Key Factors:- A packed week on the agenda with a focus on the US labour market data and the BoJ, FOMC and BoE policy decisions. etc.
A big week of earnings reporting could distract investors from the Middle East and rising Treasury yields. Among the heavyweights reporting are Amazon (AMZN), Microsoft (MSFT), Meta Platforms (META) (preview), Coca-Cola (NYSE:KO) (analysis), AbbVie (ABBV), and Chevron (CVX).
The European Central Bank will set interest rates on October 26. After raising rates 450 points since July 2022, the ECB is anticipated to hold them stable. The Federal Reserve will be in a blackout before the November FOMC meeting, but the “higher for how much longer” guessing game will continue. BNP Paribas expects the Federal Reserve to hold rates steady through 2023 and not lower them until June 2024, while Seeking Alpha analyst John M. Mason stressed that the Fed will not soften on inflation and Mott Capital Management warned that the Fed’s policy challenges will hurt the stock market.
Weekly Economic calendar USA Oct 30 to Nov 03
Monday
- 10:30 AM ET Dallas Fed Manufacturing Index for October
Tuesday
- 7:45 AM ET ICSC Weekly Retail Sales
- 8:30 AM ET Employment Cost Index for Q3
- 8:55 AM ET Johnson/Redbook Weekly Sales
- 9:00 AM ET Monthly Home Prices M/M for August
- 9:00 AM ET CaseShiller 20-city index for August
- 9:45 AM ET Chicago PMI for October
- 10:00 AM ET Consumer Confidence for October
- 4:30 PM ET API Weekly Inventory Data
Wednesday
- 7:00 AM MBA Mortgage Applications Data
- 8:15 AM ADP Private Payrolls data for October
- 9:45 AM S&P Global Manufacturing PMI, Oct-Final
- 10:00 AM Construction Spending M/M for September
- 10:00 AM ISM Manufacturing PMI for October
- 10:00 AM JOLTs Job Openings for September
- 10:30 AM Weekly DOE Inventory Data
- 2.00 PM FOMC Policy rate meeting at 2:00 – expected to hold 5.25%-5.5%
- 2:30 PM Fed Chairman Powell Press Conference
Thursday
- 7:30 AM ET Challenger Layoffs for October
- 8:30 AM ET Weekly Jobless Claims
- 8:30 AM ET Continuing Claims
- 8:30 AM ET Nonfarm Productivity for Q3
- 8:30 AM ET Unit Labor Costs for Q3
- 10:00 AM ET Durable Goods Orders M/M for September
- 10:00 AM ET Factory Orders M/M for September
- 10:30 AM ET Weekly EIA Natural Gas Inventory Data
Friday
- 8:30 AM ET Nonfarm payrolls for October
- 8:30 AM ET Private payrolls for October
- 8:30 AM ET Manufacturing payrolls for October
- 8:30 AM ET Unemployment Rate for Oct
- 8:30 AM ET Average Hourly Earnings M/M for October
- 9:45 AM ET S&P Global Composite, Oct-Final
- 9:45 AM ET S&P Global Services PMI, Oct-Final
- 10:00 AM ET ISM Non-Manufacturing PMI for October
- 1:00 PM ET Baker Hughes Weekly rig count data
TOP FACTORS IN WALL STREET
Federal Reserve meeting
Investors will watch the Federal Reserve’s policy meeting on Wednesday for policymakers’ opinions on the economy and interest rates.
After Chair Jerome Powell indicated rising long-term yields lower the need for further rate hikes, most investors believe the Fed is done tightening. However, some anticipate another hike could occur in December.
The S&P500 has sold down sharply due to Treasury yields rising to their highest levels in more than 15 years. Any hints that the Fed plans to keep rates at current levels into next year might boost bets for additional upside.
The index is up over 8% on the year but has declined more than 10% from its late July high.
Nonfarm payrolls info
This week’s important economic data is Friday’s October nonfarm payrolls report. After a record 336,000 jobs added in September, economists forecast 182,000 additional jobs, which is still strong.
The unemployment rate is predicted to stay at 3.8%, while wage growth will slow to 4%, a post-pandemic low. This may support the Fed’s assessment that pricing pressures are diminishing and that it doesn’t need to boost rates.
