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Headlines
øThe US midterm elections resulted in a split Congress, with the Democrats taking the House of Representatives and the Republicans holding the Senate
øIn the coming week, China activity data for October will be closely scrutinised, along with US inflation data
US
Headline CPI inflation is expected to pick up by 0.2 ppts to 2.5% yoy in October. Inflation has slowed from the 2.9% yoy pace recorded in July, but building capacity pressures are likely to keep the Fed’s gradual tightening on track. Removing the volatile food and energy components, core CPI is forecast to remain at 2.2% yoy.
Retail sales are expected to rise 0.6% mom in October, following two soft releases. The prior report was weighed down by a slip in restaurant and gasoline spending but saw broad advances.
Finally, industrial production is projected to advance 0.2% mom in October. This could edge up capacity utilisation to 78.2%, still well below the prior peak of 81.1% (Dec 2007). In the details, the manufacturing sector is pencilled in to grow 0.3% mom, mirroring healthy readings from ISM factory surveys.
Europe
The German ZEW Expectation of Economic Growth survey is anticipated to fall to -25.0 in November, which would take the index to its lowest level since 2012. The possible deterioration comes amid slowing German growth and lingering political risks.
The UK unemployment rate in the three months to September is expected to hold at 4.0%, while regular pay growth (excluding bonuses) over the same period is also anticipated to remain steady, at 3.1% yoy. Emerging wage growth pressure has been a key plank of the Bank of England’s gradual policy tightening stance.
UK CPI inflation may edge up slightly in October, to 2.5% yoy on the headline measure, likely boosted by base effects from petrol prices.
Finally, UK Prime Minister Theresa May will be working to secure full cabinet backing for a Brexit plan, which may involve the UK entering into an indefinite “temporary” customs union. This could pave the way for a special Brexit summit this month.
Japan and emerging markets
Japan’s GDP is expected to decline by 0.3% qoq in Q3 (-0.9% annualised), the sharpest drop since the end of 2015 and the second negative quarter this year. Private consumption is seen as a key factor weighing on the economy, and capital expenditure is expected to remain flat, reflecting corporate caution in the context of mounting trade tensions.
China’s industrial production likely stabilised at 5.8% yoy in October, with recent weakness in the manufacturing PMI index and a decline in coal consumption by power plants suggesting activity remained relatively tepid. Urban fixed asset investment may have ticked up to 5.5% yoy (ytd) from 5.4% in September, boosted by a modest rebound in infrastructure.
Retail sales growth is expected to have been stable at 9.2% in October, weighed on by slower housing-related and auto sales. However, some support likely came from personal income tax cuts effective on 1 October.
India’s CPI inflation likely eased further to 3.6% yoy in October from 3.8% in September, on the back of base effects and subdued food price inflation.
Meanwhile, the Bank of Mexico is anticipated to hike its overnight policy rate by 25 bps to 8.0%. Inflation is trending above the 2.0%-4.0% yoy target band and policymakers have said that the balance of risks remained to the upside after the prior meeting. An increase will also maintain Mexico-US interest rate differentials amid ongoing tightening from the US Fed.
Regards All.
øThe US midterm elections resulted in a split Congress, with the Democrats taking the House of Representatives and the Republicans holding the Senate
øIn the coming week, China activity data for October will be closely scrutinised, along with US inflation data
US
Headline CPI inflation is expected to pick up by 0.2 ppts to 2.5% yoy in October. Inflation has slowed from the 2.9% yoy pace recorded in July, but building capacity pressures are likely to keep the Fed’s gradual tightening on track. Removing the volatile food and energy components, core CPI is forecast to remain at 2.2% yoy.
Retail sales are expected to rise 0.6% mom in October, following two soft releases. The prior report was weighed down by a slip in restaurant and gasoline spending but saw broad advances.
Finally, industrial production is projected to advance 0.2% mom in October. This could edge up capacity utilisation to 78.2%, still well below the prior peak of 81.1% (Dec 2007). In the details, the manufacturing sector is pencilled in to grow 0.3% mom, mirroring healthy readings from ISM factory surveys.
Europe
The German ZEW Expectation of Economic Growth survey is anticipated to fall to -25.0 in November, which would take the index to its lowest level since 2012. The possible deterioration comes amid slowing German growth and lingering political risks.
The UK unemployment rate in the three months to September is expected to hold at 4.0%, while regular pay growth (excluding bonuses) over the same period is also anticipated to remain steady, at 3.1% yoy. Emerging wage growth pressure has been a key plank of the Bank of England’s gradual policy tightening stance.
UK CPI inflation may edge up slightly in October, to 2.5% yoy on the headline measure, likely boosted by base effects from petrol prices.
Finally, UK Prime Minister Theresa May will be working to secure full cabinet backing for a Brexit plan, which may involve the UK entering into an indefinite “temporary” customs union. This could pave the way for a special Brexit summit this month.
Japan and emerging markets
Japan’s GDP is expected to decline by 0.3% qoq in Q3 (-0.9% annualised), the sharpest drop since the end of 2015 and the second negative quarter this year. Private consumption is seen as a key factor weighing on the economy, and capital expenditure is expected to remain flat, reflecting corporate caution in the context of mounting trade tensions.
China’s industrial production likely stabilised at 5.8% yoy in October, with recent weakness in the manufacturing PMI index and a decline in coal consumption by power plants suggesting activity remained relatively tepid. Urban fixed asset investment may have ticked up to 5.5% yoy (ytd) from 5.4% in September, boosted by a modest rebound in infrastructure.
Retail sales growth is expected to have been stable at 9.2% in October, weighed on by slower housing-related and auto sales. However, some support likely came from personal income tax cuts effective on 1 October.
India’s CPI inflation likely eased further to 3.6% yoy in October from 3.8% in September, on the back of base effects and subdued food price inflation.
Meanwhile, the Bank of Mexico is anticipated to hike its overnight policy rate by 25 bps to 8.0%. Inflation is trending above the 2.0%-4.0% yoy target band and policymakers have said that the balance of risks remained to the upside after the prior meeting. An increase will also maintain Mexico-US interest rate differentials amid ongoing tightening from the US Fed.
Regards All.