US Consumer Price Index m/m
- Moon: Swiss CPI (December), Eurozone retail sales (November), Sentex (January), Japan’s Tokyo CPI (December), China’s trade balance (December)
- Tuesday: STEO environmental impact assessment; German Industrial Production (November), US NFIB (December).
- married: CNN Republican Debate. Norwegian CPI (December), Chinese CPI/PPI (December), Chinese M2 (December).
- Thursday: US CPI (December), IJC (released January 5), Japanese Current Account (November).
- Friday: UK GDP (November), US PPI final demand (December), Canadian housing starts (December).
- He sat down: Taiwan presidential/parliamentary elections.
Note: Previews are listed in order of the day
Swiss Consumer Price Index (Monday):
The November release was significantly cooler than expected at 1.4% y/y (1.7% expected), even with the impact of rental rate increases from mid-2023. However, the SNB’s December forecast (presented after the November data) It expects inflation to rise to an average of 1.8% during the first quarter of 2024. Although it is crucial that inflation is within the 0-2% target range for the entirety of 2024. December data will be evaluated to see if November’s decline at – 0.2% will continue, a decline that was driven by lower fuel. Hotel and holiday prices, the bulk of which come from imported products. While the rental rate remains the key point for those monitoring the Swiss CPI, the country’s statistics office only updates this report quarterly and is due to release the CPI for February, which is scheduled to be released about two weeks before the announcement. SNB policy in March.
China Trade (Monday):
There are currently no forecasts for the December trade balance (previous: $35.39 billion) and import/export details (previous: -0.6% and +0.5% respectively). The data will be considered to diagnose external and domestic demand. Regarding the previous month’s metrics, exports in November saw a surprise increase (in USD) of 0.5% year-on-year (expected -1.1%), ending a six-month streak of consecutive declines. The unexpected strength in exports is due to China’s increasing share of the global export market, despite an overall decline in global trade volume. Key factors include the shift towards electric vehicles, although some offices point out that Chinese exporters face challenges such as lower profit margins and limited scope for further price cuts, which could impact export performance in 2024. Imports last month remained weak and continued to decline. Raising concerns surrounding Chinese domestic demand. .
Norwegian Consumer Price Index (Wednesday):
The December reading is expected to continue the increasingly downward trend in the Norges Bank’s main measure of CPI inflation, which registered 5.8% year-on-year in November, a figure that matched the January 2023 reading but was significantly lower than the 2023 peak of 7.0. % since June. The December monetary policy announcement from the Norwegian Bank saw a somewhat unexpected rise to a potential peak of 4.50%, although high inflation and the downside of the Norwegian krone were cited as potential drivers of further tightening. For reference, the bank’s Q4 2023 CPI-ATE forecast is 5.83%, which is roughly in line with the November figure. Regarding December, SEB expects the index to register 5.6% year-on-year, and the expected modest upward surprise did not occur in this series.
Inflation in China (Wednesday):
The previous month’s release saw inflation reading below expectations across the board, with YoY CPI at -0.5% (expected -0.1%), Mo/Mo at -0.5% (expected -0.1%), and PPI on Annualized at -0.5% (expected -0.1%) 3.0% (experienced -2.8%). The decline in consumer price inflation was driven by a further decline in food prices, from -4% to -4.2% y/y, and a decline of 0.5% m/m, after accounting for seasonality. Energy prices also fell by 2.7% month-on-month, contributing to the contraction. Core inflation, excluding food and fuel, remained steady at 0.6% in November. Analysts cited by SCMP expect Chinese inflation to remain low in the near term, but do not expect a deflationary spiral, and note that core inflation is likely to rise in the first half of 2024 due to higher policy support, which could boost domestic demand and Services inflation. The SCMP also assumes that food and energy price deflation is expected to ease due to changing base effects, with CPI inflation expected to average 1% in 2024, up from 0.3% so far this year.
US Consumer Price Index (Thursday):
The US headline CPI is expected to rise +0.2% m/m in December (previous +0.1%), while the core rate is expected to rise +0.3% m/m, matching the rate seen in November. Traders will be looking to see if there is any return to price pressures that could impact the market’s dovish view on the Fed’s interest rate path (currently, the market has set six rate cuts of 25 basis points in 2024, but… FOMC forecast for December sees only three cuts.) The November report saw headline inflation continuing to decline, although analysts at JPM noted that core inflation remains steady at a higher level than the Fed wants, as higher wages in the services sector continue to add an element of stability. After the November data, JPMorgan said it appears less likely that the Fed will implement a rate cut at its next March 2024 meeting. This week’s issue of The Economist suggests that the recent decline in inflation may be a “false signal.” He points out that while prices for goods have fallen, prices for services continue to rise, with many rising more quickly than the pre-pandemic trend, while house prices have seen a rebound in 2023 (with mortgage rates now lower, that leaves home risks At stake). Prices could rise further), while easing financial conditions as the Fed cuts interest rates would also fuel renewed price pressures. “If inflation rebounds, the Fed will have no choice but to keep interest rates high, perhaps reviving fears of a recession that have all but faded away,” The Economist said.
US corporate earnings (Friday):
According to FactSet, fourth-quarter earnings growth for the S&P 500 is expected to reach +2.4%, marking the second consecutive quarter of annual growth for the index. He also notes that these estimates are declining as we approach Q4 reports: In September, analysts expected the S&P 500’s earnings growth rate to reach +8.1% year over year. Ahead of earnings season, FactSet data showed that 72 S&P 500 companies issued negative EPS guidance, and 39 companies issued positive EPS guidance. Looking ahead, a long-term poll by Reuters showed that analysts expect US corporate profits to improve at a stronger rate this year as inflation and interest rates decline, although concerns surrounding slowing economic growth cloud the outlook. The Reuters poll says analysts expect S&P 500 earnings to rise +11.1% this year after +3.1% in 2023. But analysts want to see strong earnings growth to support the stock’s lofty valuations, which currently stand at about 19.8 times 12-year forward earnings estimates. A month. For the S&P 500, well above the long-term average of about 15.6 times. “For the market to trade at current levels, it requires an earnings call to show strong growth next year,” Wells Fargo said. Accordingly, analysts will look to the fourth-quarter earnings report for signs of how rising interest rates will impact the economy and corporate earnings. It will also be interesting to see how analyst opinions evolve after Q4 earnings, with some predicting that Q1 earnings will weaken at a rapid pace.
UK GDP (Friday):
Expectations are for GDP to rise by +0.1% m/m in November (versus the 0.3% contraction seen in October). Despite consensus predicting an unchanged outcome, the aforementioned statement declined in every sector, with the services sector being the contributor. This, combined with a negative third-quarter GDP reading, has raised some concerns about a potential recession in the second half of 2023. For the November release, analysts at Investec noted that their forecast of +0.2% would be “smaller.” However, such a recession would be “as moderate as it gets.” Regarding the factors driving the recovery in production, the office points to strong growth in retail sales volumes, the absence of strikes on the National Health Service and cold weather which has led to Due to increased heating needs, the upside could be limited by the pressure on households and businesses from rising interest rates. Beyond the upcoming release, Investec expects lackluster activity to continue in the first quarter before later recovering as inflation declines. From a monetary policy perspective, it is likely that The upcoming release will have little impact on market prices for the Bank of England, with the MPC more concerned about services inflation and wage growth. However, a particularly weak release could prompt markets to advance current expectations for the Bank of England’s first interest rate cut from June to May. As a point of reference, markets are currently pricing in cuts of around 120 basis points by the end of the year.
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