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Key Events In The Coming Week: ECB Taper, Q3 GDP And Durables

Key Events In The Coming Week: ECB Taper, Q3 GDP And Durables

The main even this week will be the ECB’s taper announcement on Thursday where consensus expects the ECB to announce a QE extension of €30bn per month for 9 month until Sep-18, with potential extension after. Net purchases between now and Dec-17 will continue at €60bn per month as planned. To cope with rate hike expectations, the ECB is also expected to strengthen forward guidance.

In Canada, the BoC is no longer expected to hike rate this Wednedsay, instead, it will likely have a gradual hiking cycle in 2018 with three 25bp hikes in Jan, Apr, and Jul, according to BofA. Both the Riksbank and the Norges Bank are likely to remain on hold adopting a wait and see approach ahead of the ECB. Monetary policy meetings will be held in Russia, Brazil, Turkey, Hungary, Colombia and Ukraine. We forecast Russia’s CBR to cut 25bp and Brazil’s BCB to cut 75bp.

Among this week’s economic reports, we get Euro area mfg, srvs and comps PMI, which are expected to decrease slightly (57.5/58.1, 55.5/55.8, 56.4/56.7, Tue) and UK GDP qoq to decrease to 0.2% from 0.3% (Wed). In US, the advance release of 3Q GDP is expected to rise to a robust 3.0% qoq saar increase in activity, with the GDP Price Index appreciating by 1.8% qoq saar and a more subdued 1.3% qoq saar reading for core PCE (Fri). In Japan, national CPI ex-fresh food inflation is likely to raise 10bp, to +0.8% y/y, driven by a continued pick-up in the energy component (Fri).

In summary:

  • In the US, durable & capital goods orders, new & pending home sales, GDP, core PCE and final print of U. of Michigan sentiment are released.
  • In the Eurozone, we wait for central bank rates meeting, final print of consumer confidence, PMIs, money supply M3 and ECB bank lending survey.
  • In the UK, key releases include GDP and index of services.
  • In Japan, we have PMI Manufacturing, PPI services and CPI.
  • In Canada, central bank rates decision is main event.
  • In Australia, we have CPI, PPI and import & export price index.
  • In New Zealand, only trade balance is coming up.
  • In the Scandies, we have Norges Bank and Riksbank rates meeting. In Norway, we also have unemployment rate and Sovereign Wealth Fund 3Q results, while for Sweden we get PPI, trade balance, retail sales, consumer & manufacturing confidence.
  • In Switzerland, we have sight deposits and money supply M3.

A breakdown of key events by day courtesy of Deutsche Bank:

  • Monday: A fairly light start to the week for data with mostly second tier releases including China property prices data for September, Eurozone consumer confidence for October and UK CBI business optimism and total orders data for October. Perhaps the most significant event will be a likely statement from UK PM Theresa May to Parliament on the progress of Brexit talks following the EU summit.
  • Tuesday: The big highlight datawise will be the October flash PMIs due in Japan, France, Germany, Euro area and US. French confidence indicators for October and the Richmond Fed PMI in the US for October are also due. The ECB Bank Lending Survey will also be worth watching while in the UK Chancellor Hammond is scheduled to face questions in the House of Commons. The Bundestag convenes for its inaugural session following the election while in China the CPC wraps up with the appointment of the Central Committee. AT&T, General Motors, Novartis and McDonalds all report earnings.
  • Wednesday: A fairly busy day for data. In the morning the German IFO survey for October and advance reading of Q3 GDP for the UK are due. In the US the flash durable and capital goods orders data for September are due, along with September new home sales and the August FHFA house price index. Brexit will be under the spotlight again with Brexit Secretary David Davis due to testify before lawmakers. Coca-Cola, Boeing and Lloyds are among the companies due to release earnings.
  • Thursday: No doubting the highlight with the ECB meeting at 12.45pm BST and Draghi press conference shortly after likely to be front and centre. Data wise we’ll receive German consumer confidence for November, Euro area M3 money supply for September and UK CBI retailing reporting sales for October prior to the ECB. In the afternoon across the pond wholesale inventories for September, initial jobless claims, September advance goods trade balance, September pending home sales and October Kansas City Fed manufacturing activity data are all due. Barclays, Twitter, Amazon and Alphabet are amongst those due to report results.
  • Friday: The early focus overnight will be the September CPI report in Japan, while September industrial profits data in China is also due. In France consumer confidence data in October is due while in the US the highlight will be the first estimate of Q3 GDP in the US. The final University of Michigan consumer sentiment survey for October is also due. The ECB’s Praet and Nowotny are also both scheduled to speak. UBS, Exxon Mobil, Chevron and Total all report results. Deutsche

* * *

Finally, here is Goldman looking at the US, where key economic releases this week are the durable goods orders report on Wednesday and the Q3 advance GDP report Friday.

Monday, October 23

  • No scheduled data releases.

