Events to look out for next week

Markets remain weighed by the uncertainty of the impact from the Omicron variant and this is likely to drag into next week as clear data will not be available until mid–December. Chair Powell continued the FED’s shift to the Hawkish side as “transitory” inflation was finally “retried”, a faster taper was suggested and therefore an earlier start to the interest rate hike cycle.  A strong set of US data this week was topped by the unemployment rate diving to 4.2% even though the headline NFP was only 210,000, when expectations had been for 550,000 new jobs. Next week the December central bank merry go-round comes into focus starting with the RBA & BOC, along with Chinese Trade data, EZ & Japanese GDP numbers.

Monday – 06 December 2021

German Factory Orders (EUR, GMT 07:00) – German factory orders have been extremely volatile recently 3.4% in September, -7.7% (revised lower to -8.8%) in October and +1.3% rebound in November. As new restrictions loom for the unvaccinated, German factory orders are likely to have rebounded again and turned negative.

Tuesday – 07 December 2021

RBA Rate Statement & Interest Rate Decision (AUD, GMT 03:30) – The Bank’s forecast remains “for inflation to pick-up gradually as the economy strengthens” and an eventual rate hike (RBA is cautiously optimistic on growth, inflation). However, markets see them on hold through mid-year, with no change possible for the full year depending on the growth and inflation data and the path of Omicron.
ZEW Economic Sentiment & EZ Employment & Revised GDP  (EUR, GMT 10:00) – Key set of data for EZ – ZEW is likely to show a gradual rebound from the October low at 21.0 and November reading at 25.9, however well below the early summer highs of 84.0 in May.  The Quarterly Employment is likely to remain steady at 0.9% from September’s 0.7% and the decline of -0.3% in June. Finally the revised GDP could rise to 2.2% from 2.0% with the y/y number rising to 13.6% from 3.7% in 2020.

Wednesday – 08 December 2021

BOC Rate Statement & Press Conference – (CAD, GMT 15:00 & 15:30) –  Last time the BOC ended quantitative easing and moved to the reinvestment phase, “during which it will purchase Government of Canada bonds solely to replace maturing bonds.” in a move to address rising inflation. The bank held the overnight rate at 0.25% and maintained its “extraordinary forward guidance” for the path of the overnight rate. No change is expected today.
JOLTS Job Openings (USD, GMT 15:00) – This Janet Yellen invention continues to receive more prominence as the US job market continues to show signs of significant  tightening, with many workers not returning to jobs, retiring early on the back of buoyant stock markets and record house prices and many not returning even after the Government cheques stopped and the schools re-opened. A hefty 10.93 million reading in September has only declined slightly since, with the number expected to be 10.45 million today.

Thursday – 09 December 2021

Consumer Price Inflation (CNY, GMT 01:30)– China has not been immune to rising prices and uncertainty. With the continuing clouds over many real estate developers (Evergrande & Kaisa the two highest profile) and the tech crack down by the authorities also continuing (Didi announcing it will delist from the NYSE and move to the Hang Seng) Inflation is set to tick higher; CPI up to 1.6% from 1.5% and PPI 14.0% from 13.5%.
Weekly Claims (USD, GMT 13:30) Following last weeks 52-year low reading at only 222k and the previous week being revised lower again to 194K this weeks number is eagerly awaited. Seasonality factors apart, the evidence of the tight US jobs market continues, a more normal economic cycle average is 250-260K.  

Friday – 10 December 2021

German Final CPI (EUR, GMT 07:00) – Expectations are for HICP to remain steady y/y at 6%. with the m/m number turning up to 0.0% from -0.2% in November.   
Industrial Production, Manufacturing Production and GDP (GBP, GMT 07:00) – A plethora of data from the UK should show a continued stuttering recovery. IP is expected to turn up from -0.4% last time but remain in decline, MP should be more robust at 3.1% y/y from 2.8% last time. And m/m GDP is expected to have risen to 0.7% from 0.6% in November.
US Core CPI (USD, GMT 15:30) – This key data point is expected at 0.7% from 0.6% last month and the headline number 1.1% from 0.9% last time. The FED’s preferred measure of inflation remains the PCE Price Index, but with “transitory” now not part of their mantra the depth and extent of higher prices remains of key interest.

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Stuart Cowell

Head Market Analyst

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