The burden surrounding the Chinese economy and the Fed rate rise speculation will dominate this week’s headlines. Key Chinese data will be released later on in the week but today will see both US data and a couple of Fed speakers that could impact interest rate expectations. Last week several FOMC members including the Fed Chair Janet Yellen suggested that a rate rise could occur in 2015. Today we should see a wider range of views with the focus surrounding FOMC member Dudley, a ‘centrist’ of the committee and a member who is the most influenced by financial market fluctuations.
Later in the week, China will release their manufacturing PMI readings. Manufacturing is key to China as the sector is the heaviest contributor to Chinese growth. Last month the Caixin manufacturing PMI unexpectedly fell and posted a figure below 50, indicating contraction in the sector, this contributed to the vast sell off in Chinese stock that led to black Friday in August.
It is a quiet start to the week elsewhere, we have a speech by Bank of England member Kristin Forbes, who is set to focus on the sizeable UK current account deficit. Also on the docket for the UK this week, we have UK CBI realised sales, forecast to climb, UK manufacturing PMI and the Bank of England Governor Mark Carney addressing the market late tonight. This week’s highlights elsewhere include; US ADP employment change, Fed Chair Janet Yellen speaking, US ISM manufacturing PMI and the all-important non-farm pay rolls to finish off the week.
To start the week, we will receive some US inflation numbers in the form of the Personal Consumption Expenditure (PCE) and personal spending numbers. Also due to hit the wires are the US pending home sales. With four Fed members speaking today, the market will be keen to see if last week’s hawkish tone is continued.
Key numbers and events from the UK today. The UK’s lending numbers and CBI realised sales numbers are set for release which will give the market an indication of spending. Meanwhile, BoE Gov is due to speak at Lloyds of London. Volatility is often experienced during his speeches as the market attempts to decipher interest rate clues. Currently the market is starting to taper back their expectation of a hike in Feb. In the US the consumer confidence is expected to slide given the economic backdrop.
A busy day is expected in the market as data releases and key speakers are scheduled. In Europe, the German retail sales and unemployment numbers will be keenly watched. Meanwhile, in the UK the final reading of Q2 GDP is not expected to change whilst the current account numbers are also set for release. Crossing the pond, the market will get an early indication of how the all-important employment numbers will be on Friday with the release of the ADP employment report. Finally, FOMC Chair Yellen is due to deliver opening remarks at the Federal Reserve's annual community banking conference.
Overnight are some key manufacturing and service sector numbers from China. Given the economic situation these could determine the direction of the markets for the day. In addition there are key manufacturing readings from across the globe. Manufacturing data from Germany, Europe, the UK and the US are set for release. Meanwhile the US jobless claims will be monitored ahead of tomorrow’s US job data.
The day is going to be dominated by the US job data. Since the FOMC kept rates on hold two weeks ago they have been hawkish in their commentary, suggesting that a rate hike is expected in 2015. Positive job figures will be required to keep these elevated expectations maintained. Meanwhile, the UK construction data is also scheduled.