Macroeconomics: The Week Ahead: 25-29 March

 As markets wind down for the Easter break, there is a reasonably busy run of economic data and surveys, though the key inflation readings from the US, Eurozone and Japan are ironically all published on Friday. Fed, ECB, BoE and BoJ speakers will be quite plentiful, while rates are seen unchanged in Sweden, South Africa, Sri Lanka and Ghana, and a 75 bps cut in Hungary , but a further 150 bps hike is expected in Nigeria, with risks skewed to the upside given higher than expected inflation data. Despite the impending holiday break govt bond supply is plentiful, led by the US with $176 Bln of 3, 10 & 30-yr, with the UK, Germany, Italy, Netherlands, Japan and Canada also holding auctions. China dominates the run of corporate earnings, with most major banks reporting, as well as Chalco, Sinopec and Tianqi Lithium. China also has a swathe of major conferences, including the Boao Asia Forum (aka China Davos), and the China Development Forum, along with a number of renewable energy conferences, and the quarterly meeting of Copper Smelters. For Agricultural commodities, the EU MARS Crop Bulletin, USDA data on crop plantings and quarterly agricultural and livestock inventories are also due.

USA – Ahead of Friday’s PCE deflators, a busy run of second tier data is expected to see both New (2.1% m/m) and Pending (1.2% m/m) Pending Home Sales continuing to show that housing demand remains robust, despite high mortgage rates and low existing home inventories, while house prices are expected to have risen modestly (0.1%/0.2% m/m), though y/y rates will be boosted by base effects. Tuesday’s Consumer Confidence is forecast to be little changed at 106.8, with support from still solid labour demand, though higher gasoline prices may weigh a little, and the focus likely to be on the Labour Differential, which gave back much of its December & January gains, but at 27.8 still remains above November’s cyclical low of 23.0. Headline Durable Goods Orders should get a boost (1.2% m/m) from a recovery in Boeing orders, while core measures are seen up 0.4% ex-Transport and 0.2% on Non-defence Capital Goods ex-Aircraft, with perhaps some upside risk given notable improvements in regional Fed surveys’ CapEx intentions metrics. Final Q4 GDP is likely to be unrevised at 3.2%, and is now very historical. Friday’s headline Personal Income and PCE are seen posting solid 0.5% m/m gains, echoing the Average Hourly Earnings / Weekly Hours and Retail Sales. PCE deflators are also expected to echo CPI with m/m gains 0.4% headline and 0.3% core, that would edge up headline y/y 0.1 ppt to 2.5%, but leave core unchanged at 2.8%, enough to keep the Fed cautious on an initial rate cut, without setting off any alarm bells about a more protracted upturn.

Eurozone – Surveys dominate the start of the week, while national (ex-Germany) inflation readings are released from Wednesday through Friday. Consumer and Services confidence (Germany, Italy & Eurozone) are expected to show some improvement, but remain down at heel, while the EC Industrial Confidence surveys is seen unchanged at a very weak -9.5, despite the modest improvement seen in French Manufacturing Confidence and Germany’s Ifo. National CPI/HICP readings will be a rather mixed bag, mostly due to differing food, energy and fuel price base effects, thus Spain’s HICP is forecast at 1.2% m/m to push the y/y rate up to 3.2% from 2.9% and Italy’s HICP is seen flat m/m, but rising to 1.3% y/y from 0.8%, while France HICP is expected to rise 0.6% m/m, but fall to 2.8% y/y from 3.2%; Belgium and Portugal also publish. But overall this will still point to a further overall deceleration, making the initial ECB rate cut pencil earmarked by Lagarde last week ever more likely. German Unemployment is expected to sustain its upward creep, with a 10K rise, which would leave the Unemployment Rate unchanged at 5.9%, while its highly erratic and frequently heavily revised Retail Sales are forecast to rebound 0.4%, but remain down -0.8% y/y. A similar profile is expected for French Consumer Spending, up 0.3% m/m, but down -0.6% y/y.

UK – The week gets under way with the CBI Retailing survey anticipated to post a drop in Reported Sales to -14 from -7, and a further modest setback in the Lloyds Business Barometer to -40 from -42, still not far off January’s high of 44, and indeed fairly robust on a longer-term historical comparison. Q4 final GDP is seen unrevised at -0.3% q/q, and across all sub-components, with the Current Account expected to widen to £-21.4 Bln from £-17.2 Bln. None of these are likely to impact rate expectations, which as in so many G7 countries are now earmarking an initial 25 bps rate cut in June.

Japan – The usual end of month of inflation and activity data on Friday are forecast to show Tokyo CPI edging down on all measures: headline 2.5% from 2.6% y/y, ex-Food & Energy 2.9% y/y from 3.1%, and likely to remain elevated (i.e. above the BoJ’s target) throughout H1 2024, per se suggesting a further rate hike in July, once the BoJ has more data on SME wage settlements. Industrial Production is expected to recover a relatively modest 1.3% m/m, after auto sector shutdowns paced the sharp -6.7% m/m in January. Retail Sales are seen up 0.6% m/m, after a hefty downward revision to January from 0.8% m/m to just 0.2%, with LNY tourism likely to have given a boost, rather than domestic consumer spending. Unemployment data are expected to show the rate unchanged at 2.4% and Jobs to Applicants Ratio also at 1.27, though weak private consumption and soft auto output impart some downside risks, even if the tech sector should get a boost from improving global demand for semiconductors.

Australia – Consumer Confidence and Inflation Expectations gets the week under way, but the focus will be on CPI, which is forecast to temporarily edge up to 3.5% y/y from 3.4%, on a combination of higher fuel prices, pressure on housing costs and travel/tourism, which should some offset from food. After a likely deceptively strong gain in last week’s Employment, ebbing Job Vacancies are likely to suggest labour demand is nowhere near as strong as that report implied.

Canada – as noted in last week’s central bank review, the BoC looks to be at the rearguard of likely rate cuts, this week’s monthly GDP is expected to see an increase of 0.4% m/m, after a flat reading in December, and the somewhat stronger than expected Q4 1.0% SAAR increase, which was much weaker in the detail. The CFIB Business Barometer is also on tap, and should see some improvement from February’s 54.8, which was only at the bottom end of the range that prevailed in the years before the pandemic.

Corporate earnings highlights for the week as compiled by Bloomberg News are likely to include: Agricultural Bank of China, Anta Sports Products, Bank of China, Bank of Communications, BOC Hong Kong, BYD, China Construction Bank, China Everbright Bank, China Life Insurance, China Merchants Bank, China Pacific Insurance, China Petroleum & Chemical, China Telecom, China Tourism Group Duty Free, Cintas, Citic Ltd, Citic Securities, Flutter Entertainment, Haier Smart Home, Industrial & Commercial Bank of China, Industrial Bank, Midea Group, Nongfu Spring, Paychex, People’s Insurance Group of China, PetroChina, PICC Property & Casualty, Postal Savings Bank of China, SF Holding.