Week Ahead – Dec 18th

Week Ahead – Dec 18th

In the United States, November’s personal income and outlays report, notably featuring the closely observed PCE price index, will take center stage, alongside the final reading of Q3 GDP growth, CB consumer confidence, and durable goods orders. The housing sector will be under scrutiny as investors closely monitor key indicators including building permits, housing starts, and existing, and new home sales. Shifting attention internationally, the United Kingdom will report on inflation and retail sales, while Japan’s focus will be on the BOJ interest rate decision, inflation rates, and foreign trade data. In Germany, eyes will turn to the Ifo Business Climate Index, GFK consumer confidence, and producer inflation figures. Canada is set to unveil inflation rates and November’s GDP growth rate, while the Turkish Central Bank is expected to provide an update on the course of monetary policy.

Anna | anna@tradingeconomics.com 12/15/2023 5:24:14 PM

In the United States, investors will closely monitor the personal income and outlays report. It is anticipated that the annual PCE price inflation slowed to 3% last month, marking the lowest rate since March 2021, while the core rate is expected to ease to 3.4%, the lowest in over two years. However, the monthly figures are poised to show a slight increase, with the headline reading rising by 0.1% and the core by 0.2%. The report is also expected to reveal a 0.3% increase in personal spending and a 0.4% advance in income for the same period. Moreover, durable goods orders are expected to rebound slightly from a 5.4% slump in October. Additionally, building permits and housing starts are anticipated to decline compared to the previous month, with new home sales potentially remaining near 2010 lows. However, there might be a slight rebound in new home sales and homebuilder sentiment. Finally, attention will be focused on the final reading of Q3 GDP growth, Michigan consumer sentiment, CB consumer sentiment, Q3 current account, and the Philadelphia Fed Manufacturing Index.

In the Euro Area, final inflation figures are set to confirm the headline rate fell to 2.4%, its lowest level since July 2021 and the core inflation is set to be confirmed at 3.6%, the lowest since April 2022. Also, the preliminary reading for the consumer confidence is expected to show consumers are slightly less pessimistic. In Germany, the Ifo Business Climate is expected to rise again to reach the highest value in six months, as companies become slightly less pessimistic regarding both current conditions and expectations. Other key economic data to follow include Eurozone current account and construction output; Germany producer prices and the GfK consumer confidence; Italy business and consumer confidence; France PPI and business confidence; final GDP growth figures for Spain; and Russia PPI and consumer confidence. Meanwhile, the central bank of Turkey will decide on monetary policy and investors expect a 250bps increase in borrowing costs, which would mark the seventh straight hike in the current tightening cycle, as policymakers try to tame high inflation.

In the UK, it will be a busy week, with the November CPI report taking centre stage after the Bank of England took a more hawkish tone and said that borrowing costs will stay at elevated levels for a prolonged time. Both headline and core inflation are expected to slow although the CPI is seen rising 0.2% from the previous month. Retail sales, current account, the final GDP growth figures for Q3 and public sector net borrowing are also due.

Monetary policy will be the focus in Asia as the year approaches its end. The People’s Bank of China expected to hold Loan Prime Rates unchanged, defending the yuan, and opting to support the country’s slowing economy through repeated liquidity injections instead. Meanwhile, the Bank of Japan is set to hold its key rate unchanged at -0.1%, and may potentially offer updates on a pivot away from ultra-dovish policy and the phase-out of its yield curve control policy. Japan will also release its inflation rate and trade balance for November. Elsewhere, minutes from the RBI could provide an update on the expected duration of its withdrawal of accommodation stance, while Indonesia will decide on its new policy rate. Also, Malaysia is due to release November’s inflation print. In Australia, investors await minutes from the RBA’s latest meeting for rhetoric that may confirm that rates have peaked. Other releases include housing Aussie credit figures and the Kiwi trade balance.

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