It will be a busy week filled with a wide range of economic indicators, lots of Fed speak, and earnings season heats up. Wall Street will now not just fixate on inflation data, but also on how quickly the economy softens. Traders will pay close attention to the Empire manufacturing index, retail sales, PPI, industrial production, NAHB housing market index, weekly jobless claims, and existing home sales data.
Fed speak will happen all week long and expectations are high for more members to signal they are comfortable with downshifting their tightening pace again.
Earnings season continues with more bank earnings, the airlines report, Procter & Gamble (NYSE:PG) earnings will include insights on pricing trends, and Fastenal (NASDAQ:FAST) reports.
EU
The run-up to the February ECB meeting is going to bring immense focus on incoming data and central bank speak, with investors becoming increasingly hopeful that global interest rates may nearly be peaking and perhaps not as high as feared even a couple of weeks ago. On the former, the standout release will be the final inflation number for December while the ZEW surveys will also be of interest.
On the latter, the ECB minutes will be pored over, as will comments from President Christine Lagarde and colleagues towards the end of the week. Markets are still pricing in three 50 basis point hikes at the upcoming meetings but that could be pared back.
UK
So it turns out the UK may have just about avoided a technical recession in 2022 thanks to the World Cup. The GDP data for November showed unexpected growth which, when combined with the 0.5% gain in October makes it unlikely that the economy will have fallen into a recession after all, barring surprise downward revisions or a shocking number in December. Perhaps Gareth Southgate will get that knighthood after all.
Ultimately, it makes no difference. The spending that boosted November’s number will probably simply be shifted from elsewhere. The cost-of-living crisis is squeezing the economy and will likely further intensify this year, potentially tipping the economy into recession, anyway. We’ll get a lot more data this week including unemployment, inflation, and retail sales.
Russia
No data or events are scheduled for next week so the focus will remain on developments in Ukraine.
South Africa
The currency has stabilized after tumbling last week amid speculation about the changing of the SARB mandate. While the ANC hasn’t given up hope, any changes are unlikely, for the foreseeable future, anyway. That leaves investors to focus on the inflation and retail sales data next Wednesday, the first of which still sits above the SARB 3-6% target range.
The CBRT meets next week and frankly, I have no idea what they will do. Official inflation fell from 84.39% to 64.27% in December which the central bank could look to capitalize on, despite previously indicating it was done with its latest easing cycle.
Switzerland
The World Economic Forum takes place in Switzerland next week and on Friday, SNB Chair Thomas Jordan will be among many central bankers throughout the week making an appearance.
All eyes will be on China this week. To kick off the week, the PBOC is expected to cut its one-year MLF rate by 10 basis points to 2.65%. On Tuesday, we see the impact Covid had on GDP, industrial production, retail sales, and fixed asset investment. Fourth quarter GDP is expected to drop from 3.9% to 1.5%, while December’s retail sales plunge from -5.9% to -12.0%. At the end of the week, China is expected to cut its loan prime rates.
Much attention will remain on China’s Covid situation and whether the economic outlook continues to brighten with improving reopening trends.
India
Inflation has been falling and that is starting to make some traders doubt that the RBI will need to continue to raise rates. The upcoming week contains wholesale price data that is expected to show disinflation trends remain. Trade data is also due.
Australia & New Zealand
China’s reopening momentum has been good news for both Australia and New Zealand. China-Australia relations are expected to return to a healthy and stable development, with China’s ambassador Xiao Qian recently commenting positively on China-Australia relations. The relationship has been constructive so far. The main economic release for Australia will be the December employment report. Hiring is expected to slow down from 64,000 to 15,000.
For New Zealand, traders will pay close attention to the REINZ House Sales data, Food prices, and manufacturing PMI.
The Bank of Japan’s monetary policy decision is expected to keep rates on hold. Traders are still digesting the surprising decision to adjust its government bond yield curve control. BOJ watchers are looking for hints that they could soon move toward normalization by the end of July.
Next week also focuses on the Japan PPI, machine tool orders, Tertiary industry index, core machine orders, industrial production, and trade data.
Singapore
Second-tier data includes the release of non-oil domestic exports for December.
See this week's Economic Calendar.