Key Events: Disruption Is Inbound!

Key Events

G10

In the US, these are the highlights:

1. Inauguration – Monday. Reports suggest up to 100 day-one executive orders. Key ones include tariffs, but the incoming administration has skilfully prepared the markets and plans a gradual and predictable phase in. This could be dollar negative.
2. S&P PMIS – Friday. These are more trading than economic events – the PMI no longer correlate well with GDP. Our Event Monitor give market impact.

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

1. UK labour market data – Tuesday. PAYE data suggests last month’s overshoot in private regular pay was not a one-off. But feedthrough into inflation has been weak since construction and B2B services were the drivers. More important for the BoE will be the PAYE employment numbers (LFS ones being non-credible). Last month’s numbers showed a sharp downtick. If Tuesday’s print confirms this, it opens the way to the BoE becoming much more dovish.
2. UK public sector finance data – Wednesday. Since the last budget, actual outturns have aligned with OBR expectations for CGNB. We expect OBR expectations for interest cost are too high. We see comparisons between the current budget and the Truss one as overdone.
3. Preliminary PMIs – Friday. PMIs are a poor indicator of hard data, particularly in the EZ where they have shown very strong seasonality lately. This could support the readings ahead and see fading dovish pricing for the ECB.

Elsewhere in G10:

1. New Zealand CPI – Tuesday. All eyes remain on non-tradables inflation, expected in line with RBNZ forecasts (+0.8% QoQ). However, the recent bounce in select price indices suggests tradable inflation will come in hotter than the RBNZ forecast (consensus: +0.2% QoQ; RBNZ: -0.1% QoQ).
2. Japan CPI – Thursday. Expected to climb after the government cut energy subsidies. However, the BoJ will stay focused on service-price inflation, which likely edged higher.

EM

1. South Africa inflation – Wednesday. Rand weakness and higher oil should push inflation back above 3%.

Central Banks in Action

1. Fed pre-meeting black out in effect.
2. Bank of Japan – Friday. We expect the BoJ hike 25bp, with Nikkei’s Friday piece likely confirming the move.
3. CBRT rate decision – Thursday. Ongoing disinflation and contained FX weakness should ensure another 250bp rate cut to 45%.
4. Singapore policy decision – Friday. Slowing inflation and downside risks to growth leave risk of MAS easing, via a reduced slope of S$NEER appreciation.
5. PBoC LPR decision – Monday. We expect no change, given the current intensifying pressure on the RMB; PBoC will leave the OMO and LPR rate unchanged.

Markets to Watch

• USD is in focus with the inauguration Monday. Super strong tariffs would likely see the USD rally (alongside the JPY, with EUR, AUD, BRL, and MXN likely underperforming). Softer-than-expected tariffs would buoy risk currencies and see European pessimism partially priced out.

(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.)