The Week Ahead: Highlights

Asia-Pacific Preview

Bank of Korea, Bank of Thailand Monetary Policy Decisions in Focus

By Brian Jackson, Econoday Economist

The Bank of Koreas policy meeting will be a major focus in the Asia-Pacific in the week ahead. Officials there raised policy rates by 25 basis points at their previous meeting last month after an extended pause, with officials citing both strong AI-related growth in exports and investment and the recent increase in headline inflation. Officials also advised that they expect inflation to remain above their two percent target "for a considerable time" and noted that further rate hikes are likely in coming months. Data released since that meeting showed a fall in headline inflation from 3.2 percent in June to 2.8 percent in July, but core inflation rose slightly from 2.4 percent to 2.5 percent, suggesting next weeks decision is finely balanced.

The Bank of Thailand will also hold its policy meeting after leaving rates on hold at its previous two meetings on April and June.  At their June meeting, officials revised up their growth forecasts and also expressed confidence that inflation will moderate over the medium-term. Headline inflation has fallen in each of the last three months to 1.95 percent in July, just below the mid-point of the target range of one percent to three percent. This suggests officials will retain current policy settings at the meeting.

Key Australian data include quarterly investment data and monthly inflation and household spending data. In the statement their decision to leave policy rates on hold earlier this month, officials from the Reserve bank of Australia noted that the impact of the Iran conflict on inflation has "so far been less than expected" but cautioned that headline inflation is still too high and will likely remain so "for some time". Headline inflation fell from 4.0 percent in May to 3.8 percent in June, and any further moderation in July will likely reassure officials that policy tightening earlier this year is having the intended effect.

Singapore, Thailand, India and Taiwan will all report industrial production data in the week ahead while Hong Kong will report trade data. These releases will likely show the impact of both continued strong AI-related demand and disruptions to shipping through the Straits of Hormuz.

US Preview

Investors Await Feds Warsh Speech at Jackson Hole

By Theresa Sheehan, Econoday Economist

On Friday, August 28 at 10:00 am ET, Fed Chair Kevin Warsh will give the keynote address at the Kansas City Feds annual Jackson Hole forum. This years theme is Financial Innovation: Implications for Payments and Policy. Warsh is unlikely to talk much about payments systems, but he may use it to segue into his more likely topic of reform at the Federal Reserve.

Warsh has now been at the Feds helm for a few months and may have some more solid information to impart on his five focuses for reforming Fed operations and approach to monetary policy the information framework, communications, data sources and methodology, balance sheet policy, and productivity and jobs. What will be most important to markets at the moment is any changes in the routines around an FOMC meeting.

Warsh has been adamant that the FOMC will tame inflation and return it to the 2 percent inflation target. He has already said that the target is not going to change but he has suggested that how the FOMC assesses the inflation data will get some adjustments. The present government reports will not be abandoned, but the Fed may make some recommendations about how the data is collected and reported. Other types of data may be incorporated to assist in interpreting the current and future data environment, not excluding private sources. Warsh may offer some specifics here.

Unlike some of his predecessors, Warsh is not going to signal the policy outlook for the upcoming FOMC meeting on September 15-16. He may talk a little about the present economic situation and the uncertainties presented by geopolitical circumstances, but only in terms of the framework within which policymakers will discuss the fed funds target rate range. What is possible is that Warsh will offer some guidance about Fed communications and/or the balance sheet.

Warsh may put to rest speculation about the future of the summary of economic projections (SEP) and the dot plots that reflect the thinking of individual FOMC participants. He could also announce his intentions regarding holding press briefings in relation to FOMC meetings. This would be another significant change on top of the pull back from forward guidance.

Warsh has previously indicated that he favors shrinking the Feds enormous holdings of US treasuries and agency mortgage-backed securities. This is a tricky proposition at a time when the federal deficit is on the rise and priorities of the Treasury Department may not align with interest rate and balance sheet policy. Warsh is going to be tested on his pledge to keep the central bank independent and to act in accordance with the dual mandate.

