This week is shaping up to be one of the busiest for global economic and political events in recent memory. From the overnight selection of a new governor at the People’s Bank of China, to the year's first G-20 meeting, to Powell's first Fed rate hike and a barrage of other central bank meetings, there is no shortage of events to follow.
Market focus will be on the FOMC meeting this week and in particular the Fed dots. In the UK there is a BoE meeting on Thursday as well as CPI and unemployment. The EU summit will discuss the future of the EU but more immediately the possibility of moving to the next round of Brexit negotiations. In EM there are central bank meetings in Brazil, Russia, Indonesia, Chile, Colombia, Taiwan and Philippines.
In other data
- In the US, attention will be on the FOMC rate decision, housing data, durable goods orders and current account balance.
- In the Eurozone, look for PMIs.
- In the UK, there is the BoE bank rate announcement, unemployment data, CPI and retail sales.
- In Japan, CPI and PMI.
- In Canada, a quiet week with only CPI and retail sales.
- In Australia, we get unemployment rate, house price index and RBA's March minutes.
- In New Zealand, there is the RBNZ official cash rate.
- In the Scandies, we get the Norway unemployment rate and Riksbank speakers in Sweden.
As reported overnight, on Monday China anounced that Yi Gang, formerly a PBOC deputy director, will lead the central bank. On Monday and Tuesday, central bankers and finance ministers from the Group of 20 are gathering for the first time this year in Buenos Aires. Their talks start Monday and conclude with the release of a statement on Tuesday. They convene at a time when concerns are growing that global economies may be peaking, and while they won't discuss cryptocurrencies as reported last night, the topic of the moment is President Donald Trump’s plan to impose tariffs on steel and aluminum.
The Week's key event will take place on Wednesday, when Jerome Powell makes his debut in the hot seat, chairing his first meeting of the Federal Open Market Committee after taking over from Janet Yellen. He is widely expected to hike the overnight lending rate to a range of 1.5 percent to 1.75 percent. A greater unknown is whether officials will boost their estimate for 2018 rate hikes to four from a median of three at their last forecast round in December. Elsewhere in the Americas, Brazil’s central bank is predicted to cut its key rate to a record low.
On Thursday, Bank of England officials will lay the groundwork for an interest-rate increase in May. Inflation in the U.K. is still 1% above the bank’s target and policy makers are concerned that the economy’s speed-limit has dropped since the Brexit vote, leaving it at risk of overheating. Investors currently assign a more than 80 percent chance of a move in May, and it would take a big shock from the BOE on Thursday to prompt a significant unwinding of that trade. Elsewhere, New Zealand, the Philippines and Indonesia also set rates today. Germany releases its Ifo Index on the business climate, which is expected to slip.
Trump this month announced 25 percent tariffs on imported steel and 10 percent for aluminum and they take effect Friday. As Bloomberg reminds us, Canada and Mexico are already excluded from the levies, and the Trump administration has left the door open for Australia and possibly other allies to win a similar concession if they can show they are trading fairly and are national-security partners. Planned retaliation from the European Union to China has triggered concerns over a global trade war
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Here is Deutsche Bank with a detailed macroeconomic breakdown of key events by day:
Monday: The commencement of the two-day G20 finance ministers meeting should be the highlight on Monday, while the expected announcement by China's NPC for the PBOC governor role will also be closely watched. Meanwhile the UK's David Davis and EU's Michal Barnier are due to meet in Brussels with the meeting bringing possible clues about an agreement on the terms of Brexit transition. It should be a fairly quiet start to the week for data with UK and China house prices data due overnight, followed by the January trade balance for the Euro area. There is no data due in the US however the Fed's Bostic is slated to speak in the afternoon.
Tuesday: Overnight we have the scheduled Chinese Prime Minister's press conference following the NPC. The main focus datawise in the morning will likely be on the February inflation report in the UK with CPI, RPI and PPI data all due. German PPI for February will also be released, while the March ZEW survey should also be closely watched. In the afternoon the Euro area consumer confidence reading for March is due out. Away from this President Trump is scheduled to meet with Saudi Crown Prince Mohammed bin Salman. Illinois will also hold a primary election for governor and congressional seats ahead of the midterms later in the year.
Wednesday: The big highlight on Wednesday is the FOMC meeting outcome at 6pm GMT. Shortly after that Fed Chair Powell will also deliver his first postmeeting press conference as Chair. Away from that it’s another fairly quiet day for data with January/February employment data and February public sector net borrowing data due in the UK, while in the US the Q4 current account balance and February existing home sales data will be released.
