- #1
Thread Owner
UPCOMING EVENTS:
Monday: BoJ Summary of Opinions, Australia Retail Sales, China Caixin Manufacturing PMI, Switzerland Manufacturing PMI, Eurozone Flash CPI, Canada Manufacturing PMI, US ISM Manufacturing PMI.
Tuesday: US Job Openings, New Zealand Employment report.
Wednesday: Japan Average Cash Earnings, China Caixin Services PMI, Eurozone PPI, US ADP, Canada Services PMI, US ISM Services PMI.
Thursday: Switzerland Unemployment Rate, Eurozone Retail Sales, BoE Policy Decision, US Jobless Claims.
Friday: Canada Employment report, US NFP, US University of Michigan Consumer Sentiment.
Monday
The Eurozone CPI Y/Y is expected at 2.4% vs. 2.4% prior, while the Core CPI Y/Y is seen at 2.6% vs. 2.7% prior. The inflation data we got from France and Germany on Friday showed further easing and saw the market adding to rate cuts bets for the ECB. The market expects at least three more rate cuts by the end of the year which could increase in case Trump goes hard on tariffs.
The US ISM Manufacturing PMI is expected at 49.8 vs. 49.3 prior. The expectations are skewed to the upside following the US S&P Global Manufacturing PMI returning in expansion with an upbeat commentary from the agency saying that “the US businesses are starting 2025 in an upbeat mood on hopes that the new administration will help drive stronger economic growth.
“Rising optimism is most notable in the manufacturing sector, where expectations of growth over the coming year have surged higher as factories await support from the new policies of the Trump administration, though service providers are also entering 2025 in good spirits.”
Tuesday
The US Job Openings are expected at 8.000M vs. 8.098M. The last report surprised to the upside as rate cuts and Trump’s victory boosted business confidence and activity. Overall, the data continues to point to a solid labour market although the low quits and hiring rates suggest that it might be hard to get a job but there’s also less chance of losing one.
The New Zealand Q4 Employment change Q/Q is expected at -0.2% vs. -0.5% prior, while the Unemployment Rate is seen increasing further to 5.1% vs. 4.8% prior. The Labour Cost Index Y/Y is expected to ease to 3.0% vs. 3.4% prior, while the Q/Q rate is seen at 0.6% vs. 0.6% prior.
The RBNZ got inflation back within the target band and it’s now focusing on growth much like the Bank of Canada. The market expects another 50 bps cut at the upcoming meeting and a total of 120 bps of easing by year end.
Wednesday
The Japanese Average Cash Earnings Y/Y is expected at 3.8% vs. 3.0% prior. As a reminder, the BoJ hiked interest rates by 25 bps at the last meeting as the central bank got enough evidence of stronger wage growth.
We haven’t got much in terms of forward guidance other than the usual “will raise rates if the economy and prices move in line with forecasts”. If the data keeps on strengthening though, the market might move forward the expectations for a rate hike or even price in one more hike by the end of the year.
The US ADP is expected at 150K vs. 122K prior. This is not a reliable indicator for NFP, but it’s been pointing to a normalising but stable job creation. It shouldn’t be as market moving as it was in second half of last year as the market has already repriced interest rate expectations and it’s now just about further easing in inflation.
The US ISM Services PMI is expected at 54.2 vs. 54.1 prior. The US S&P Global Services PMI missed expectations by a big margin but as the agency noted "although output growth slowed slightly in January, sustained confidence suggests that this slowdown might be short-lived.
Especially encouraging is the upturn in hiring that has been fuelled by the improved business outlook, with jobs being created at a rate not seen for two-and-a-half years.” Anyway, the Manufacturing PMI is a better indicator for the turns in the business cycle.
Thursday
The Bank of England is expected to cut interest rates by 25 bps bringing the Bank Rate to 4.5% with a 7-2 vote split. As a reminder, the BoE kept the Bank Rate unchanged as expected at the last policy decision but we got a more dovish than expected vote split as 3 voters wanted a rate cut compared to just 1 expected.
Policymakers continue to lean towards four rate cuts for this year compared to three rate cuts expected by the market. The recent UK PMIs showed all the indices jumping to a three-month high although the S&P Global noted that companies have been cutting employment amid falling sales and that price pressures reignited pointing to a stagflationary scenario. It adds that although output ticked higher, it's an economy that is broadly flatlining with risks remaining skewed to the downside.
The US Jobless Claims continue to be one of the most important releases to follow every week as it’s a timelier indicator on the state of the labour market.
Initial Claims remain inside the 200K-260K range created since 2022, while Continuing Claims continue to hover around cycle highs although we’ve seen some easing recently.
This week Initial Claims are expected at 215K vs. 207K prior, while there’s no consensus for Continuing Claims at the time of writing although the prior release showed a decrease to 1858K vs. 1900K prior.
Friday
The Canadian Employment report is expected to show 25K jobs added in January vs. 90.9K in December and the Unemployment Rate to tick higher to 6.8% vs. 6.7% prior. The last report was really strong with wage growth easing further. The data from Canada has been pointing to gradual improvement after the aggressive rate cuts which would have likely seen the CAD getting stronger if it wasn’t for Trump’s tariffs threats.
The US NFP is expected to show 170K jobs added in January vs. 256K in December and the Unemployment Rate to remain unchanged at 4.1%. The Average Hourly Earnings Y/Y is expected at 3.8% vs. 3.9% prior, while the M/M figure is seen at 0.3% vs. 0.3% prior.
The last report came out much stronger than expected and led to another hawkish repricing in interest rates expectations, although eventually it marked the top as we got benign US inflation data the following week.
The Fed is mainly focused on inflation now given that the labour market remains solid and it’s not a source of inflation pressures given the easing wage growth and a low quits rate. The data we got up to now points to another strong employment report.
