Key Factors
Key Factors :
Key Factors : This week’s economic announcements will most certainly affect the market’s price for rate cuts in the United Kingdom, Canada, and Australia
The focus of a holiday-shortened week will be retail sales statistics and bank earnings, as markets await more information on the health of US consumers. Global leaders are meeting in Davos, China will reveal full-year GDP numbers, and oil prices are expected to stay unpredictable. Here’s what you need to know to get your week started.
Weekly Economic calendar USA JAN 15 to 19th
Monday
- US Markets are Closed in Observance of Martin Luther King Jr. Day Holiday.
Tuesday
- Canada CPI,
- ICSC Weekly Retail Sales
- Empire Manufacturing for January
- Fed’s Waller Speaks on Economic Outlook and Monetary Policy
Wednesday
- MBA Mortgage Applications Data
- Import Prices for December
- Export Prices for December
- Retail Sales M/M for December
- Retail Sales – Less Autos M/M for December
- Johnson/Redbook Weekly Sales
- Industrial Production M/M for December
- Capacity Utilization for December
- Business Inventory M/M for November
- NAHB Housing Market Index for January
- US Treasury to Auction $13B in 20-year notes.
- Federal Reserve Releases Beige Book
- Fed’s Williams Speaks at NY Fed Event
- API Weekly Inventory Data
Thursday
- Fed’s Bostic Speaks on Economic Outlook
- Weekly Jobless Claims
- Continuing Claims
- Housing Starts M/M for December
- Building Permits M/M for December
- Philly Fed Index for January
- Weekly EIA Natural Gas Inventory Data
- Weekly DOE Inventory Data
- Fed’s Bostic Speaks on Economic Outlook
Friday
- Existing Home Sales M/M for December
- University of Michigan Confidence, Jan-P
- Baker Hughes Weekly rig count data
- Net Long-term TIC Flows for November
- Fed’s Daly Speaks in Fireside Chat
TOP FACTORS IN WALL STREET
US Retail sales
The release of retail sales statistics in the United States on Wednesday will be eagerly monitored for signs that consumer spending, a primary engine of economic development, is remaining resilient in the face of rising interest rates.
In order to combat inflation, the Federal Reserve raised interest rates last year. However, with price hikes moderating, the likely speed of interest rate decreases this year, as well as the economy’s ability to avoid a recession, are the primary issues looming over markets.
Retail sales are estimated to have increased 0.4% in December, following an increase of 0.3% in November.
Data on construction starts and existing home sales are expected to show a faltering housing market in the face of increased borrowing costs.
Investors will also hear from Fed officials such as Fed Governor Christoper Waller, Atlanta Fed President Raphael Bostic, and San Francisco Fed President Mary Daly.
Bank’s earnings
Following a mixed bag of profits from big lenders on Friday, Goldman Sachs (NYSE:GS) and Charles Schwab (NYSE:SCHW) are slated to report on Tuesday and Wednesday, respectively.
Major U.S. banks reported reduced earnings in a bumpy fourth quarter marred by special charges and job cutbacks, with evidence that the income boost from high interest rates is fading and some consumer loans are beginning to deteriorate.
Nonetheless, the country’s top lenders, JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), and Citigroup (NYSE:C), expressed optimism about the economy, noting that customers remained resilient even as consumer credit defaults began to return to pre-pandemic levels.
Jamie Dimon, CEO of JPMorgan Chase, the largest bank in the United States and a leading economic indicator, said consumers were still spending and that markets expected a soft landing, but he warned that government spending could continue to drive up prices.
Davos
The 54th World Economic Forum, themed “Rebuilding Trust,” kicks up Monday in the Swiss ski town of Davos.
Political figures, central bankers, and corporate leaders will meet to examine the global economic situation, which includes wars in Ukraine and Gaza, trade issues, and rising debt levels.
China’s Premier Li Qiang and France’s President Emmanuel Macron, the only G7 leader in attendance, are both scheduled to deliver special speeches.