Thursday: Brexit should be a focus for markets on Thursday with EU leaders due to meet in Brussels to sign off on Brexit guidelines (possibly continuing through to Friday). Meanwhile it’s a busy day for data, highlighted by the release of the flash March PMIs in Japan, Europe and the US. Away from that we'll also have the BoE monetary policy meeting outcome. Other notable data releases on Thursday include March confidence indicators in France, the January current account balance reading for the Euro area, Germany's IFO survey for March, UK retail sales for February and weekly initial jobless claims, January FHFA house price index, February leading index and March Kansas City Fed PMI in the US. Late in the evening we'll also get the February CPI report in Japan. ECBspeak will also be a focus with Lautenschlaeger and Nouy due to speak at separate events. German Chancellor Merkel is also due to deliver a speech in parliament likely outlining her policy goals.
Friday: The most significant data on Friday comes in the US with flash February durable and capital goods orders data, along with February new home sales data. A number of Fedspeakers are also scheduled to speak including Bostic, Kashkari and Rosengren. The final day of the week also marks the deadline for the US government needing to pass a spending bill. Finally it’s worth noting that Italian parliament will reopen following the March 4th election.
Finally, here is Goldman with a focus only on the US along with consensus estimates:
The key economic releases next week are the durable goods and new home sales reports on Friday. The March FOMC statement will be released on Wednesday at 2:00 PM EST, followed by Chairman Powell’s press conference at 2:30 PM.
Monday, March 19
09:00 AM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Federal Reserve President Raphael Bostic will take part in a discussion on the Community Reinvestment Act at the National Interagency Community Reinvestment Conference in Miami, Florida. Audience Q&A is expected.
Tuesday, March 20
- There are no major economic data releases.
Wednesday, March 21
- 08:30 AM Current account balance, Q4 (consensus -$100.5bn, last -$100.6bn)
10:00 AM Existing home sales, February (GS -0.8%, consensus +0.4%, last -3.2%): We look for a 0.8% decline in February existing homes sales, on top of last month’s 3.2% decrease. Regional housing data released so far suggest a moderate slowdown in closed homes sales, consistent with the 4.7% drop in January pending homes sales (which represent contract signings). Existing home sales are an input into the brokers' commissions component of residential investment in the GDP report.
2:00 PM FOMC statement, March 20-21 meeting: As discussed in our FOMC preview, we expect the FOMC to raise the target range for the funds rate by 25 basis points at the March meeting. In the post-meeting statement, we think the committee is likely to remain upbeat on economic activity, but the statement is likely to acknowledge the recent housing weakness. In the Summary of Economic Projections (SEP), we look for: (1) higher median estimates for 2018-19 GDP growth; (2) lower unemployment projections and a modest overshoot of inflation in 2021; and (3) the median 2018 dot for the funds rate to show four hikes in 2019.
Thursday, March 22
08:30 AM Initial jobless claims, week ended March 17 (GS 230k, consensus 225k, last 226k); Continuing jobless claims, week ended March 10 (consensus 1,885k, last 1,879k): We estimate initial jobless claims moved back up 4k to 230k in the week ended March 17. The trend in initial claims appears to be falling, and we look for another low reading. However, we note initial claims in California look elevated and could normalize. Continuing claims—the number of persons receiving benefits through standard programs—edged up in the prior week.
09:00 AM FHFA house price index, January (consensus +0.4%, last +0.3%): Consensus expects the FHFA house price index to rise 0.4% in January, a touch above the pace of growth in December. The FHFA house price index has a wider geographic coverage than the S&P/Case-Shiller home price index, but is based only on properties financed with conforming mortgages. On a year-over-year basis, FHFA home prices rose 6.5% in December.
- 09:45 AM Markit Flash US manufacturing PMI, March preliminary (consensus 55.5, last 55.9)
- 09:45 AM Markit Flash US services PMI, March preliminary (consensus 56.0, last 55.8)
- 11:00 AM Kansas City Fed manufacturing index, March (consensus +18.0, last +17.0)
Friday, March 23
08:10 AM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Federal Reserve President Bostic will give a speech at the Knoxville Economics Forum in Tennessee. Audience Q&A is expected.
08:30 AM Durable goods orders, February preliminary (GS +1.5%, consensus +1.7%, last -3.6%); Durable goods orders ex-transportation, February preliminary (GS +0.9%, consensus +0.5%, last -0.3%); Core capital goods orders, February preliminary (GS +0.9%, consensus +0.7%, last -0.1%); Core capital goods shipments, February preliminary (GS +0.5%, consensus +0.4%, last -0.1%): We expect durable goods orders to rise 1.5%, following an unexpected 3.6% decline in January. We believe the details of the report are likely to be strong, reflecting strong manufacturing surveys and solid February industrial production data. Accordingly, we expect a 0.9% increase in core capital goods orders and a 0.5% increase in core capital goods shipments. We expect durable goods orders ex-transportation to rise 0.9%.
10:00 AM New home sales, February (GS +6.5%, consensus +5.1%, last -7.8%): We expect new home sales to increase 6.5% in February following a 7.8% decline in January. The level of new home sales looks depressed relative to single-family building permits, so we expect a rebound in this report.
10:30 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Federal Reserve President Kashkari will take part in a moderated Q&A in New York. Audience Q&A expected.
Source: BofA, Deutsche, Goldman