There is little else in the week that will hold market attention. That advance estimate for second quarter GDP disappointed with a smaller than expected increase of 1.5 percent. The second estimate at 8:30 ET on Wednesday could see some upward revision, but most forecasters think it will be small. In any case, annual revisions to the GDP number will be released with the third estimate on Wednesday, September 30 at 8:30 ET.

The Week Ahead: Econoday Consensus Forecasts

Monday

New Zealand Retail Sales for Second Quarter (Mon 1045 NZDT; Sun 2245 GMT; Sun 1845 EDT)

Consensus Forecast, Q/Q: 0.0%

Consensus Range, Q/Q: 0.0% to 0.2%

Real spending has been depressed by rising energy costs. The consensus sees no change in sales on the quarter.

Singapore CPI for July (Mon 1300 SGT; Mon 0500 GMT; Mon 0100 EDT)

Consensus Forecast, Y/Y: 2.3%

Consensus Range, Y/Y: 2.1% to 2.4%

CPI inflation seen at 2.3 percent on year in July, up from 1.9 percent in June, on energy price effects.

Tuesday

Germany GDP Flash for Second Quarter (Tue 0800 CEST; Tue 0600 GMT; Tue 0200 EDT)

Consensus Forecast, Q/Q: 0.2%

Consensus Range, Q/Q: 0.2% to 0.2%

Consensus Forecast, Y/Y: 0.9%

Consensus Range, Y/Y: 0.9% to 0.9%

The consensus sees no revision from the flash for Q2 with GDP up 0.2 percent on quarter and up 0.9 percent on year. That is similarly unimpressive after increases of 0.3 percent and 0.4 percent in Q1.

Germany Ifo Survey for August (Tue 1000 CEST; Tue 0800 GMT; Tue 0400 EDT)

Consensus Forecast, Business Climate: 87.1

Consensus Range, Business Climate: 85.9 to 87.7

Consensus Forecast, Current Conditions: 87.0

Consensus Range, Current Conditions: 86.1 to 87.6

Consensus Forecast, Business Expectations: 87.5

Consensus Range, Business Expectations: 85.8 to 87.7

The consensus sees a slightly better showing for business climate at 87.1 in August from 86.6 in July.

US Case-Shiller Home Price Index for June (Tue 0900 EDT; Tue 1300 GMT)

Consensus Forecast, 20-City Adjusted - M/M: 0.1%

Consensus Range, 20-City Adjusted - M/M: 0.1% to 0.1%

Consensus Forecast, 20-City Unadjusted - Y/Y: 1.8%

Consensus Range, 20-City Unadjusted - Y/Y: 1.7% to 2.1%

The call is for increases of 0.1 percent on month and 1.8 percent on year, pretty much what its been doing lately, as housing price inflation remains muted.

US Consumer Confidence for August (Tue 1000 EDT; Tue 1400 GMT)

Consensus Forecast, Index: 90.1

Consensus Range, Index: 88.0 to 90.9

Confidence expected to erode to 90.1 in August from 90.8 in July and 92.2 in June as rising energy prices fuel inflation concerns.

US New Home Sales for July (Tue 1000 EDT; Tue 1400 GMT)

Consensus Forecast, Annual Rate: 620K

Consensus Range, Annual Rate: 615K to 647K

Sales seen receding to 620K rate in July after rising to 628K in June as housing remains in doldrums.

US Richmond Fed Manufacturing Index for August (Tue 1000 EDT; Tue 1400 GMT)

Consensus Forecast, Index: 7

Consensus Range, Index: 6 to 7

A slightly better number at 7 is expected versus 5 in July.

Wednesday

Australia Monthly CPI for July (Wed 1130 AEST; Wed 0130 GMT; Tue 2130 EDT)

Consensus Forecast, Y/Y: 3.5%

Consensus Range, Y/Y: 3.1% to 3.6%

CPI expected at 3.5 percent in August versus 3.8 percent in July.

