Below are the most important global events likely to affect FX and bond markets in the coming week starting November 11.
U.S. inflation and retail sales data will be the highlight of the week's economic data as investors continue to digest the implications of Donald Trump's victory in the U.S. presidential election.
Elsewhere, a raft of data from China will attract attention, alongside Japanese growth figures and ZEW economic sentiment numbers from Germany.
U.S.
A quieter, holiday-shortened week due to Veterans Day on Monday awaits in the U.S. in the wake of Donald Trump's election win the previous week.
The details of Trump's policies and their implications remain uncertain until his inauguration in January. However, his plans for trade tariffs and tax cuts are expected to be inflationary, potentially leading to fewer interest-rate cuts by the Federal Reserve than previously expected.
U.S. Treasury yields and the U.S. dollar have already risen significantly as a result.
The Fed cut interest rates in November, as expected, but another rate cut in December looks uncertain.
Given that, Wednesday's CPI inflation data for October will be closely watched and could be significant for the interest-rate outlook.
Principal Asset Management's chief global strategist, Seema Shah, said a shift in the Fed's tone in its statement accompanying the latest rate cut suggests the central bank is less confident that it is winning the battle against inflation.
"The Fed may have lost some confidence in the disinflationary path." The U.S. election result could exacerbate this dynamic, she said.
Shah expects another rate cut in December but said the outlook beyond that is "very uncertain."
Analysts expect headline annual CPI inflation will be higher in October than September's 2.4% due to base effects.
Retail sales figures on Friday, Nov. 15 will also be watched closely for an indication of how well the U.S. economy is performing.
Other data due include producer price data for October and weekly jobless claims Thursday, as well as industrial production for October on Friday, Nov. 15.
MEXICO
Mexico's central bank is expected to cut interest rates by 25 basis to 10.25% in a decision Thursday.
However, the recent fall in the value of the Mexican peso in the wake of Donald Trump's U.S. election win could prompt some caution from the central bank, HSBC economists said.
EUROZONE
Germany's ZEW economic sentiment indicator on Tuesday could shed some light on how investors stand following the German coalition government's collapse.
HSBC economists expect the ZEW index to be mixed. They expect the current situation component to improve, "particularly following an upside surprise in the third-quarter flash GDP release." However, ZEW expectations are likely to decline further, as concerns over potential global trade frictions outweigh better activity news from China.
Also on Tuesday, Germany will release final inflation data for October.
Second-estimate GDP growth data for the eurozone are due Thursday, after flash estimate figures showed a 0.3% expansion on the quarter in July-September. Flash estimate eurozone employment and industrial production data will be released Thursday.
Minutes from the European Central Bank's most recent meeting will be released Thursday. Final French CPI as well as Italian CPI data are due Friday.
Germany will auction 5 billion euros in December 2026 Schatz on Tuesday and 4 billion euros in August 2034 Bund on Wednesday. The Netherlands auctions bonds on Tuesday, followed by Italy and Portugal on Wednesday.
U.K.
The Bank of England cut interest rates at its November meeting, but further rate cuts look likely to be gradual due to a solid economy and because policies in the recent budget could stoke inflation.
Data in the coming week will provide some clues on the health of the economy. These include jobs and wages figures Tuesday, as well as the provisional estimate of third-quarter gross domestic product Friday. The RICS house price index for October is due Thursday.
The U.K.'s Debt Management Office will sell the October 2043 gilt on Tuesday and the March 2028 gilt on Wednesday.
SCANDINAVIA
Norwegian inflation data for October are due on Monday. This comes after Norges Bank left interest rates on hold at its November meeting and signaled that rate cuts are unlikely until early next year.
Norway's central bank said inflation had slowed markedly, but it warned that the recent depreciation of the Norwegian krone and a "rapid rise" in business costs could limit further declines.
Swedish inflation data for October are due Thursday.
Sweden's interest-rate outlook contrasts markedly with that of Norway. The Riksbank recently cut interest rates by a larger-than-usual 50 basis points due to Sweden's weak economy. The central bank said the policy rate could be cut again in December.
