The Week Ahead
Following the buzz around China last week, the nation begins its Golden Week celebrations from tomorrow. Other key events this week include the Fed Chair Powell’s speech (Mon) and the all-important US jobs report (Fri). UK GDP will garner interest today. Eurozone HCOB PMI and CPI prints, the UK manufacturing PMI reading, and US job openings and ISM manufacturing will be scrutinised on Tuesday. Eurozone unemployment features on Wednesday. US ISM services, factory orders and initial jobless claims will draw market attention on Thursday. US nonfarm payrolls are currently expected to show that 130k jobs were added in September, with unemployment steady at 4.2% and average hourly earnings easing to 3.7%yoy.
Central bank chatter includes ECB President Lagarde and the BoE’s Greene later today. The Fed’s Bostic, Cook, Barkin and Collins speak at a Technology-Enabled Disruption conference, the ECB’s Rehn, Guindos, Schnabel and Nagel attend separate events, and we will hear from the BoE’s Pill and incoming SNB President Schlegel on Tuesday. On Wednesday, the Fed’s Barkin, Hammack, Musalem and Bowman, and several ECB members including Lane, Holzmann and Schnabel speak, and we have the BoE’s policy minutes. The Fed’s Kashkari and Bostic will discuss an inclusive economy on Thursday.
US data remained mixed with the S&P Global manufacturing PMI reading unexpectedly falling further into contraction to 47, while services eased to 55.4. The Conference Board consumer confidence reading also surprised to the downside, suffering the largest monthly drop since August 2021. Later the Q2’24 estimate was unchanged at 3%yoy, however, personal consumption was marginally lower at 2.8%. Markets were, however, more interested in the Fed’s favoured inflation measure, the PCE Price Index. Both the headline and core readings came in at 0.1%mom. Later the University of Michigan sentiment reading nudged slightly higher, with the 1-year and 5–10-year inflation targets staying at 2.7%.
Elsewhere, China’s policymakers announced a raft of stimulus measures to revitalise the economy, and markets were receptive. The disappointing official and Caixin PMI prints released over the weekend and this morning, for September, reinforced the need for additional support. The September Politburo meeting, unusually focused on economic matters, signalled a renewed urgency to meet growth targets. This, coupled with the government's recognition of capital markets' role in economic recovery and targeted measures for the property sector, has bolstered investor confidence. However, the sustainability of sentiment is still contingent upon improvements in economic fundamentals, particularly through forthcoming fiscal policies that extend beyond monetary interventions. The renminbi enjoyed a bounce, rallying to the psychological 7 level against the dollar.
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