- US inflation releases due, but markets likely relaxed given Fed’s recent policy shift
- UK Q3 GDP set to show decline although figure still difficult given post-pandemic rebound
- German inflation set to remain hot despite ECB guidance saying no rate hike before 2023
After a relatively quiet day for the Macroeconomic calendar on Monday, Tuesday sees the release of the Eurozone ZEW Economic Sentiment indicator for November. As always the forward looking aspect of this report adds to its significance but expectations are for the reading to post its sixth consecutive month of declines. Following October’s reading of 21, forecasts suggest the print will come in around the 18.5 level and whilst the trajectory isn’t great, so long as this number holds comfortably in positive territory then markets may well be happy to ride this out for some time yet.
Also on Tuesday, the US Producer Price Index reading for October will be published. This is going to be closely watched as it typically front runs consumer inflation, although the Federal Reserve’s confirmation that it will start its tapering program also needs to be taken into account. Regardless, expectations are for another increase in the year-on-year number, which is set to push out to 8.7%, up from 8.6% in September. There is however a chance that this number could tip lower, something that would likely offer relief, especially for businesses looking to absorb some of these rising costs.
Onto Wednesday and German Inflation for October is due. The annualised reading is expected to advance from 4.1% a month ago to around 4.5%, although despite this and the fact that the spike could be longer lived than previously expected, the ECB is adamant that a rate hike won’t be seen before 2023. Critically however those inflationary pressures need to filter through to bolstering the labour market.
US inflation data for October will also be published on Wednesday, with expectations that this will inch up ever so slightly from the 5.4% posted a month ago. As with the PPI reading however, unless there’s a big shock on the upside, the market may be fairly relaxed over the outcome, given the Fed’s tapering should start to see this figure cool in the coming months.
The preliminary UK GDP reading for Q3 will be released on Thursday. This number is still showing exaggerated levels of volatility off the back of the COVID pandemic and accompanying economic rebound. The quarterly figure is expected to dip from the 5.5% reading seen in Q2 to 1.5%, but that remains significantly above the levels seen pre-pandemic. Anything much below 1% however could raise some hesitancy over the timing of that BoE rate hike, which is now expected in the run up to Christmas.
Across the Atlantic to round off the week with the September JOLT Job opening figure set for release. The number of vacancies in the labour market has been widely reported, so whilst the expected continued reversion away from the July peak in excess of 11 million is expected to continue, the number remains significantly higher than policymakers would like to see. However, so long as the trajectory remains meaningfully downward then there’s unlikely to be much cause for concern.
Finally, Michigan Consumer Sentiment for November will be released. Given the buoyant jobs market, the fact this number remains so depressed – and indeed not all that far from the early pandemic lows– is likely to be cause for concern, especially against that backdrop of rising borrowing costs and inflation. Expectations are for a reading of around 71, down from the 71.7 printed in October.