Singapore Industrial Production for July (Wed 1300 SGT; Wed 0500 GMT; Wed 0100 EDT)

Consensus Forecast, Y/Y: 7.2%

Consensus Range, Y/Y: 6.9% to 9.0%

Output seen up 7.2 percent on year in July, same as in June.

US Durable Goods Orders for July (Wed 0830 EDT; Wed 1230 GMT)

Consensus Forecast, New Order - M/M: 0.5%

Consensus Range, New Order - M/M: -3.5% to 1.6%

Consensus Forecast, Ex-Transportation - M/M: 0.5%

Consensus Range, Ex-Transportation - M/M: 0.3% to 0.9%

Orders expected up 0.5 percent for total and ex-transportation.

US GDP for Second Quarter (Wed 0830 EDT; Wed 1230 GMT)

Consensus Forecast, Q/Q - Annual Rate: 1.5%

Consensus Range, Q/Q - Annual Rate: 1.4% to 1.6%

Consensus Forecast, Personal Consumption Expenditures - Annual Rate: 3.2%

Consensus Range, Personal Consumption Expenditures - Annual Rate: 2.8% to 3.2%

The consensus look for no revision for GDP at 1.5 percent growth for Q2.

US Personal Income and Outlays for July (Wed 0830 EDT; Wed 1230 GMT)

Consensus Forecast, Personal Income - M/M: 0.2%

Consensus Range, Personal Income - M/M: 0.1% to 0.3%

Consensus Forecast, Personal Consumption Expenditures - M/M: 0.1%

Consensus Range, Personal Consumption Expenditures - M/M: -0.1% to 0.3%

Consensus Forecast, PCE Price Index - M/M: 0.1%

Consensus Range, PCE Price Index - M/M: 0.1% to 0.2%

Consensus Forecast, PCE Price Index - Y/Y: 3.6%

Consensus Range, PCE Price Index - Y/Y: 3.6% to3.7%

Consensus Forecast, Core PCE Price Index - M/M: 0.2%

Consensus Range, Core PCE Price Index - M/M: 0.2% to 0.3%

Consensus Forecast, Core PCE Price Index - Y/Y: 3.3%

Consensus Range, Core PCE Price Index - Y/Y: 3.2% to 3.3%

Modest increases of 0.2 percent for income and 0.1 percent for spending expected.

Thursday

South Korea Bank of Korea Announcement (Thu 1000 KST; Thu 0100 GMT; Wed 2100 EDT)

Consensus Forecast, Change: 25 bp

Consensus Range, Change: 25 bp to 25 bp

Consensus Forecast, Level: 3.00%

Consensus Range, Level: 3.00% to 3.00%

Forecasters expect a 25 bp rate move after hawkish guidance following the last rate hike.

Australia Capital Expenditures for Second Quarter (Thu 1130 AEST; Thu 0130 GMT; Wed 2130 EDT)

Consensus Forecast, Q/Q: 2.0%

Consensus Range, Q/Q: -6.0% to 4.0%

Capex seen up only 2 percent on quarter, slowing from 6.5 percent in Q1.

Australia House Spending for July (Thu 1130 AEST; Thu 0130 GMT; Wed 2130 EDT)

Consensus Forecast, M/M: -0.4%

Consensus Range, M/M: -0.5% to 0.7%

A weak reading expected at minus 0.4 percent on the month in July.

Germany GfK Consumer Climate for September (Thu 0800 CEST; Thu 0700 GMT; Thu 0200 EDT)

Consensus Forecast, Index: -29.2

Consensus Range, Index: -30.0 to -29.0

Climate expected at minus 29.2 in September, nearly unchanged from minus 29.6 in August.

Eurozone M3 Money Supply for July (Thu 1000 CEST; Thu 0800 GMT; Thu 0400 EDT)

Consensus Forecast, Y/Y-3-Month Moving Average: 3.3%

Consensus Range, Y/Y-3-Month Moving Average: 3.2% to 3.4%

The consensus sees slightly faster growth at 3.3 percent in July from 3.0 percent in June.

