Macroeconomics: The Day Ahead for 12 October

A busier schedule of statistics and a raft of events awaits, with Japan’s PPI, UK BRC Retail Sales and labour data and Norwegian House Prices to digest ahead of Germany’s ZEW survey, US NFIB survey and JOLTS Job Openings, along with Indian CPI and Industrial Production. There are the as expected no change from the Bank of Korea, with the ENTOSG European Winter Natural Gas supply outlook perhaps taking top billing in terms of the day’s reports given the European power crisis, with the IMF’s World Economic Outlook and the USDA’s monthly World Agricultural Supply & Demand Estimates also on tap, while ECB’s Lane and Fed’s Clarida head another long list of central bank speakers. A busier day for govt bond auctions has Dutch 26-yr, UK 40-yr, German 2-yr and US 3 & 10-yr, with demand metrics at the US sales in focus after some weak recent auction results, and it would have to be added that fairly fat auction concessions have been carved out. However the overarching themes are likely to continue to dominate: the various power crises around the world, high energy prices and inflation concerns along with China’s array of woes: power, property and regulatory clampdowns.

Germany’s ZEW survey is expected to see Expectations (23.5 vs. 26.5) and Current Conditions (28.0 vs. 31.9) drop further, as supply chain bottlenecks bite against an uncertain political backdrop, and as ever also reflecting the setback in the Dax since the prior survey. The latest IMF/World Bank forecasts are likely to echo the recent OECD update in signalling that risks to growth forecasts are on the downside, on a combination of supply chain issues and resultant inflation pressures, and it is forecasts for the latter which may be the more interesting aspect of the update. While the UK labour data were strong, above all in terms of Vacancies, it will be October and November data that offer the key insights into what impact the roll-off of the furlough scheme at the start of this month will have. Last but not least Indian CPI is expected to see a drop to 4.5% y/y from August’s 5.3%, on a combination of easing food prices and benign base effects, but core CPI is likely to accelerate from August’s 6.1% y/y, while expectations of a modest pick-up in Industrial Production to 11.8% y/y from July’s 11.5% look to be a tad optimistic given the m/m drops in exports and Infrastructure Industries output.

U.S.A. – Sep NFIB Small Business Optimism, Aug JOLTS Job openings

THE NFIB survey has offered some interesting contrasts in recent months, on the one hand posting cyclical highs in labour demand, compensation and inventory accumulation plans, as well as increased Capital Spending, while the ‘Expect Better Economy’ index has plunged again (see chart), after a brief respite in June. It is the latter that has above all been the key drag on the headline reading, with a slight drop to 99.5 from 100.1 anticipated, with price expectations likely get particular focus. JOLTS Job Openings are expected to edge up to another record high of 10.95 Mln, surging by more than 500K nearly every month of this year, having started  the year at 7.099 Mln.