Written Commentary
Heavily front loaded data schedule to start the week: German Trade, Australia Inventories and Housing Finance, Swiss and Turkish CPI to digest; US Factory Orders and Brazil Account ahead; plenty of ECB speakers, but Lagarde likely only one talking about policy & economy
Week Ahead: run of US labour data in focus, above all JOLTS and Payrolls, China Trade, Japan Tokyo CPI, German Orders & Production, UK BRC Sales, Australia and Brazil Q3 GDP; BoC, RBA and RBI all seen holding rates; USDA WASDE and Canada Crop Production, COP28 and Battery Metals conferences
German Trade data underline continued weakness in external demand, reduced producer demand for raw and intermediate materials
Australia: unexpected sharp inventory rebound imparts upside risk for Wednesday’s; continued strength in Housing Finance a headache for RBA
EVENTS PREVIEW
The new week brings Services PMIs, US Payrolls (seen rebounding on the end of the UAW autoworkers strike) and run of other labour indicators, China Trade, Japan’s Tokyo CPI & Wages, UK BRC Retail Sales, Australian & Brazil Q3 GDP, German Trade, Orders and Production, along with Bank of Canada (no change 5.0%), RBA (no change 4.35%) & RBI (no change 6..50% policy meetings, and the BoE’s Q4 Financial Stability Report. In the commodity space, COP28 continues, while the USDA publishes its monthly World Agricultural Supply & Demand Estimates (WASDE), with Canada also releasing its crop production report, and beyond COP28 there are also the Shanghai Battery Metals, Singapore Asia INTL Li-ion Battery Recycling Summit 2023 and Vietnam Asia International Coffee conferences. Govt bond supply is still relatively plentiful, with no US coupon issuance, though there are sales of UK conventional and I-L 10yr and German 2-yr, French 5, 10 & 12-yr and Spanish 6, 16-yr and I-L 6-r, and Japanese 10 & 30-yr. Earnings highlights for the week according to Bloomberg news are likely to include: Ashtead Group, AutoZone, Broadcom, Dollar General, Ferguson, Lululemon Athletica, MongoDB, Veeva Systems. Overall with the Fed, ECB and BoE policy meetings next week, along with the array of key monthly inflation and activity indicators in US, China and UK also next week, this week may prove to be protracted US Payrolls vigil in market activity terms.
Today’s statistical schedule is quite heavily front loaded, with further key elements of Australian Q3 GDP, Housing Finance and MI Inflation Gauge, German Trade, Turkish and Swiss CPI to digest, with only US Factory Orders and Brazil’s Current Account ahead. There will be plenty of ECB speakers, though only Lagarde and de Guindos are likely to talk about the economic and policy outlooks. The overnight run of Australian and German data were remarkable for the large misses relative to forecasts, perhaps a further indication of just how much VUCA (Volatility, Uncertainty, Complexity & Ambiguity) is the dominant feature of the global economy. While some rebound in Australian Q3 Inventories after a revised Q2 fall of -1.3% q/q was always possible, the 1.2% q/q rebound against forecasts of -0.8% q/q begs the question of whether this was a typical restocking or an involuntary accumulation; be that as it may, it imparts a key upside risks to Wednesday’s Q3 GDP. Meanwhile the surge in Australia’s Housing Finance (5.4% m/m) despite the rise in rates adds to the RBA’s quandary on rates. The drop in both German Exports (-0.2% m/m after -2.5% in September) and Imports (-1.2% m/m vs. prior -1.9%) underlines the continued weakness in external demand, as well as reduced domestic demand for primary and intermediate goods as industry retrenches.
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