- MON: German Ifo
Survey (Mar). - TUE: NBH Policy
Announcement, US Advanced Goods Trade Balance (Feb), US Richmond Fed (Mar). - WED: CNB Policy
Announcement, Australian CPI (Feb). - THU: SARB
Policy Announcement, CBRT Minutes, Banxico Policy Announcement, Spanish Flash
CPI (Mar), EZ Business Climate (Mar), German Prelim CPI (Mar), US GDP (Q4)
& PCE Prices (Q4). - FRI: Japanese
Tokyo CPI (Feb), Chinese Official PMIs (Feb), German Retail Sales (Feb), French
Prelim. CPI (Feb), EZ Flash CPI (Mar), US PCE (Feb), Canada GDP (Jan), US
University of Michigan Final (Mar).
NOTE: Previews are listed in day-order
Australian CPI (Wed):
The monthly CPI for February is expected to
have cooled slightly to 7.2% from January’s 7.4%, with the forecast range
between 6.7-7.7%. Desks warn that the metric is volatile, as last month’s
release surprised to the downside with a 3.6% decline in clothing and footwear.
Analysts at Westpac say the February survey will incorporate quarterly data for
various sectors, such as restaurants, household services, motor vehicle
services, urban transport fares, communication, and insurance, among others.
Westpac’s 7.4% annual forecast is based on a 0.8% increase for the month.
CBRT Meeting Minutes (Thu):
The CBRT maintained its Weekly Repo Rate at
8.50%, as widely expected. The Bank noted stronger economic activity, but
caveated with concerns of recession in developed economies. The CBRT said the
earthquake impact on production, consumption, employment, and expectations are
being assessed, but no permanent hit to the Turkish economy is anticipated from
the natural disaster. The Bank reiterated that it will use all instruments
decisively for price stability and to reach the 5% medium-term inflation
target, whilst suggesting the transparent, predictable, and data-driven
decision-making framework is to continue. The decision aligns with previous
guidance that the benchmark rate was at an “adequate” level. Desks were divided
on whether the Bank would pause or cut rates again, with six out of 18
economists forecasting another 50bps ease for this meeting. As elections
approach in May, some analysts eye the April 27th meeting for the possibility
of a pre-election cut to rates.
SARB Announcement (Thu):
The Reserve Bank is expected to lift rates by
25bps to 7.50%, according to a Reuters poll; a minority of those surveyed are
looking for an unchanged decision. Analysts will be looking to any commentary
from the central bank that suggests its hiking cycle has concluded, given the
prospects for cooling inflation ahead, combined with soft economic momentum.
“We expect only a further 25bps rate hike in this cycle, and still-contained
wage and services inflation support our long-standing view that aggressive
tightening isn’t required amid weak economic growth,” Standard Bank said,
adding that “if the ZAR remains weaker than we foresee, the inflation
consequences and/or risks could impel the SARB to hike more aggressively than
we currently see as necessary.”
Banxico Announcement (Thu):
Banxico unanimously hiked by a
consensus-topping 50bps in February, with its decision motivated by core
inflation dynamics. But the central bank suggested that, with its monetary
stance attained, it will likely hike by a lower magnitude at the March meeting
as it sees inflation converging towards its target by Q4 2024. Accordingly,
many are looking for a 25bps hike next week. Data released this week showed
mid-month CPI rising 0.2% M/M, slightly short of the +0.3% that the street was
looking for, while the headline rate of inflation slowed to 7.1% Y/Y from 7.5%.
Pantheon Macroeconomics notes that inflation has continued to fall in Q1, and
that is helping to improve the economic outlook. “The main threat now to
economic activity is further Banxico policy tightening,” Pantheon says, “we
think any rate hike over the next few months is a mistake; we think
policymakers have done enough to return inflation to the target,” and adds that
“moreover, we can’t be sure that the threats to the global banking system are
over.”
