Bank of England and Federal Reserve headline this weeks high tier economic releases
Big week ahead with a number of high tier economic releases headlined by the Federal Reserve and Bank of England’s interest rate decisions. We will be looking for an improved outlook from the Fed following US quarterly GDP increasing from a revised 2% up to 4.1% on Friday. This led President Trump to herald this reading as "an economic turnaround of historic proportions". The BoE are expected to raise rates a quarter of a percent on Thursday whilst we also have key inflation data out of the Eurozone earlier in the week. We end the week with US Employment Data headlined by the Non-Farm Payroll figure, an economic highlight of every month.
Spanish Flash CPI is the first piece of data out this week, the yearly figure is expected to post 2.3%, unchanged from last month’s reading. Throughout the day, 6 German states will be releasing their preliminary CPI figures, the cumulative rate of change is expected to post 0.4% up 0.3% from the previous month. Also to be released is the Net Lending to Individuals figure from the UK, which measures the change in total value of new credit issued to consumers. The consensus is for this to remain unchanged at £5.3B.
German Retail Sales will be the first piece of relevant data out on Tuesday morning. Despite five of the last six readings posting negative figures, indicating a decrease in consumer spending, we are expecting a positive reading of 1.1%. At 10am the Eurozone will be releasing their combined flash CPI estimate, expected to remain unchanged at 2% along with Flash GDP also predicted to stay fixed at 0.4%. The afternoon session begins with Canadian monthly GDP, predicted to increase from 0.1% to 0.3%. We finish the day with the release of US CB Consumer Confidence. The reading is predicted to tick up to 126.5 from 126.4.
Manufacturing PMI’s dominate the morning session on Wednesday. The final Eurozone figure is expected to match last month’s reading of 55.1, whilst the reading posted by the UK is predicted to fall short of last month’s 54.4 down to 54.2. However, it is worth noting that any figure above 50 still signals industry expansion. Across the pond, the US will release their ADP Non-Farm figure, predicted to increase from 177k to 186k. US ISM Manufacturing PMI is set to be released at 3pm with a slight reduction from 60.2 to 59.4 expected. The main event of the day will be at 7pm when Jerome Powell and the FOMC release their interest rate statement and rate decision. We are not expecting a rate increase this month, but it will be interesting to see whether the statement indicates one or two more rate hikes before the end of the year.
The Bank of England rate decision dominates Thursday’s proceedings, however the first piece of data for the day will be UK Construction PMI expected to reduce slightly from 53.1 to 52.9. The BoE’s rate decision will be announced at 12pm, with the bank expected to raise interest rates by 0.25% to 0.75%. The probability of this increase currently stands at 90% and we are expecting the vote to come in at 8-0-1 compared to 3-0-6 at the previous meeting. The BoE will also release their Monetary Policy Summary along with their Inflation Report detailing their projection for inflation and economic growth over the next two years. This, combined with Governor Mark Carney holding a press conference to discuss the report, will give the market clues as to the possibility of future rate hikes.
The morning session begins with Services PMI’s out of the Eurozone, with the final reading expected to remain at 54.4. UK Services PMI’s are predicted to reduce marginally from 55.1 down to 54.7. US Employment Data dominates the closing session of the week with the release of Non-Farm Payrolls, Unemployment rate and Average Earnings. The Non-Farm figure is predicted to come in lower than last month at 193k, down from 213k. Month on month Average Earnings are expected to tick up to 0.3% from 0.2% and the Unemployment Rate is expected to fall back under 4% for the third time in four months to 3.9%. The final piece of data out this week is US Non-Manufacturing PMI’s with a slight reduction from 59.1 down to 58.7 predicted.