Tuesday, October 24

  • 09:45 AM Markit Flash US Manufacturing PMI, October preliminary (consensus 53.5, last 53.1)
  • 09:45 AM Markit Flash US Services PMI, October preliminary (consensus 55.2, last 55.3)
  • 10:00 AM Richmond Fed manufacturing index, October (consensus 16, last 19)

Wednesday, October 25

  • 08:30 AM Durable goods orders, September preliminary (GS +0.1%, consensus +1.0%, last +2.0%); Durable goods orders, ex-transportation, September preliminary (GS +0.6%, consensus +0.5%, last +0.5%); Core capital goods orders, September preliminary (GS +0.3%, consensus +0.3%, last +1.1%); Core capital goods shipments, September preliminary (GS +0.3%, consensus +0.1%, last +1.1%): We expect durable goods orders to edge up 0.1% in the September report (mom sa), reflecting a modest pullback in commercial aircraft orders and moderate increases in core measures. Financial results from industrial companies have been less encouraging than in previous quarters, and hurricane effects could weigh on September capex orders and shipments. However, industrial production of business equipment rose a firm 0.8% in the month, and broader manufacturing trends appear strong, according to September and October-to-date manufacturing surveys. Accordingly, we forecast a 0.3% increase in both orders and shipments of core capital goods, and we estimate a 0.6% rise in durable goods orders ex-transportation.
  • 09:00 AM FHFA house price index, August (consensus +0.4%, last +0.2%)
  • 10:00 AM New home sales, September (GS +1.0%, consensus -1.1%, last -3.4%): We estimate new home sales rebounded 1.0% in September, following a 3.4% drop in the prior month. The level of new home sales looks depressed relative to single-family building permits, though we expect any rebound in Texas homes sales to be offset by Irma-related weakness in Florida.

Thursday, October 26

  • 08:30 AM Initial jobless claims, week ended October 21 (GS 230k, consensus 235k, last 222k): Continuing jobless claims, week ended October 14 (consensus 1,890k, last 1,888k): We estimate initial jobless claims rebounded 8k to 230k in the week ended October 21 after falling to a four-decade low in the previous week. Our forecast reflects increases in Michigan and California claims from depressed levels in the previous week. However, we also expect additional post-hurricane normalization in Texas and Florida filings, which have retraced most of their earlier increases. Continuing claims – the number of persons receiving benefits through standard programs – have resumed their downtrend, falling to a new year-to-date low in the week ended October 7.
  • 08:30 AM Advance goods trade balance, September (GS -$65.0bn, consensus -$63.9bn, last -$63.3bn) We estimate the goods trade deficit widened $1.7bn to $65.0bn in September. Regional port statistics suggest a rebound in container volumes, but we expect the hurricanes to weigh more heavily on export activity.
  • 08:30 AM Wholesale inventories, September preliminary (consensus +0.4%, last +0.2%)
  • 08:30 AM U.S. Census Bureau Advance Economic Indicators Report
  • 10:00 AM Pending home sales, September (GS flat, consensus +0.5%, last -2.6%): Regional data we collect on contract signings were mixed in September, and we estimate pending home sales were unchanged in September, following a 2.6% decline in August. Within the hurricane-affected South region, we expect a rebound in Texas to partially offset a slowdown in Florida homes sales. We have found pending home sales to be a useful leading indicator of existing home sales with a one- to two-month lag.
  • 10:30 AM Minneapolis Fed President Kashkari speaks: Minneapolis Fed President Neel Kashkari will give remarks at the Opportunity and Inclusive Growth Institute Fall Conference in Minneapolis.

Friday, October 27

  • 08:30 AM GDP, Q3 advance (GS +2.3%, consensus +2.6%, last +3.1%); Personal consumption, Q3 (GS +2.3%, consensus +2.1%, last +3.3%): We estimate a +2.3% increase in the first vintage of Q3 GDP (qoq saar), reflecting solid underlying economic growth that was only partially offset by temporary hurricane disruptions. We estimate a 2.3% annualized increase in real personal consumption, as spending activity firmed in September after Hurricane Harvey-related weakness in August. We also expect solid growth in business fixed investment (+4.9% qoq ar) as well as a hurricane-related boost to government spending (+0.5%). On the negative side, we expect a decline in residential fixed investment (-3.5%), in part reflecting storm effects.
  • 10:00 AM University of Michigan consumer sentiment, October final (GS 100.6, consensus 100.8, last 101.1): We expect a modest pullback in the final reading of the University of Michigan consumer sentiment index for October (-0.5pt to 100.6), reflecting some sequential softness in higher frequency consumer surveys and a short-lived pullback in stocks. The preliminary report’s measure of 5- to 10-year ahead inflation expectations declined one-tenth to 2.4% in the preliminary reading, the low end of its 12-month range.

Source: BofA, Deutsche Bank, Goldman

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