Christine Lagarde, President of the European Central Bank, is slated to make three appearances. Kristalina Georgieva, Managing Director of the International Monetary Fund, Ajay S. Banga, President of the World Bank, and Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, will also be present.
China GDP
On Wednesday, China will reveal full-year GDP data, which will show how close the world’s second-largest economy came to meeting the official 5% growth target for 2023.
A persistent housing crisis, wary consumers, and geopolitical problems all lead to another difficult year for China’s economy.
In other news, Germany is set to report full-year GDP figures on Monday, which might reveal that the Eurozone’s largest country experienced a mild recession in 2023.
The UK will announce inflation statistics on Wednesday, a day after the most recent employment figures. Underlying inflation is projected to continue significantly higher than the Bank of England’s 2% target.
The Bank of England has stated that it intends to maintain interest rates high “for an extended period” to ensure that the recent increase in inflation does not cause long-term issues in the economy, but investors expect the first rate decrease as early as May.
Oil Price
Oil prices are expected to remain volatile in the next week after jumping 1% on Friday as an increasing number of oil tankers reversed course from the Red Sea following US and UK operations on Houthi targets in Yemen following attacks on shipping by the Iran-backed group.
Brent was down 0.5% for the week, while US crude was down 1.1%. Earlier in the week, significant price cuts by leading exporter Saudi Arabia, as well as a surprising increase in US oil stockpiles, fueled supply concerns.
Although a shortage of shipping in the Red Sea causes transportation challenges for some crude supplies, the impact on physical oil markets has been negligible thus far.” Reuters spoke with Matt Stephani, head of investment advisory firm Cavanal Hill Investment Management.
“If the conflict were to spread to the other side of the Arabian peninsula… oil markets may react much more significantly,” he said.
Weekly Global Market Calendar (15 Jan-19 Jan)
Monday, JAN 15
- PBoC MLF,
- US Markets closed for MLK Day,
- BoC Business Outlook Survey.
Tuesday, JAN 16
- UK Labour Market report,
- Canada CPI,
- Fed’s Waller.
Wednesday, JAN 17
- China Industrial Production and Retail Sales,
- UK CPI,
- US Retail Sales,
- US Industrial Production,
- US NAHB Housing Market Index.
Thursday, JAN 18
- Australian Labour Market report,
- ECB Minutes,
- US Building Permits and Housing Starts,
- US Jobless Claims,
- New Zealand Manufacturing PMI.
Friday, JAN 19
- Japan CPI,
- UK Retail Sales,
- Canada Retail Sales,
- US University of Michigan Consumer Sentiment.
Global Events in details date wise
This week’s economic announcements will most certainly affect the market’s price for rate cuts in the United Kingdom, Canada, and Australia. Market players will also be paying particular attention to what the Fed’s Waller has to say about the recent rapid easing of financial conditions.
Monday 15th
PBoC
On Monday, the PBoC will execute the MLF operation, and we will see if they decide to lower the rate or keep it at 2.50%. There are some hopes for a 10 basis point cut tomorrow, which would pave the way for a cut in LPR rates as well. The latest Chinese inflation numbers continue to indicate deflationary tendencies, giving the PBoC plenty of space to loosen policy even further.
Tuesday Jan 16th
Unemployment Rate in the United Kingdom
The UK unemployment rate is predicted to rise to 4.3% from 4.2% previously. The average wages excluding bonuses are 6.6%, compared to 7.3% previously, while those including bonuses are 6.8%, compared to 7.2% previously. This report is unlikely to impact the BoE’s stance, as the central bank continues to favor a “wait and see” strategy, but the data will undoubtedly influence market pricing, with more to come the following day with the release of the UK CPI report.
Measures of Inflation in Canada
The Canadian CPI Y/Y is projected to be 3.3% vs. 3.1%, while the M/M figure is expected to be -0.3% vs. 0.1% previously. The Bank of Canada is focusing on underlying inflation metrics (common, median, and trimmed-mean), and while rates are approaching the 1-3% target range, Governor Macklem stated that more work is needed on both the inflation and wage growth fronts. As a reminder, the most recent data showed underlying inflation indicators creeping upward and wage growth increasing.
