vintage of Q2 GDP report (previously reported at +3.0% qoq saar). While we also forecast an unchanged reading for personal consumption (+3.3% qoq ar), we view the risks as skewed to the downside on account of the negative revisions to June retail sales.
• 08:30 AM U.S. Census Bureau Advance Economic Indicators Report; Advance goods trade balance, August preliminary (GS -$65.5bn, consensus -$65.1bn, last -$63.9bn): We estimate the goods trade deficit widened $1.6bn to $65.5bn in August. Regional port statistics suggest a slowdown in container volumes, and we expect the hurricane to weigh more heavily on export activity.
• 08:30 AM Initial jobless claims, week ended September 23 (GS 255k, consensus 265k, last 259k); Continuing jobless claims, week ended September 16 (consensus 1,995k, last 1,980k): We estimate initial jobless claims fell 4k to 255k in the week ended September 23, reflecting a further rise in Florida filings related to Hurricane Irma that is more than offset by a further decline in Texas. Continuing claims – the number of persons receiving benefits through standard programs – rose sharply in the previous week, and could edge higher again reflecting storm effects.
• 09:45 AM Kansas City Fed President George (FOMC non-voter) speaks: Kansas City Federal Reserve President Esther George will give a speech on the US economy and monetary policy at a forum titled “Banking and the Economy: A Forum for Minority Bankers”.
• 10:00 AM Fed Vice Chair Fischer (FOMC voter) speaks: Federal Reserve Vice Chair Stanley Fischer will give a speech on “Developments in Central Banking” at a conference hosted by the Bank of England in London. Audience Q&A is expected.
• 11:00 AM Kansas City Fed manufacturing survey, September (last 16)

Friday, September 29

• 06:00 AM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Federal Reserve will give a speech at a conference jointly hosted by Philly Fed and the Journal of Economics and Business on “Fintech: The Impact on Consumers, Banking, and Regulatory Policy”. Audience and media Q&A is expected.
• 8:30 AM Personal income, August (GS +0.3%, consensus +0.2%, last +0.4%); Personal spending, August (GS +0.2%, consensus +0.1%, last +0.3%); PCE price index, August (GS +0.26%, consensus +0.3%, last +0.1%); Core PCE price index, August (GS +0.16%, consensus +0.2%, last +0.1%); PCE price index (yoy), August (GS +1.47%, consensus +1.5%, last +1.4%); Core PCE price index (yoy), August (GS +1.34%, consensus +1.4%, last +1.4%): We estimate a 0.3% increase in August personal spending (nominal, mom sa), reflecting weakness in retail spending and utilities consumption likely related to Hurricane Harvey, partially offset by higher gas prices. Based on details in the PPI and CPI reports, we estimate that the core PCE price index increased 0.16% month-over-month in August, or +1.34% from a year earlier. Additionally, we expect that the headline PCE price index gained 0.26% in August, or +1.47% from a year earlier. We estimate a 0.3% increase in personal income.
• 09:45 AM Chicago PMI, September (GS 59.5, consensus 58.7, last 58.9): Incoming regional manufacturing surveys have been better than expected in September, and we expect the Chicago PMI to rebound 0.6pt to 59.5 in the September report after a flat reading in July.
• 10:00 AM University of Michigan consumer sentiment, September final (GS 95.1, consensus 95.3, last 95.3): We expect the University of Michigan consumer sentiment index to edge down 0.2pt to 95.1 in the final September estimate, reflecting sequential softness in higher frequency consumer surveys. The preliminary report’s measure of 5- to 10-year ahead inflation expectations rose one-tenth to 2.6% in the preliminary reading, the top of its 12-month range.

Source: BofA, DB, Goldman

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