On Tuesday, market players will watch for evidence of wage growth slowing in third-quarter employment costs before Friday’s data.
Earnings
With its Thursday earnings announcement, Apple (NASDAQ:AAPL) leads another hectic week of U.S. corporate earnings.
Along with other megacap U.S. tech and growth businesses, Apple shares have driven equity indices upward this year.
Big Tech companies like Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA) disappointed in the third quarter. Though down 11% from its high, the tech-heavy Nasdaq 100 index is up over 30% on the year.
Other firms reporting include McDonald’s (NYSE:MCD) on Monday, Caterpillar (NYSE:CAT) and Pfizer (NYSE:PFE) on Tuesday, Mondelez (NASDAQ:MDLZ) on Wednesday, and Starbucks (NASDAQ:SBUX) and Eli Lilly (NYSE:LLY) on Thursday, highlighting consumers’ purchasing patterns.
The Bank of England
Thursday marks the Bank of England’s penultimate meeting of the year, when officials must decide whether to raise interest rates again after 14 hikes in a row.
Investors expect the BoE to retain rates at 5.25%, a 15-year high, but leave the door open to further hikes. Policymakers are also anticipated to repeat that rates will need to stay around current levels for some time despite signs of an economic slowdown.
The BoE will revise its quarterly predictions, which showed 0.5% economic growth in 2023 and 2024 in August. This month, Governor Andrew Bailey predicted a “very subdued” outlook.
GDP and eurozone inflation
The European Central Bank held interest rates on Thursday after the steepest rate hikes on record and will now focus on Tuesday’s inflation and GDP figures before its final meeting of the year.
Even while rising energy prices remain a worry, October consumer price inflation is forecast to fall to 3.2%, closer to the ECB’s 2% target.
GDP statistics the same day is projected to reveal that the Eurozone economy contracted 0.1% in the third quarter, growing 0.2% annually.
On Thursday, ECB President Christine Lagarde hinted at stable policy and resisted rate cuts.
FOMC/press conference
I think it’s a done deal since Fed fund futures (FFF) suggest a 99.91% hold. Several Fed members noted the uncertainty the Middle East war could bring to monetary policy, with some stating bond yields could do policy for them (to prevent them from raising rates). Whether the tightening tank has juice later on is what needs to be cleaned from the statement or press conference.
Only 26% of the FFF curve predicts an increase in January. This Fed meeting may be quieter than usual.
US Consumer Confidence
Consumer confidence in the US fell to 100 from 103. The Conference Board study focuses on the labor market, whereas the University of Michigan survey covers household finances. Recent labor market data has shown weakness, as have growing continuing claims.
US ADP
Despite its poor track record in forecasting the US NFP, the US ADP is nevertheless a market-moving report, especially since that labor market data is the market’s focus. The consensus predicts 150K October job growth versus 89K in September.
ISM Manufacturing PMI USA
The US ISM Manufacturing PMI should stay at 49.0. After recovering from the 2022 recession, the S&P Global Manufacturing PMI rose to 50.0, beating predictions. Price pressures are also easing, which is excellent for the Fed.
US Job Openings
The US Job Openings are expected to drop to 9.270M from 9.610M. This report moved the market since labor market data is now a key focus. The US labor market has been weakening through fewer jobs rather than more layoffs, as the Fed had sought. Recent growing ongoing claims and dropping initial claims show this.
US Jobless claims
Last week’s US Jobless Claims missed estimates, but Continuing Claims are rising, suggesting that laid-off people are finding it tougher to find work. The consensus expects Initial Claims to be 210K and Continuing Claims to be 1795K vs. 1790K.
US Jobless Rate
The US NFP is predicted to add 172K jobs, down from 336K the month before, and the unemployment rate will stay at 3.8%. Average Hourly Earnings Y/Y are predicted to fall to 4.0% from 4.2%, while M/M is expected to move to 0.3% from 0.2%.
Canada Jobless Rate
The Canadian labor market report is predicted to reveal 20K new jobs vs. 63.8K last month and a 5.6% unemployment rate in place of 5.5%. The BoC has stressed wage growth, therefore wages will be a focus.
US ISM Services PMI
US ISM Services PMI should drop to 53.0 from 53.6. With the Services index expanding, the S&P Global Services PMI exceeded expectations. Good news: price pressures continue to diminish.
