Key Events: Presidential Debate, Inflation and ECB

Key Events

G10

In the US, the main data points are:

1. Trump and Harris debate, Tuesday 9pm EST. The debate could bring more clarity on the candidates respective policies.  The challenge for President Trump will be to move away from personal attacks on VP Harris and for VP Harris to shore up her credibility on the economy and the border.
2. CPI, PPI – Wednesday, Thursday. I agree with the consensus on mom CPI at 0.2%. With CPI and PPI we will get an estimate of PCE, the Fed main focus.   The risk of a PCE surprise large enough to shift Fed policy seems low.   Since Q1 CPI and PCE have shifted to a lower range the Fed is happy with.  Also, at this stage the Fed is more focused on the employment than on the inflation leg of its mandate.
3. U Mich consumer confidence – Friday. Consensus expects roughly no change relative to August.  The more interesting part of the release will be inflation expectations that have been falling (1yr) or flat (LT).

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

1. UK Employment – Tuesday. July employment and weekly earnings figures could offer Bank of England policymakers the key data needed to adjust their outlook ahead of a potential second interest rate cut in this cycle.

EM

1. China exports remained strong – Monday. Container throughput and Korean exports suggest exports remained strong. Consensus estimate of +4% YoY looks too low.
2. China CPI & PPI – Monday. Falling commodity prices and weak PMI output prices likely to push PPI into deeper deflation. We expect CPI to stabilize around last month’s level (0.5% YoY).
3. Mexico CPI set to drop – Monday. New CPI basket kicks in this month. Core goods has been driving disinflation with core services (focus for Banxico) lagging. We expect the pattern to continue.
4. Brazil CPI to soften – Core likely slowed to ~ 0.3% MoM which could be a relief for market. BCB meets on 18 Sep.
5. Hungary disinflation to resume for now – Tuesday. A helpful base effect will allow YoY inflation to temporarily resume its decline.
6. Czechia inflation to return to target – Tuesday. Lower fuel prices and a stronger currency should mean CPI returns to the 2% target.
7. South Africa inflation expectations – Thursday. Further decline in expectations could determine whether the SARB cuts by 25bps or 50bps on 19 September.
8. India inflation to drop further – Thursday. CPI likely to drop further below RBI target 4% – which should allow RBI to cut rates in October.
9. India trade deficit to rise on gold – Thursday. With gold import tariff lowered, gold imports are reported to be surging. Market expects monthly deficit to rise from USD23.5bn to USD33bn.
10. China Social Financing data – day TBD. Seasonal pickup in August + boost from govt. Issuance. But underlying weakness should persist in YoY measure of bank loans and medium-term household borrowing.

Central Banks in Action

1. ECB to cut by 25bps – Thursday. ECB commentary notes data in line with baseline, arguing for gradual pace of cuts. Market will focus on staff projection to growth (downgrade seems likely), and any change in communication from Lagarde.
2. The Fed pre-meeting blackout starts on Saturday September 7^th.

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