Key Events – BoC and ECB Cuts Incoming, Fed to Follow

Key Data Events

G10

In the US, it is all about inflation data:

1. CPI, PPI – Wednesday, Thursday. CPI and PPI will provide an estimate of core PCE. Provided that estimate remains near or below 25bp, the Fed is likely to cut in December.

In the Eurozone and UK, the main events will be:

1. German Final November CPI – Tuesday. Will provide more detail on the latest print. The market is not expecting any change from preliminary read.
2. UK monthly October GDP – Friday. The market is expecting a slight bounce of +0.1% in the headline MoM number.

Elsewhere in G10:

1. Japan Q3 GDP (2^nd Est) – Monday. Following last week’s Capex upgrade, we expect private non-residential investment to be revised higher. Also keep an eye on domestic household consumption, which could be revised lower.
2. Japan Tankan – Friday. This is the last major data lease before the December BoJ meeting. We watch inflation expectations, worker shortages and consumption expectations.

EM

1. China November PPI – Monday. The consensus forecast is at -2.8% compared to October PPI at -2.9%. However, high-frequency domestic commodity prices and PMI price components indicate a lower PPI than the October value.
2. China November CPI – Monday. Consensus forecast is at 0.4% compared to 0.3% in October. Given food price inflation fell and fuel prices are largely unchanged, we also expect a negative surprise from the CPI.
3. China November Export – Tuesday. Based on container throughput data, we expect a small decline in November export growth from 12.7% in October to roughly 9%, in line with market expectations.
4. China November Bank Loan and Aggregated Financing Data – Monday-Friday. The market expects RMB 1 tn new bank loans and RMB 2.6 tn aggregated financing, both below the October value. High-frequency data indicates a first YoY increase in new home sales. In November, net government bonds issuance was at a record high of RMB 2 tn. Both indicate that November financing data could surprise to the upside, even if the loan demand from the corporations may have remained weak.
5. Hungarian inflation – Tuesday. FX weakness and higher fuel prices will push inflation higher.
6. Czechia inflation – Tuesday. Difficult base effects this month and next will see YoY inflation continuing to rise.
7. South Africa inflation – Wednesday. Recent disinflation is set to end with earlier large declines in fuel prices gradually reversing.
8. South Africa inflation expectations – Thursday. A catch down in inflation expectations to the recent disinflation will be important for further SARB easing.
9. India inflation – Thursday. Easing food prices should mean an end to the recent run-up in CPI.

Central Banks in Action

1. The Fed has entered its pre-meeting blackout.
2. BoC to cut 50 bps – Wednesday. Both 25 and 50bps cuts remain on the table. However, given the evolution of the data since the last meeting, we expect the BoC to cut by 50bps leaving the option open for larger cuts in the future.
3. ECB policy decision – Thursday. We expect the ECB to cut 25bp and revise its macroeconomic projections more dovishly, with inflation sustainably at target in H1 2025.

Markets to Watch

• We have re-entered short ERZ5. This week’s ECB (Thursday) could provide a good entry point to add to the trade if the tone is dovish but refrains from explicitly opening the way to 50bp cuts.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)