The focus for the week ahead will be on US non-farm payrolls and several central bank meetings.
This week the RBA and RBNZ will meet to review monetary policy settings. The RBA is expected to hold rates unchanged at 0.10%. There is a chance that the RBNZ will raise rates by 25bps, despite Covid restrictions still in place. The ECB will release the minutes of its latest meeting this week. There will also be several speeches by US Fed officials including Vice Chair Quarles.
Inflation data last week came in just slightly ahead of expectations. The prelim Euro area CPI for Sep came in at +3.4% (expecting 3.3%) as annual energy price growth continued to accelerate (+17% in Sep). Excluding energy, the prelim CPI growth was lower at +1.9% (but up from +1.7% in Aug).
US annual PCE price inflation for Aug came in at +4.26% ahead of the Jul rate of +4.16%. Core inflation was slightly higher than expected at +3.6% in Aug. The latest Fed forecast has PCE inflation at 4.2% for 2021. Personal income growth slowed in Aug as growth in employee compensation and government transfer payments slowed. US Personal consumption expenditures (nominal value) increased at a faster pace in Aug led by faster growth in non-durable goods and slower growth in services. This offset a further (albeit slower) decline in durable goods consumption for Aug – due to a combination of restricted supply and higher prices. Consumer sentiment improved slightly at the end of Sept, but sentiment towards durables remained weak. This month, consumer sentiment noted that inflation had already impacted living standards:
Indeed, favorable buying attitudes posted some small further declines due to complaints about prices for homes, vehicles, and durables, all of which were already near all-time lows. Even if transient, higher inflation has already decreased living standards, and further damage is anticipated as just 18% of all households anticipated income gains would be larger than the expected inflation rate. http://www.sca.isr.umich.edu/
The main focus this week will be on US non-farm payrolls for Sep. Expectations are for a +460k increase in payrolls. The unemployment rate is expected to decline slightly to 5.1%.
Also out this week will be the US ISM Services PMI for Sep.
This week, the US Treasury will settle approx. $183bn in ST Bills with a net paydown of $57bn. Some short-term Bill rates remain slightly elevated amid debt ceiling negotiations.
Approx. $25bn in ST Bills will mature on the Fed balance sheet this week and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf or scroll through the file below.
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