Fed’s Waller
Given the Fed’s recent vigorous easing of financial conditions, it’s worth noting that Waller will deliver a speech on the economy and monetary policy at Brookings, followed by a Q&A session. Waller is an important FOMC member because he has served as a “leading indicator” for changes in Fed policy. He was the first to mention QT in December 2021, and he was the first to mention rate cuts in November 2023.
Wednesday JAN 17
UK Core CPI
The UK CPI Y/Y is projected to be 3.8% vs. 3.9% previously, while the M/M measure is expected to be 0.2% vs. -0.2% before. The Core CPI Y/Y is predicted to be 4.9%, down from 5.1% before, with no consensus for the M/M number, despite the preceding announcement showing a -0.3% dip. Again, this study has no influence on the February BoE meeting, but it will undoubtedly affect market pricing, with the first decrease projected in May and a total of 125 basis points lowered by year’s end.
Retail Sales in the United States
The US Retail Sales M/M figure is predicted to be 0.4%, up from 0.3% previously, while the ex-autos figure is expected to be 0.2%, up from 0.2% previously. Also keep an eye on the Control Group, which is viewed as a better indicator of consumer spending and has been routinely outperforming predictions for several months.
Thursday JAN 18
Unemployment Rate in Australia
The Australian unemployment rate is predicted to remain constant at 3.9% in December, with 18K jobs added compared to 61.5K in November. This report will have little consequence on the RBA meeting in February, but it will influence market pricing, with a weak report likely raising rate cuts expectations following the recent miss in the Monthly Australian CPI data.
Jobless Claims in the United States
The weekly release of US Jobless Claims remains one of the most essential since it is a more timely indicator of the status of the labor market. Initial Claims remain at cycle lows, but Continuing Claims have begun to trend lower after reaching a new cycle high. The consensus for Initial Claims this week is 207K vs. 202K previously, but there is no estimate for Continuing Claims at the time of writing, since the previous week’s total was 1834K vs. 1868K previously.
Friday JAN 19
Core CPI in Japan
The Japanese Core CPI Y/Y is predicted to be 2.3%, down from 2.5% previously. The headline inflation rate in Japan has been rapidly declining due to energy deflation, while the Core-Core measure, which excludes food and energy prices, has been declining at a slower rate. The Tokyo CPI, which is considered a leading indication for the National CPI, has recently declined further, while Average Cash Earnings have grown at a far slower rate than projected. This has pushed expectations for monetary policy normalization further away, given the conditions sought by the Bank of Japan have not materialized.
WEEKLY EARNINGS CALENDAR
Monday, JAN 15
NA
Tuesday, JAN 16
Goldman Sachs, Calavo Growers CVGW, Fulton Financial FULT, Hancock Whitney HWC, Interactive Brokers IBKR, Morgan Stanley MS, Pinnacle Financial Partners PNFP, PNC PNC, Progress Software PRGS.
Wednesday, JAN 17
Kinder Morgan KMI, Alcoa AA, Charles Schwab SCHW, Citizens Financial Group CFG
, Discover Financial Services DFS, H.B. Fuller FUL, Prologis PLD, Synovus SNV, U.S. Bancorp USB, Wintrust Financial WTFC
Thursday Jan 18
Bank OZK OZK, F.N.B. Corp FNB, Fastenal FAST, First Horizon FHN, Home Bancshares HOMB, J.B. Hunt Transport JBHT, KeyCorp KEY, M&T Bank MTB, Northern Trust NTRS, PPG Industries PPG, Texas Capital Bancshares TCBI, WNS WNS
Friday, JAN 12
Travelers TRV, Ally Financial ALLY, Comerica CMA, Fifth Third FITB, Huntington Banc HBAN Regions Financial RF, SLB SLB, State Street STT
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