Events to Look Out for Next Week

After another volatile week, it looks to be a very mixed picture into the weekend as geopolitical uncertainties and central bank expectations continue to whip prices around. Treasury yields are a little cheaper while equity futures edge higher after reports yesterday that Secretary of State Blinkin will meet with his Russian counterpart Lavrov next week was sufficient to ease some concerns over an imminent invasion. Geopolitical risks will keep overshadow developments but central banks will also remained in focus as speculation of further tightening in March are increasing.

The week ahead is also expected to be a massive one from a data perspective as RBNZ rate decision, GDP data, PMIs data, and Consumer Confidence data will be in the highlights for next week.

Monday – 21 February 2022

United States – Presidents’ Day
PBoC Interest Rate Decision (CNY, GMT 01:15) – In January the PBoC trimmed its 14-day reverse repo rate to 2.25%, down from 2.35%. It also injected a net 50 bln yuan in a further attempt to stimulate its sagging economy. These actions follow similar moves last Monday where the Bank cut its 7-day reverse repo rate 10 bps to 2.10%, and the 1-year medium term lending rate by 10 bps to 2.85%, while also injecting 700 bln yuan in liquidity.
Markit PMIs (EUR, GMT 08:30-09:00) – The prelim. Eurozone’s & Germany’s  Composite February PMIs are expected to have raised, given a boost mainly in Services, leaving the composite at 52.7 and 54.3 respectively.
Markit PMIs (GBP, GMT 09:30) – February’s prelim. Services PMIs and Manufacturing PMIs in the UK are expected higher at 55.2 and 57.5 respectively.

Tuesday – 22 February 2022

IFO Business Climate, Assessment & Expectations (EUR, GMT 09:00) – The German IFO business reading is expected to incline to 96.5 in February from 95.7.
Markit PMIs (USD, GMT 14:45) – February’s prelim. Services PMIs and Manufacturing PMIs in the US are expected higher at 53 and 56 respectively.
Consumer confidence (USD, GMT 15:00) – Consumer confidence is expected to fall to a 1-year low of 108.0 from 113.8 in January, versus a 7-month low of 109.8 in September. The present situation index is expected to slip to 10-month low of 142.0 from 148.2 in January. The expectations index is expected to fall to a 15-month low of 85.4 from 90.8.

Wednesday – 23 February 2022

Interest Rate Decision & Policy Report (NZD, GMT 01:00- 02:00) – The Reserve Bank of New Zealand (RBNZ) is expected to hike its cash rate by 25bp next week. Inflation is going gangbusters in New Zealand and the Bank could respond, as annual inflation is expected to rise to its highest level in three decades, driven by rising fuel and housing costs, and a tight labour market.
Consumer Price Index and Core (EUR, GMT 10:00) – Eurozone HICP inflation unexpectedly accelerated to 5.1% y/y in January, from 5.0% y/y in the previous month. National data already indicated that the headline rate would come in above consensus expectations, which predicted a sharp deceleration thanks to base effects. Energy price inflation remains the key driving factor, with anecdotal evidence of sharp electricity price hikes at the start of the year. Coupled with with high food price inflation, the numbers highlight that the cost of living especially for low income households, has risen significantly, which in turn also adds to the risk of second round effects, especially against the background of tightening labour markets.
UK Inflation Report Hearings (GBP, GMT N/A) – The BOE Governor and several MPC members testify on inflation and the economic outlook before Parliament’s Treasury Committee.

Thursday – 24 February 2022

Gross Domestic Product (USD, GMT 13:30) – A boost is seen in Q4 GDP to 7.3% from the 6.9% advance figure, amid hikes of $7 bln for residential construction, $3 bln for nonresidential construction, $5 bln for wholesale inventories, $3 bln for net exports and $3 bln for for factory inventories, but a -$2 bln trimming for public construction. The Q4 GDP figures document a sharp turn in the inventory cycle to accumulation after a prolonged inventory liquidation phase. Production was finally able to overtake aggregate demand, as businesses struggled to patch supply bottlenecks to meet unprecedented levels of “goods” demand. Inventory replenishing in Q4 was mostly accomplished through a huge upward ratcheting in imports, as US stimulus spending was effectively “exported” to the rest of the world.
New Home Sales (USD, GMT 15:00) – A 0.5% January climb is anticipated for new home sales to a 10-month high pace of 815k, after a December rise to a 9-month high of 811k from 725k in October.

Friday – 25 February 2022

Gross Domestic Product (EUR, GMT 07:00) – GDP is the economy’s most important figure. German Q4’s GDP is not expected to show anything new, with quarterly growth at -0.7% and headline at 1.5%. That leaves the Eurozone on course for modest growth in Q4 and a somewhat disappointing number in Q1, although with the prospect of a quick recovery from the latest virus wave amid easing supply chain disruptions. There are still risks though, also from the surge in energy prices and Ukraine tensions, which in Europe could also undermine energy supply and thus will keep gas prices in particular elevated.
Durable Goods & Personal Income/Consumption (USD, GMT 13:30) – Durable goods orders are expected to rise 0.3% in January with a flat transportation orders rate, after a -0.7% headline decrease in December that included a -3.7% transportation orders drop. Durable orders ex-transportation is pegged to rise 0.4%, after a 0.6% December increase. Personal income is forecasted to drop to -0.4% in January  following a 0.3% December headline gain. A plunge by -4.0% is expected for “current transfer receipts” after a flat December figure, due to the end of the child tax credit.

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Andria Pichidi

Market Analyst

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