Monday: BoJ Summary of Opinions, Australia Retail Sales, China Caixin Manufacturing PMI, Switzerland Manufacturing PMI, Eurozone Flash CPI, Canada Manufacturing PMI, US ISM Manufacturing PMI.
Tuesday: US Job Openings, New Zealand Employment report.
Wednesday: Japan Average Cash Earnings, China Caixin Services PMI, Eurozone PPI, US ADP, Canada Services PMI, US ISM Services PMI.
Thursday: Switzerland Unemployment Rate, Eurozone Retail Sales, BoE Policy Decision, US Jobless Claims.
Friday: Canada Employment report, US NFP, US University of Michigan Consumer Sentiment.
Monday
The Eurozone CPI Y/Y is expected at 2.4% vs. 2.4% prior, while the Core CPI Y/Y is seen at 2.6% vs. 2.7% prior. The inflation data we got from France and Germany on Friday showed further easing and saw the market adding to rate cuts bets for the ECB. The market expects at least three more rate cuts by the end of the year which could increase in case Trump goes hard on tariffs.
The US ISM Manufacturing PMI is expected at 49.8 vs. 49.3 prior. The expectations are skewed to the upside following the US S&P Global Manufacturing PMI returning in expansion with an upbeat commentary from the agency saying that “the US businesses are starting 2025 in an upbeat mood on hopes that the new administration will help drive stronger economic growth.
“Rising optimism is most notable in the manufacturing sector, where expectations of growth over the coming year have surged higher as factories await support from the new policies of the Trump administration, though service providers are also entering 2025 in good spirits.”
Tuesday
The US Job Openings are expected at 8.000M vs. 8.098M. The last report surprised to the upside as rate cuts and Trump’s victory boosted business confidence and activity. Overall, the data continues to point to a solid labour market although the low quits and hiring rates suggest that it might be hard to get a job but there’s also less chance of losing one.
The New Zealand Q4 Employment change Q/Q is expected at -0.2% vs. -0.5% prior, while the Unemployment Rate is seen increasing further to 5.1% vs. 4.8% prior. The Labour Cost Index Y/Y is expected to ease to 3.0% vs. 3.4% prior, while the Q/Q rate is seen at 0.6% vs. 0.6% prior.
The RBNZ got inflation back within the target band and it’s now focusing on growth much like the Bank of Canada. The market expects another 50 bps cut at the upcoming meeting and a total of 120 bps of easing by year end.
Wednesday
The Japanese Average Cash Earnings Y/Y is expected at 3.8% vs. 3.0% prior. As a reminder, the BoJ hiked interest rates by 25 bps at the last meeting as the central bank got enough evidence of stronger wage growth.
We haven’t got much in terms of forward guidance other than the usual “will raise rates if the economy and prices move in line with forecasts”. If the data keeps on strengthening though, the market might move forward the expectations for a rate hike or even price in one more hike by the end of the year.
The US ADP is expected at 150K vs. 122K prior. This is not a reliable indicator for NFP, but it’s been pointing to a normalising but stable job creation. It shouldn’t be as market moving as it was in second half of last year as the market has already repriced interest rate expectations and it’s now just about further easing in inflation.
The US ISM Services PMI is expected at 54.2 vs. 54.1 prior. The US S&P Global Services PMI missed expectations by a big margin but as the agency noted "although output growth slowed slightly in January, sustained confidence suggests that this slowdown might be short-lived.
Especially encouraging is the upturn in hiring that has been fuelled by the improved business outlook, with jobs being created at a rate not seen for two-and-a-half years.” Anyway, the Manufacturing PMI is a better indicator for the turns in the business cycle.
Thursday
The Bank of England is expected to cut interest rates by 25 bps bringing the Bank Rate to 4.5% with a 7-2 vote split. As a reminder, the BoE kept the Bank Rate unchanged as expected at the last policy decision but we got a more dovish than expected vote split as 3 voters wanted a rate cut compared to just 1 expected.
Policymakers continue to lean towards four rate cuts for this year compared to three rate cuts expected by the market. The recent UK PMIs showed all the indices jumping to a three-month high although the S&P Global noted that companies have been cutting employment amid falling sales and that price pressures reignited pointing to a stagflationary scenario. It adds that although output ticked higher, it's an economy that is broadly flatlining with risks remaining skewed to the downside.
The US Jobless Claims continue to be one of the most important releases to follow every week as it’s a timelier indicator on the state of the labour market.
Initial Claims remain inside the 200K-260K range created since 2022, while Continuing Claims continue to hover around cycle highs although we’ve seen some easing recently.
This week Initial Claims are expected at 215K vs. 207K prior, while there’s no consensus for Continuing Claims at the time of writing although the prior release showed a decrease to 1858K vs. 1900K prior.
Friday
The Canadian Employment report is expected to show 25K jobs added in January vs. 90.9K in December and the Unemployment Rate to tick higher to 6.8% vs. 6.7% prior. The last report was really strong with wage growth easing further. The data from Canada has been pointing to gradual improvement after the aggressive rate cuts which would have likely seen the CAD getting stronger if it wasn’t for Trump’s tariffs threats.
The US NFP is expected to show 170K jobs added in January vs. 256K in December and the Unemployment Rate to remain unchanged at 4.1%. The Average Hourly Earnings Y/Y is expected at 3.8% vs. 3.9% prior, while the M/M figure is seen at 0.3% vs. 0.3% prior.
The last report came out much stronger than expected and led to another hawkish repricing in interest rates expectations, although eventually it marked the top as we got benign US inflation data the following week.
The Fed is mainly focused on inflation now given that the labour market remains solid and it’s not a source of inflation pressures given the easing wage growth and a low quits rate. The data we got up to now points to another strong employment report.
