Your weekly schedule for financial news and important economic data.
Strong corporate earnings, successful US Treasury bond auctions, and the expectation of interest rate cuts have all contributed to the US equity markets’ continued strong upward trajectory.
The ASX 200 in Australia has stabilized following a brief period of volatility, keeping levels close to recent record highs. This is in advance of the big companies—CSL, Telstra, Wesfarmers, Origin Energy, Whitehaven Coal, and the Commonwealth Bank of Australia (CBA)—releasing their earnings reports the following week.
Fed Chairman Jerome Powell reaffirmed on CBS’s 60 Minutes that he does not anticipate cutting rates in March.
The US ISM services PMI increased from 50.5 to 53.4 in January, marking the strongest growth in the service sector in four months.
On the edge, the RBA’s first Board Meeting of 2024 was somewhat more hawkish than anticipated.
Although the RBA maintained a weak tightening bias, it kept its official cash rate at 4.35%.
The Chinese CPI decreased by -0.8% YoY in January, highlighting the necessity for the Chinese government to step up and offer more significant stimulus to stop the deflationary spiral from spreading.
The Caixin Service PMI in China decreased marginally from a five-month high of 52.9 to 52.7 in January.
This week, crude oil increased 5.5% to $76.22. Wall Street’s fear gauge, the Volatility (VIX) index, fell to 12.80, edging closer to the recent 11.80 low. The majority of the move came after Israel rejected a cease-fire proposal from Hamas. Gold traded flat on the week at $2035, needing a new catalyst to move outside the $2000 – $2060 range it has been trading between for the past six weeks.
Important things to do this coming week.
Westpac Consumer Confidence, Australia + New Zealand (Tuesday, February 13th at 10:30 am AEDT)
AU: Tuesday, February 13th at 11:30 a.m. AEDT: NAB Business Confidence
AU: Employment (starting at 11:30 a.m. AEDT on Thursday, February 15th)
JAPAN + CHINA
JP: GDP Q4 (starting at 10:50 a.m. AEDT on Thursday, February 15)
CH: February 16th, AEDT, Friday, New Yuan Loans
US
US: Wednesday, February 14 at 12:30 a.m. AEDT: Inflation
US: Retail Sales (beginning at 12:30 AEDT on Friday, February 16).
US: Building Permits and PPI (starting at 12:30 AEDT on Saturday, February 17th)
US: Consumer Sentiment from Michigan (as of Saturday, February 17 at 2:00 am AEDT)
EU + UK
The unemployment rate for the UK and the EU is as of Tuesday, February 13 at 6:00 p.m. AEDT.
AEDT on Tuesday, February 13 at 9:00 p.m. GE: ZEW Economic Sentiment
UK
England and Wales: Inflation (Wednesday, February 14 at 6:00 p.m. AEDT)
GB: GDP Q4 (to be released on Thursday, February 15 at 6:00 p.m. AEDT)
retail sales in the United Kingdom (Friday, February 16 at 6:00 p.m. AEDT)
US
United States Consumer Price Index (CPI)
Date: February 14th, Wednesday, at 12.30 a.m. AEDT
Recent US economic data has shown strength, leading to a recalibration of Fed rate expectations. The odds of a March rate cut have shrunk to just 16% from 63% priced just a month ago. The data also shows stronger-than-expected services activities, higher wage growth, and robust job numbers.
Markets will be closely monitoring whether improved economic conditions will make the battle against inflation more difficult in light of the US economy’s persistent heat. Policymakers haven’t changed their cautious approach thus far, suggesting that they’re not in a rush to lower rates. However, more inflation progress will be monitored to provide the rationale for the more dovish market pricing, as markets continue to expect five rate cuts through 2024 as opposed to the Fed’s three guided cuts.
Going forward, US headline inflation is predicted to register at 2.9% yearly as opposed to the previous 3.4%, and the core component may decelerate to 3.7% from the previous 3.9%. The core reading is predicted to remain at 0.3%, but the headline CPI is predicted to decrease month over month to 0.2% from the prior 0.3%.
US central and headline CPI% YearOver Year
US Headline and Core CPI% YoY
Date of the UK’s inflation report: Wednesday, February 14 at 6:00 p.m. AEDT
The UK’s yearly headline inflation rate unexpectedly increased to 4% in December from 3.9% in November, defying consensus estimates that it would decline to 3.8%.
The last Bank of England (BoE) interest rate meeting took a more hawkish stance than expected due in large part to this, which was the first increase in inflation in ten months. This was highlighted by:
Two legislators pushing for a further rate increase of 25 basis points (bp).
The Bank of England’s updated inflation projections show that throughout the second half of 2024 and into 2025, inflation rates will exceed the target.
tempered expectations for rate cuts in the near future, the BoE reiterated that “monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target.”
The current consensus for this month is that the annual headline inflation will rise to 4.3% YoY in January. But when more bank forecasts become available the following week, this prediction might change.
British Inflation Rate
A pictureAU Employment Information Date: February 15, Thursday, at 11.30 a.m. AEDT
Despite expectations of a gain of 15,000 jobs, the Australian economy actually lost a substantial 65,001 jobs in December of last year. Due to a significant decline in participation from 67.1% to 66.8%, the unemployment rate stayed stable at 3.9%.
The employment-to-population ratio and participation rate both reached record highs in November, according to David Taylor, head of labor statistics at ABS. “The decline in employment in December followed larger than usual employment growth in October and November, a combined increase of 117,000 people,” Taylor said.
Employment Details for AU Date: Thursday, February 15, at 11.30 a.m. AETA
In December of last year, the Australian economy actually lost a significant 65,001 jobs, contrary to expectations of a gain of 15,000. The unemployment rate remained at 3.9% as a result of a notable decrease in participation from 67.1% to 66.8%.
David Taylor, head of labor statistics at ABS, states that both the participation rate and the employment-to-population ratio hit all-time highs in November. “December’s employment drop came after October and November’s stronger-than-usual employment growth, totaling 117,000 new hires,” according to Taylor.
JP The preliminary GDP growth rate for Japan for the fourth quarter
Date: February 15 at 10.50 a.m. AEDT on Thursday
A string of well-received US Treasury bond auctions, strong corporate earnings, and expectations of rate cuts all contributed to the US equity markets’ relentless ascent higher.
In Australia, the ASX 200 recovered from a volatile start to stabilize and consolidate close to recent record highs ahead of next week’s earnings reports from CSL, CBA, Telstra, Wesfarmers, Origin Energy, and Whitehaven, among other companies.
Earlier, Japan’s GDP contracted more than anticipated in the third quarter, at an annualized rate of 2.9%, which was the country’s first decline in four quarters. As lower-than-expected corporate investment and private consumption turned out to be a drag, this illustrates the fragility of the Japanese economy.
In spite of this, the stage is set for a slight improvement in 4Q. Preliminary Q4 GDP in Japan is predicted to expand 1.4% year over year instead of contracting 2.9% as previously reported. The GDP is predicted to grow by 0.3% in Q4, up from the previous quarter’s -0.7%.
A weaker-than-expected GDP print may not provide Japanese policymakers the confidence that conditions are ready for a policy rate hike just yet, which may prevent them from proposing any significant policy changes at their meeting in March. Japanese policymakers have been considering the possibility of abandoning their negative interest rate policies this year.
Japan GDP QoQ chart
America’s Q4 earnings season
We have reports from Coca-Cola, Airbnb, Lyft, Cisco, AMD, Dropbox, Coinbase, and Robin Hood scheduled for this week, which marks the continuation of the US Q4 earnings season.