Norway will hold a bond auction on Wednesday, while Sweden will sell inflation-linked bonds on Thursday.
CHINA
China's consumption, investment and industrial output all likely grew faster in October, according to a poll of economists by The Wall Street Journal. If data releases due during the week confirm those expectations, that would provide fresh evidence that Beijing's stimulus push is having an effect.
Data on retail sales--a proxy for consumption--on Friday, Nov. 15 are expected to show growth of 3.7% on year, up from September's 3.2% increase. Fixed-asset investment, a barometer for investment, likely climbed 3.5% in the January-October period, compared with the 3.4% rise in the first three quarters of the year. Industrial production is expected to have increased 5.6% in October, picking up from September's 5.4% rise.
Housing price data will also be closely watched for signs of market stabilization after a recent batch of positive readings signaling that sales are picking up.
ING economists will also be watching China's Singles' Day, e-commerce's Black Friday equivalent, for clues as to how consumption is faring. They expect to continue to see solid growth numbers from the event.
Further announcements on stimulus will also be in focus after a meeting of China's top legislative body approved a program to swap local government debt but didn't offer up the fiscal stimulus details markets had been hoping for.
Danske Bank's Allan von Mehren thinks China will keep increasing stimulus until it sees a sustained improvement. But for now, the latest announcement will keep feeding doubts as to whether policymakers will do what it takes, he said.
JAPAN
With many economists and investors expecting the Bank of Japan to raise interest rates in the near term, markets will look at the summary of opinions for its Oct. 30-31 policy meeting for hints on how close the bank is to the next hike. The summary is scheduled to be released on Monday. At the October meeting, the central bank left its policy rate unchanged and released an outlook suggesting that the economy is moving in line with its projections.
Government data due Friday, Nov. 15 is likely to show the Japanese economy expanded modestly in the third quarter thanks to a recovery in consumption backed by higher wage-supported growth. Real gross domestic product is expected to have grown 0.2% from the previous quarter in the July-September period, or 0.6% in annualized terms, according to a poll of economists by data provider Quick.
The Ministry of Finance is slated to auction 250 billion yen of 10-year inflation-indexed bonds on Monday and 900 billion yen of 30-year sovereign debt on Wednesday. The ministry's auction of super-long Japanese government bonds on Wednesday could attract demand from long-term Japanese investors such as insurance companies and pension funds.
AUSTRALIA & NEW ZEALAND
In Australia, employment data for October on Thursday will be a crucial moment for bond traders.
For months, economists have badly underestimated the strength of job creation, and there's every chance of a similarly strong result in October.
Unemployment is currently hovering around historic lows, while labor-market participation is at record highs. All this is occurring even as the economy has slowed to a crawl.
The strength of employment is being fueled in part by strong hiring of health carers, and while the labor market continues to show surprising gains, the Reserve Bank of Australia will find it hard to justify a cut in interest rates.
Most economists think the RBA will lower the official cash rate in February, but there's a growing number of forecasters who think the central bank will delay until the mid-point of next year or even the second half.
Recent communication by the RBA has offered little in the way of comments pointing toward a coming reduction in the Official Cash Rate.
New Zealand data releases include the RBNZ Survey of Expectations on Monday and house price figures from REINZ on Thursday.
INDIA
India will be releasing inflation data on Tuesday, and monthly wholesale price index data on Thursday.
India's headline inflation likely rose 5.8% on year in October, according to the median estimate of six economists polled by WSJ. That would be higher than the 5.49% recorded in September. Vegetable prices, which are already elevated, could rise further, while a global price spike and higher import tax for edible oil could have pushed food and beverage inflation close to double digits, Citi analysts write in a note.
The Reserve Bank of India will be watching October and November inflation data to determine whether a rate cut is due before the end of the year.
While the RBI has changed its stance to neutral from hawkish, it could want to wait for October's likely spike in inflation to subside before making a move, HSBC economists Pranjul Bhandari and Aayushi Chaudhary said. It could also prefer to ease once global financial markets steady, they said, noting that a strong dollar has been pressuring emerging-market currencies.
MALAYSIA
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11-08-24 1056ET
