Asia | China | Economics & Growth | Monetary Policy & Inflation | US
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We’ve got some important data releases this week. Here are my three focuses:
(1) Who’s in the Deflation Club? Already, we have China’s data for October, which showed surging headline inflation on higher pork prices, but anemic core inflation at 1.5%. This week, we will get October data for the US (Wed), UK (Wed), Sweden (Wed), Norway (Mon) and Euro-area (Fri) and next week, we get Canada and Japan inflation. On recent trends, most countries seem to be in the central bank comfort zone of 2%, but Euro-area and Japan are struggling like China. These are emerging as the countries to watch for deflation.
(2) Will Trade War Finally Affect US Small Businesses? We have President Trump and Fed Chair Powell speaking on the economy this week. Recent optimism around a trade deal with China appears to dented by reports that the US rolling back tariffs may not happen. Trump’s speech to the Economics Club on Tuesday may help clarify. Meanwhile, Powell’s speech on Wednesday will likely stick the Fed’s more recent neutral tone. An important release to watch, then, will be Tuesday’s US NFIB small business optimism index. It’s so far not reacted much to worsening trade dynamics. Instead it appears to have been buoyed by Trump’s tax and deregulation drive. If the October print for the NFIB index is poor, this could add to the case for a sharper US slowdown.
(3) Will the Chinese Consumer Recover? Finally, this is China data week. We’ll get credit data (some time during the week), and key growth data including investment and retail sales (Thursday). We also get the earnings report for Tencent on Wednesday– one of the Chinese tech powerhouses. Baidu and Alibaba have already reported strong results, which suggests there is some life in the China consumer. Both Tencent and retail sales should help confirm this (see chart).
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.
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