US International Trade in Goods (Advance) for July (Thu 0830 EDT; Thu 1230 GMT)

Consensus Forecast, Balance: -$100.0 B

Consensus Range, Balance: -$104.8 B to -$94.7 B

The trade gap is expected almost flat at $100 billion in July versus $101.5 billion in June.

US Jobless Claims for Week of August 22 (Thu 0830 EDT; Thu 1230 GMT)

Consensus Forecast, Initial Claims - Level: 208 K

Consensus Range, Initial Claims - Level: 203 K to 210 K

Claims expected nearly flat at 208K from 206K in the previous week.

Friday

Japan Tokyo CPI for August (Fri 0830 JST; Thu 2330 GMT; Thu 1930 EDT)

Consensus Forecast, CPI - Y/Y: 2.0%

Consensus Range, CPI - Y/Y: 1.8% to 2.2%

Consensus Forecast, Ex-Fresh Food - Y/Y: 1.8%

Consensus Range, Ex-Fresh Food - Y/Y: 1.7% to 2.1%

Consensus Forecast, Ex-Fresh Food & Energy - Y/Y: 2.1%

Consensus Range, Ex-Fresh Food & Energy - Y/Y: 2.0% to 2.2%

Japan Unemployment Rate for July (Fri 0830 JST; Thu 2330 GMT; Thu 1930 EDT)

Consensus Forecast, Rate: 2.5%

Consensus Range, Rate: 2.4% to 2.6%

Sweden GDP for Second Quarter (Fri 0800 CEST; Fri 0600 GMT; Fri 0200 EDT)

Consensus Forecast, Q/Q: 1.4%

Consensus Range, Q/Q: 1.4% to 1.4%

Consensus Forecast, Y/Y: 2.8%

Consensus Range, Y/Y: 2.5% to 2.8%

France GDP for Second Quarter (Fri 0845 CEST; Fri 0645 GMT; Fri 0245 EDT)

Consensus Forecast, Q/Q: 0.2%

Consensus Range, Q/Q: 0.2% to 0.2%

Consensus Forecast, Y/Y: 0.7%

Consensus Range, Y/Y: 0.7% to 0.7%

No revision expected from the flash with growth at 0.2 percent on quarter and 0.7 percent on year in Q2.

Germany Unemployment Rate for August (Fri 0955 CEST; Fri 0755 GMT; Fri 0355 EDT)

Consensus Forecast, Rate: 6.4%

Consensus Range, Rate: 6.3% to 6.4%

The consensus sees unemployment flat at 6.4 percent.

Eurozone EC Economic Sentiment for August (Fri 1100 CEST; Fri 0900 GMT; Fri 0500 EDT)

Consensus Forecast, Economic Sentiment: 97.1

Consensus Range, Economic Sentiment: 96.4 to 97.6

Consensus Forecast, Industry Sentiment: -6.0

Consensus Range, Industry Sentiment: -6.7 to -6.0

Economic sentiment expected nearly flat at 97.1 in August from 96.9 in July.

Canada Monthly GDP for June (Fri 0830 EDT; Fri 1230 GMT)

Consensus Forecast, M/M: 0.2%

Consensus Range, M/M: 0.1% to 0.2%

GDP expected up 0.2 percent in June after 0.3 percent in May.

Canada GDP for Second Quarter (Fri 0830 EDT; Fri 1230 GMT)

Consensus Forecast, Annual Rate: 3.3%

Consensus Range, Annual Rate: % to

A strong 3.3 percent annualized growth rate is the call for Q2!

US Chicago PMI for August (Fri 0945 EDT; Fri 1345 GMT)

Consensus Forecast, Index: 59.0

Consensus Range, Index: 56.1 to 59.0

A powerful 59.0 is the call for Chicago PMI, up from 57.6 in July.

US Consumer Sentiment for August (Fri 1000 EDT; Fri 1400 GMT)

Consensus Forecast, Index: 51.0

Consensus Range, Index: 50.0 to 52.1

The consensus looks for no change at 51.0 in the August flash from the gloomy July final, down from 55.2 in June. Consumers continue to fret over high inflation.