UPCOMING EVENTS:

• Tuesday: Japan CPI, US Durable Goods Orders, US Consumer Confidence.
• Wednesday: Australia Monthly CPI, RBNZ Policy Decision, US Q4 GDP 2^nd Estimate.
• Thursday: Japan Industrial Production and Retail Sales, Australia Retail Sales, Switzerland Q4 GDP, Canada GDP, US PCE, US Jobless Claims.
• Friday: Japan Unemployment Rate, Chinese PMIs, Switzerland Retail Sales, Eurozone CPI and Unemployment Rate, US ISM Manufacturing PMI.

Tuesday

The Japanese Core CPI Y/Y is expected at
1.8% vs. 2.3% prior while there’s no consensus on the other measures although
the prior Headline CPI Y/Y printed at 2.6% and the Core-Core CPI Y/Y came at
3.7%. The Tokyo
CPI, which is seen as a
leading indicator for national inflation, surprised recently falling much more
than expected with almost all the measures dropping below the BoJ’s 2% target.
Even if the BoJ decides to exit the NIRP, it looks like it’s going to be just a
one and done.

The US Consumer Confidence has been rising
in the past couple of months. The present situation index increased
substantially the last
time, which might have been a hint for
the strong January NFP report released a week later. In fact, compared to the
University of Michigan Consumer Sentiment, which shows more how the consumers
see their personal finances, the Consumer Confidence shows how the consumers
see the labour market.
The consensus sees the index remaining unchanged at 114.8 in February.

Wednesday

The Australian Monthly CPI Y/Y is expected
at 3.5% vs. 3.4% prior. The RBA focuses more on the quarterly CPI readings,
but the monthly indicator is timelier and can be a guide for the trend, especially
at turning points. The Core measures will be more important but overall, this
report is unlikely to change much for the central bank.

The RBNZ is expected to keep the OCR
unchanged at 5.50%. There is a very slight chance of a hike with the ANZ bank
recently forecasting the central bank to raise rates to 6.00%. The data
though doesn’t call for such a move at the moment with the last GDP
reading surprisingly showing a strong contraction and the disinflationary
trend remaining intact. The unemployment
rate has also been rising steadily, so
there’s no real indication for a rate hike.

Thursday

The US PCE Y/Y is expected at 2.4% vs.
2.6% prior, while the M/M measure is seen at 0.3% vs. 0.2% prior. The Core PCE
Y/Y is expected at 2.8% vs. 2.9% prior, while the M/M reading is seen at 0.4%
vs. 0.2% prior. Forecasters can reliably estimate the PCE once the CPI and
PPI are out, so the market already knows what to expect. Therefore, we are
unlikely to see big reactions unless the data surprises on either side.

The US Jobless Claims continue to be one
of the most important releases every week as it’s a timelier indicator on the
state of the labour market. Initial Claims keep on hovering around cycle
lows, while Continuing Claims remain firm around cycle highs. This week the
consensus sees Initial Claims at 210K vs. 201K prior,
while there’s no consensus for Continuing Claims at the time of writing
although the last week’s data showed a decrease to 1862K vs. 1889K prior.

Friday

The Eurozone CPI Y/Y is expected at 2.5%
vs. 2.8% prior, while the Core Y/Y measure is seen at 2.9% vs. 3.3% prior. The
Core 3-month and 6-month annualised rates are already below the ECB’s 2%
target, but the central bank is adamant on its patience stance and some
members, including President Lagarde, stated that they want to see the Q1 2024
wage data before considering a rate cut. The market is fully pricing a 25 bps
rate cut in June and despite the ECB’s message, the market will likely price
back in an April cut if the data misses expectations.

The US ISM Manufacturing PMI is expected
at 49.5 vs. 49.1 prior. The expectations are skewed to the upside as the S&P
Global Manufacturing PMI showed another
increase in February to 51.5 vs. 50.7 in the prior month. The generally
commentary was upbeat as the sector is experiencing a rebound from the
recessionary phase in the last 2 years.

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