Top Economic News You Can’t Afford to Miss Today
The U.S. Federal Reserve’s anticipated 25-basis-point rate cut will take center stage in a week filled with central bank decisions from Japan, the U.K., Norway, and Sweden.
In addition, a busy economic calendar awaits as key economic news and data is released ahead of the year-end holidays. Eurozone surveys will offer insights into potential economic recovery, while a slew of crucial reports from China will also command attention.
Major Economic News, Data and Events scheduled this week
U.S. – Fed Rate Cut and PCE Number in Economic News from the US.
The U.S. Federal Reserve announces its last rate decision of 2024 on Wednesday with respect to the Fed rate cut. It is widely expected to cut interest rates by 25 basis points as inflation has been sufficiently contained recently to justify a further reduction.
There will be heightened focus on the outlook for future interest-rate cuts, especially given that many of the policies of President-elect Donald Trump are expected to be inflationary.
The Fed will present its latest rate projections and these will be closely scrutinized in the upcoming Fed rate cut.
In terms of economic data, focus will center on Friday’s release of November PCE inflation, the Fed’s preferred inflation gauge.
Other economic data will provide further information on how well the economy is faring as we near year-end. These include the Empire State Manufacturing Survey and flash purchasing managers’ surveys for December Monday, retail sales Tuesday, and the final estimate for third-quarter gross domestic product and weekly jobless claims Thursday. Housing starts are also due Wednesday and existing home sales Thursday.
CANADA – Core Retail and Retail sales data in economic news
Canadian inflation data for November are due for release Tuesday and will be closely watched as investors gauge the outlook for interest rates going forward.
The Bank of Canada delivered a second consecutive half-point interest-rate cut this month, but rate reductions are expected to be more gradual from here.
Canadian housing starts data are due Monday.
EUROZONE – PMI Numbers
Flash estimate purchasing managers’ indices for France, Germany and the eurozone on Monday will provide insight into the subdued outlook of the bloc. This comes after the European Central Bank this month reduced GDP and inflation forecasts as it cut interest rates once more.
Germany’s Ifo and ZEW indices on Tuesday will also be watched closely as Europe’s largest economy continues to struggle. Germany’s GfK consumer climate survey is due Thursday.
Eurozone final inflation figures for November are due Wednesday. Italy will release consumer and business confidence surveys Friday, followed by a eurozone consumer confidence survey for December. Producer price indices from Germany, France and Italy will be released the same day.
U.K. – Bank of England Policy, CPI
A decision by the Bank of England is due Thursday, alongside a raft of economic data releases.
The BOE is widely expected to keep its policy rate on hold at 4.75%, sticking to a policy of gradually reducing rates every few months due to concerns about the risks of inflation remaining elevated.
U.K. money markets show an 85% chance that rates will be left on hold this month, with February’s meeting considered to be a much more likely candidate for the BOE to cut rates.
Ahead of Thursday’s decision, data are expected to show another uptick in annual CPI inflation in November, which would add to the argument for the BOE to keep rates unchanged this month.
Annual CPI fell below the BOE’s 2.0% target in September, but then picked up to 2.3% in October. Investec economists expect that the rate will tick up again to 2.6% in November, with core inflation also rising.
Flash purchasing managers’ surveys on manufacturing and services activity in December are due Monday, followed by jobs data Tuesday, then retail sales and public finances figures Friday, Dec. 20. Producer price data are released at the same time as the CPI inflation data Wednesday.
JAPAN – Bank of Japan Policy
All eyes are on the Bank of Japan as rate-hike expectations swirl ahead of its two-day monetary-policy meeting ending on Thursday.
Opinions are divided over whether the central bank will deliver its final rate hike of the year or opt to wait for the new year.
Economists at Nomura expect the Bank of Japan to raise its policy rate by 25 basis points to 0.50% at the meeting, but still see scope for a deferment to January or beyond.
If the BOJ does decide to forgo a rate hike in December because of uncertainties or fiscal policy considerations, there are better odds of a move in January, Nomura said.
In contrast, if the economic news of the BOJ deciding to skip a rate hike in December because it thinks economic fundamentals are not firm enough, it may well pass on tightening in January too because data over that period is unlikely to show any significant changes, the Nomura economists said.
On Friday, Dec. 20, consumer price data for November is likely to show that inflation picked up a bit due to the fading impact of government energy subsidies. Core consumer prices–excluding fresh food–are expected to have risen 2.6% from a year earlier, according to a poll of economists by data provider Quick. That would be slightly faster than October’s 2.3% rise.
The Ministry of Finance is scheduled to auction 1 trillion yen of 20-year Japanese government bonds on Tuesday, just one day before the BOJ’s meeting starts. As such, investors’ interest in the auction could be muted as they await the outcome of the rate decision.
CHINA – Retail Sales
China reports the final prints of key economic activity data for 2024 on Monday, which will come under especially sharp scrutiny after the outcome of the Central Economic Work Conference.
Retail sales, a proxy for consumption, are expected to have risen 4.7% on year, compared with October’s 4.8% increase. Fixed-asset investment, a barometer for investment in China, likely climbed 3.4% in the January-November period, matching the pace seen in the first ten months of the year. Industrial production is expected to have increased 5.3% last month, the same as in October.
On Thursday, the People’s Bank of China announces loan prime rates.
Until then, Happy Trading!
Commodity Samachar Securities
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