Week Ahead: Post election moves watching US inflation data  

This week definitely feels like the “morning after the night before” as the world and global markets digest and decompress after Donald Trump’s historic US election victory. Ultimately, the US economy could see a near-term boost from improved confidence, looming pro-growth policy measures and a lighter regulatory environment. Indeed, many on Wall Street are revising up their 2025 growth outlooks. That said, potential tariffs and a possible bump in inflation could, all else equal, lead to higher interest rates than most would otherwise predict.

Interestingly, the Treasury market slipped back to levels seen pre-election. Calming words from Fed Chair Powell helped, as well as a realisation that inflationary tariffs may not actually be seen for some time. Amplified electioneering may also be reined in. But equities are seriously liking the outcome. US stocks enjoyed their best week in a year with “animal spirits” seemingly very strong. A possible overheating in the economy could be a medium-term risk, while the relief rally might just run its course soon.  

This week’s US CPI numbers will bring attention once again to price pressures, with a hot report highlighting the risks to the macro picture, aside from any Trump policies. Powell gave little guidance on how fast and far rates will fall at last week’s FOMC meeting. Retail sales will also guide the greenback, as the US consumer has been a key driver of the economy this year. The dollar will eye both reports in a very bullish position, having not fallen for six straight weeks and having recently eased overbought conditions.

UK data will be watched after the odds for another BoE rate cut took a hit with the budget and on the global move in bond markets after the US election. Wage growth is cooling, though this is partly down to the base effects story. The Bank of England turned a bit more hawkish at last Thursday’s meeting, as it revised its inflation and growth forecasts significantly higher. Cable is clinging on to support around 1.2862. That is the halfway point of the April to September move higher.

In Brief: major data releases of the week

Tuesday, 12 November 2024

– UK Jobs: Wage growth is the main data point and is expected to tick up one-tenth to 3.9%. The unemployment rate still has reliability issues. It is also seen rising by a tenth to 4.1%. Rate cut bets have ebbed since the budget, with around a 20% chance of a December move.  

Wednesday, 13 November 2024

– US CPI: Expectations are for the headline to rise 0.2% m/m and the core 0.3% m/m. That core print would push the three-month annualised rate up to 3.6%. Shelter inflation is key, as non-housing services and goods inflation are consistent with headline at target.

Thursday, 14 November 2024

– Australia Jobs: Consensus sees around 20,000 jobs being added and the jobless rate unchanged at 4.1%. The final quarter of the year is usually softer for population growth. That likely means a slower pace of job growth that recently seen.

Friday, 15 November 2024

– China data: Retail sales are forecast at 3.4%, up from the prior 3.2%. Industrial production is predicted to expand 5.7%, up from 5.4% in September, and fixed asset investment up one-tenth at 3.5%. It will be the first full month since the monetary easing in September.

– UK GDP: Q3 q/q growth is seen easing from the previous 0.5%. Recent PMIs pointed to a cooling in both manufacturing and services, though the budget is seen boosting growth.

– US Retail Sales: Headline sales are forecast to rise 0.3% m/m, down from the 0.4% print in September. Consumer spending remains relatively robust, and the clear-cut election result may help prolong this.

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