Newsquawk week ahead: Highlights include US and China CPI, US earnings season

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The upcoming week of January 9-14:

DB: Swiss Unemployment (Dec), German Industrial Production (Nov), EZ Sentix (Jan), Unemployment (Nov), China Exports/Imports (Dec)
YOU: EIA STEO; Norwegian CPI (Dec), US NFIB (Dec), China M2 Loans and New Yuan (Dec)
JAR: Australian CPI (November)
GAME: Australian Trade Balance (Nov), US CPI (Dec), CMI (Jan 2)
FRI: ECB TLTRO redemption amount announcement; UK GDP (Nov), Swedish CPIF (Dec), EZ Trade Balance (Nov), Industrial Production (Nov), US University of Michigan Prelim. (January), German Wholesale Price Index (December), Canadian Housing Starts (December)

warning: Previews are on the agenda

Chinese CPI (game): China inflation data for December is not expected to be released at this time. To repeat the previous report, according to Global Times (GT), CPI Y/Y increased to 1.6% in November from 2.1% in October, food price print was 3.7%, which is 3.3 points lower than in October. Most of the consumer inflation affected food prices in the month – pork prices increased by 34.4%. “According to a research report published by the China International Capital Corporation (CICC), live pig supply density improved in November amid policy adjustments by Chinese authorities,” GT reported. . China has pegged consumer inflation at around 3% for 2022. And PPI fell by 1.3% in November, mainly due to base effects. Using China’s latest Caixin PMI data as a proxy for December, the statement said, “Input costs facing Chinese businesses rose at the slowest pace since September and only marginally. Invoice prices remained stable, with discounts from manufacturers offset by price increases from service companies. From a broader policy perspective, Caixin’s chief economist warned: “Under pressure from falling demand, weakening expectations and a supply shock, the Central Conference’s annual economic labor report said the foundations for economic recovery are not strong. Policymakers explained that priority should be given to restoring and expanding domestic consumption.

US CPI (game): Consensus expects headline CPI to print 0.1% M/M in December, in line with the previous rate, while the annual measure is expected to decline to 6.7% Y/Y from 7.1%. Credit Suisse says commodity prices will be adversely affected as supply chain and demand conditions ease. Services inflation will continue to be supported by house prices, with CS peaking for a couple of quarters before easing later in the year. Lower gasoline prices offset higher food inflation, the bank said. In addition, core CPI may rise 0.3% M/M, according to analysts, slightly recovered from the previous 0.2%; although the annual core inflation rate decreased slightly from 6.0% to 5.9%. “The report, in line with expectations, will reassure the Fed as it plans to slow and possibly pause the bullish cycle earlier this year,” the bank wrote. NOTE: The New York Fed will release its monthly consumer inflation expectations on Monday, and the University of Michigan inflation expectations components released on Friday will also be in focus. As other data shows, traders will be watching inflation updates in many forms as the Fed wants to see significant progress in lowering its target price pressures before moving forward. change the inflation rate and start focusing again on the worsening growth outlook.

BoK Policy Announcement (Friday): SocGen analysts expect the BoK to raise interest rates by 25 basis points to 3.50% on Friday, marking the end of SocGen’s rate hike cycle. “We have lowered our last policy rate forecast to 3.50% from 3.75%,” he wrote, “as data continue to point to weak economic activity and rising inflation, while sustainability concerns persist due to high corporate leverage and weak housing.” . market, that would be bad for growth prospects.” Elsewhere, SocGen believes the weaker USDKRW exchange rate will ease pressure on South Korea’s central bank to keep up with the Fed’s tightening cycle, and believes the BoK will follow the “majority view” of Policy Council members proposed in November by fixing its terminal rate. At the level of 3.50%.

China Trade (Friday): Trade data for December, which sums up the final month of the year, is currently not expected due to various domestic COVID measures, high inflation and tighter monetary policy abroad amid fears of a recession. Domestically, the zero-tolerance COVID policy was relaxed and cases continued to rise as China responded to the weakened virus in early December. Using China’s Caixin PMI as an indicator, the statement said “the latest contraction in sales was the fastest in three months, with companies highlighting relatively weak demand conditions amid the ongoing pandemic.” External demand for Chinese manufactured goods also fell, and at a faster pace than in November. Weak global economic conditions and the pandemic were largely responsible for the drop in export activity, although some companies reported a relative improvement in November.

UK GDP (Friday): Consensus expects a 0.3% M/M contraction in November versus a 0.5% expansion in October. October’s rise was boosted by a favorable M/M comparison compared to September, which was impacted by the extra bank holiday for the Queen’s funeral. Pantheon Macroeconomics noted at the time that “October GDP was still 0.1% below January 2020 levels and 0.4% below the artificial peak in May 2022.” Ahead of the upcoming release, Investec analysts (who have the above consensus view) predict that GDP is likely to be relatively flat in November due to the “reversal in November of national insurance growth that took effect in April 2022, which is slightly higher than in October with tax payments.” Meanwhile, analysts warn, “A narrower measure of manufacturing output could see further declines, given the sluggish level of the manufacturing component of the PMI survey.” Investec forecasts fourth-quarter GDP fell 0.1%, but is likely to slow deeply this year. From a policy perspective, February’s 25 basis point hike was priced at 39%, and a 50 basis point increase to 61%. Inflation is still on policymakers’ minds, although weak growth could prompt other MPC members to join. Tenreiro and Dhingra are either in the unchanged camp or downgrading their votes to 25 basis points from 50 basis points in December.

US Corporate Earnings Season (Friday): It’s going to be a quiet start to the earnings season, and despite nearly 150 US companies reporting the week of January 9, only a handful of companies are on the S&P 500 list. However, six of these companies are major financial companies (BAC, BK, BLK, C, JPM, WFC), and healthcare giant UNH will also report – all on Friday. For the broader earnings season, analysts expect S&P 500 companies to report a 1.6% decline in fourth-quarter earnings, according to Refinitiv, and the “earnings slump” will be a topic of interest among the analyst community. Other themes likely to dominate this season’s updates are margin compression due to higher inflation and declining international revenues due to the relative strength of the US dollar against others. global peers. In addition, according to analysts, the company’s forecasts for the first quarter can be more informative for prospects than the numbers of the fourth quarter alone, which will help to know the opinions of the companies regarding the debate about how far the United States will fall into a recession, and during any period. potential. the recession could be prolonged. Rathbone strategists say the new year will be filled with old worries, including the war in Ukraine, unpredictable energy demand and continued tariffs, which mean there will be no quick turnaround. normal. He said the earnings season would be crucial because the outlook in the US was still relatively buoyant, which “means there is room for disappointment if the recession deepens.”

This article originally appeared on Newsquawk

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