Weekly Global Market Calendar (30 Oct-03 Oct)
Monday, October 30
- AUD: Australia retail sales
- EUR: Eurozone confidence, Germany CPI and GDP
Tuesday, October 31
- Halloween
- CNH: China PMI’s
- EUR: Eurozone CPI, GDP
- JPY: BoJ rate decisions, unemployment, retail sales
- USD: Conference Board consumer confidence
Wednesday, NOV 01
- CNH: China Caixin manufacturing PMI
- NZD: New Zealand unemployment
- GBP: UK S&P Global/CIPS Manufacturing PMI
- USD: FOMC rate decision, ISM Manufacturing
Thursday, NOV 02
- AUD: Australia trade balance
- EUR: Eurozone/Germany S&P Global Manufacturing PMI
- GBP: BoE rate decision
- USD: US factory orders, initial jobless claims
Friday, NOV 03
- CNH: China Caixin services PMI
- EUR: Eurozone unemployment
- GBP: BoE’s Jonathan Haskel, BoE’ Huw Pill speech
- CAD: Canada unemployment
- USD: US October nonfarm payrolls (NFP)
Global Events in details date wise
Monday Oct 30
Tuesday OCT 31
BOJ
The BoJ is likely to maintain rates at -0.10% and YCC to aim 10yr JGBs at 0% with a +/-50 bps soft cap and 1% hard cap. There is discussion regarding a YCC policy change. The central bank may also lift its inflation predictions for 2023 and 2024 to exceed 2%.
Eurozone Core CPI YoY
Eurozone CPI Y/Y is predicted to decline to 3.2% from 4.3%, while Core CPI is expected to fall to 4.2% from 4.5%. At the latest meeting, the ECB paused its tightening cycle, and the market expects it to stay on hold until mid-2024, when it will resume cutting rates.
US Consumer Confidence
Consumer confidence in the US fell to 100 from 103. The Conference Board study focuses on the labor market, whereas the University of Michigan survey covers household finances. Recent labor market data has shown weakness, as have growing continuing claims.
Wednesday NOV 1
US ADP
Despite its poor track record in forecasting the US NFP, the US ADP is nevertheless a market-moving report, especially since that labor market data is the market’s focus. The consensus predicts 150K October job growth versus 89K in September.
ISM Manufacturing PMI USA
The US ISM Manufacturing PMI should stay at 49.0. After recovering from the 2022 recession, the S&P Global Manufacturing PMI rose to 50.0, beating predictions. Price pressures are also easing, which is excellent for the Fed.
US Job Openings
The US Job Openings are expected to drop to 9.270M from 9.610M. This report moved the market since labor market data is now a key focus. The US labor market has been weakening through fewer jobs rather than more layoffs, as the Fed had sought. Recent growing ongoing claims and dropping initial claims show this.
Thursday NOV 02
Switzerland YoY CPI
The Swiss CPI Y/Y is projected at 1.8% vs. 1.7% and the M/M at 0.1% vs. -0.1%. The SNB’s 0-2% headline and core inflation target for Switzerland has been in place for some time.
US Jobless claims
Last week’s US Jobless Claims missed estimates, but Continuing Claims are rising, suggesting that laid-off people are finding it tougher to find work. The consensus expects Initial Claims to be 210K and Continuing Claims to be 1795K vs. 1790K.
Friday NOV 03
US Jobless Rate
The US NFP is predicted to add 172K jobs, down from 336K the month before, and the unemployment rate will stay at 3.8%. Average Hourly Earnings Y/Y are predicted to fall to 4.0% from 4.2%, while M/M is expected to move to 0.3% from 0.2%.
Canada Jobless Rate
The Canadian labor market report is predicted to reveal 20K new jobs vs. 63.8K last month and a 5.6% unemployment rate in place of 5.5%. The BoC has stressed wage growth, therefore wages will be a focus.
US ISM Services PMI
US ISM Services PMI should drop to 53.0 from 53.6. With the Services index expanding, the S&P Global Services PMI exceeded expectations. Good news: price pressures continue to diminish.
OTHERS
BoE expects inflation falls.