Japanese Tokyo CPI (Fri):
Core Tokyo CPI is expected to have eased to
3.1% from 3.3% amid stabilising energy prices and base effects. The release is
seen as a leading indicator of the national metrics due a couple of weeks
later. Desks highlight that Japan’s headline CPI in February fell largely due
to the implementation of government energy subsidies. Food prices saw a minor
uptick, with non-fresh food contributing most to the increase. The
above-forecast rise in the “super-Core” CPI (excluding fresh food and energy)
was driven by higher import costs, accelerating consumer goods prices, and
faster inflation in clothing, footwear, and medical supplies. Analysts at
Pantheon Macroeconomics, following the February National release, suggested the
BoJ’s upcoming meeting on April 28th (led by new governor Kazoo Ueda) is
expected to maintain easy policy settings given the international banking
fears. Pantheon thinks Ueda is likely to maintain that Japan’s economy requires
easy monetary policy throughout the year, while exploring options to adjust the
yield curve control policy for sustainability.
Chinese NBS PMI (Fri):
The Manufacturing PMI for March is seen
ticking lower to 50.5 from 52.6 in February, with no expectations for the Non-Manufacturing
and Composite metrics at the time of writing. In February, the PMIs overall
surprised markets to the upside, with the services figure suggesting a strong
consumption recovery during the Chinese New Year holidays, driven by the
economic reopening. However, ING cautioned that the sustainability of this
rebound is uncertain, with more muted consumption activity expected in February
before a gradual increase in March. The services industry is predicted to
outperform manufacturing in 2023, the desk said. For this month, ING
anticipates a M/M decline in export orders, but an increase in domestic orders
within the manufacturing PMI, attributing this to a slowdown in demand from
external markets. The non-manufacturing PMI is also expected to post slower
growth, reflecting that the Chinese economic recovery has been gradual in pace.
EZ Flash CPI (Fri):
Expectations are for headline HICP to fall to
7.3% Y/Y in March from 8.5% in February, with the super-core metric expected to
advance to 5.7% Y/Y from 5.6%. The prior report saw a modest downtick in the
headline rate, while the super-core reading unexpectedly rose, which analysts
attributed to unfavourable base effects. For the upcoming release, Credit
Agricole expects a strong decline in headline inflation to 6.8% Y/Y, in line
with huge negative base effects for energy, one year after the outbreak of the
Ukraine war, adding that the decline in energy inflation to 0.4% in March from
13.7% in February would explain 155bp of the 172bp slowdown in headline inflation
Y/Y. However, the bank cautions that it expects food and core inflation to be
stickier, with the former slowing only very slightly to 5.5%. Beyond the
upcoming release, the Credit Agricole expects that headline inflation should
continue to fade, but will be very bumpy on account of base effects, policy
measures and their withdrawals. From a policy perspective, the upcoming release
will be the first of two inflation reports due before the May 4th ECB meeting,
and therefore will not have the ‘final’ say in cementing expectations for the
event. As it stands, market pricing is essentially 50-50 on whether the ECB
will stand pat on rates or opt for a +25bps increase. However, it is worth
noting that this piece has been produced during a bout of notable banking
turmoil in the Eurozone and therefore, markets are likely more dovishly priced
than they would be if this phase of selling pressure abates.
US PCE, Personal Income and Spending (Fri):
Core PCE is expected to rise 0.4% M/M in
February, cooling vs the +0.6% in January; the annual rate of core PCE is seen
moderating to 4.3% Y/Y from 4.7%. Credit Suisse notes that “goods prices
continue to be the key driver of disinflation, with shelter and other services
remaining stubbornly strong,” adding that “monthly headline inflation should be
similar to core, but the annual measure should drop to 5.1% Y/Y owing to an
easy base effect.” Meanwhile, US Personal Income is expected to rise 0.3% M/M
in February, cooling vs the +0.6% M/M in January; Personal Spending is also
seen rising 0.3% M/M, which would be cooler than the +1.8% prior – that January
reading was supported by a one-off rise in social security payments; CS says it
does not expect a mean-reversion lower, although in the months ahead, growth
will likely stagnate. “Personal spending likely stabilised – a positive outcome
after extreme strength last month,” the bank writes, “there are also likely to
be some upward revisions to January consumer spending, further solidifying the
outlook for Q1 GDP growth.”
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