Thursday, the Bank of England meets a day after the Fed and is not likely to raise rates. After the September surprise delay, regulators will likely keep rates at 5.25%.
UK headline CPI
The UK’s headline CPI rate unexpectedly held steady at 6.7% y/y in September, but the Bank is hopeful the new energy price ceiling will prompt inflation to fall in October. Thus, with inflation falling dramatically, unemployment rising, and economic growth stalling, the BoE’s prudence seems justified.
Sterling may swing depending on the BoE’s current Monetary Policy Report, but most of these downside risks have been priced in. Investors expect the BoE to cut rates less than the Fed or ECB next year, even as the economy flirts with recession. The pound may benefit from any Bank predictions that support the higher for longer case.
Will the BoJ save the Yen?
With the Fed and BoE on hold, the Bank of Japan meeting could be the week’s wildcard due to rumors of a policy change. According to local press sources, the BoJ is considering raising the 10-year yield threshold again after doubling it to 1.0% in July.
The target band remains at plus or minus 0.5%, although it was adjusted for ‘flexibility’. Since inflation in Japan has been at 2% for some time, the BoJ is likely to gradually wind down its ultra-accommodative policies despite the creative rhetoric.
Even if price pressures have calmed in recent months, the Bank’s updated outlook report is projected to suggest that core CPI will overshoot the 2% target for the next two fiscal years, allowing policymakers to tweak the yield curve control strategy. Another reason for higher yields is a strong economy.
This week, the yen broke 150 per dollar, therefore raising the yield cap above 1.0% might help. While the shift hasn’t spurred any intervention to defend the yen, Governor Ueda’s dovish language may limit any policy boost.
Euro recession scare as GDP data arrives
The ECB delivered its strongest indication that Eurozone rates had peaked this week, although President Lagarde did not say so in her post-meeting press conference. However, poor economic indicators and a solid US economy have sent the euro back down and threaten the $1.05 level.
Eurozone flash CPI and third-quarter GDP growth
The euro is unlikely to benefit from next week’s data. Tuesday will bring October’s flash CPI and third-quarter GDP growth projections.
October headline inflation is predicted to drop from 4.3% to 3.4% y/y, and the core measure, which eliminates volatile items, should also fall.
However, the GDP report, projected at -0.1% q/q, may suggest a recession.
Loonie, Aussie, and Kiwi losses: Can they stop?
In Canada, poor economic projections have worried the Bank of Canada. Governor Tiff Macklem signaled that more rate hikes are unlikely after the Bank maintained rates constant this week, sending the loonie significantly down.
Tuesday’s monthly GDP figure and Friday’s October employment report are unlikely to change rates, leaving the local dollar weak.
If Chinese PMI readings on Tuesday and Wednesday indicate increasing mood in Australia’s main export market, its aussie equivalent may rise slightly.
China PMIs
China’s positive PMIs may help the New Zealand currency, which has slumped to a year low. Kiwi traders will also watch New Zealand’s quarterly employment statistics, starting with wages on Wednesday and unemployment on Thursday.
WEEKLY EARNINGS CALENDAR
Monday Oct 30
SoFI
McDonald’s
Western Digital
Pinterest
Transocean (RIG).
Tuesday, OCT 31
Advanced Micro Devices (AMD),
Anheuser-Busch (BUD),
Amgen (AMGN),
Caesars Entertainment (CZR),
Caterpillar (CAT),
First Solar (FSLR)
Pfizer (PFE).
Wednesday, NOV 01
Airbnb (ABNB),
BP (BP),
CVS Health (CVS),
Dupont (DD),
Estee Lauder (EL),
Humana (HUM),
Modelez (MDLZ),
Norwegian Cruise (NCLH),
Qualcomm (QCOM)
Yum Brands (YUM).
Thursday, NOV 02
Apple (AAPL)
Booking Holdings (BKNG)
Carvana (CVNA)
Coinbase (COIN)
ConocoPhillips (COP)
Duke Energy (DUK)
Moderna (MRNA)
Molson Coors (TAP)
Palantir (PLTR)
Starbucks (SBUX).
Friday, NOV 03
Bloomin Brand (BLMN),
CBOE (CBOE),
Dominion (D),
Fluor (FLR),
Monster Beverage (MNST)
Restaurant Brands (QSR).
For details
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