This week is filled with key economic releases that can be helpful to traders, analysts, and consumers seeking to understand the global economic trajectory better.
CPI in the UK, Canada & Japan
Consumer Price Index (CPI), a key measure of inflation and deflation and an indicator often referred to by many Central Banks, is scheduled to be released in Canada, the UK, and Japan on Tuesday, Wednesday, and Friday respectively.
In Canada like many countries worldwide, inflation has been running high. It seems that headline inflation reached 3.3% YoY and core inflation reached 3.2% YoY. Accordingly, many market experts and participants may have their eye out for this month’s CPI release to see whether or not the Bank of Canada (BoC) was able to tame inflation.
This is especially true given the fact that the BoC has used the “stickiness of Canadian inflation” as a justification for its hawkish rate hikes. The BoC’s Governor, Tiff Macklem, even stated that “inflation was too high” and warned that “the central bank must stay the course as it tries to rein in prices, adding that the longer the BoC waits to act, the more difficult the task will become.” He also revealed that he expects headline inflation to rise again before dropping.
Whether or not these predictions will hold true is yet to be determined, traders and analysts alike may want to track Tuesday’s CPI results to find out how the Canadian economy is faring. Additionally, some note that last week’s stronger-than-expected US CPI results which were revealed on September 13th may also act as an indicator for Canada’s upcoming release.
UK CPI, which is scheduled to be released on Wednesday, is also expected to show that headline inflation is expected to rise to 7% from 6.8% driven by inflation in the energy sector. However, core inflation is expected to show a slight drop and reach 6.8% from 6.9%.
If, in the end, the CPI release shows that inflation has dropped in August, then the BoE could leave its interest rates unchanged. Nonetheless, the results are still uncertain and it may be interesting to see what the release will reveal and how it could affect the Bank of England’s (BoE) upcoming monetary policy announcement on September 21st. Furthermore, traders might find it beneficial to monitor the upcoming UK Flash PMI and UK Retail Sales releases on Friday, as they could provide valuable insights into the current condition of the UK's economy.
Another key CPI release for this week may be Japan's National Core CPI, which is expected to be released this Friday and can reveal how the world’s third-largest economy is doing. Unlike many countries, Japan’s National Core CPI is actually expected to show a slight drop from 3.1% to 3%. Interestingly, this release will precede the Bank of Japan’s announcement.
Central Banks’ Announcements: FOMC, PBoC, BoE, BoJ
This week is filled with Central Banks’ announcements, and since Central Banks are authoritative bodies that can directly influence a nation’s economic trajectory, traders, analysts, and even consumers may want to see what these banks decide.
As such, the Federal Open Market Committee (FOMC), the People’s Bank of China (PBoC), the Bank of England (BoE), and the Bank of Japan (BoJ) will all hold their announcements this week. The FOMC will reveal whether or not it will sustain its famous hawkish rate hiking policy or not. In the meantime, the expectations suggest that the FOMC will likely keep rates between 5.25%-5.50%.
In addition, while many expected rate cuts along the line in 2024, it may be interesting to note that Fed officials “have been dismissing any talk of rate cuts, and have suggested that rates could be held at terminal levels for an extended amount of time.”
Since China is considered the world’s second-largest economy, this Wednesday’s upcoming PBoC announcement can also provide valuable insight into the state of the global economy. The PBoC is expected to keep its benchmark Loan Prime Rates at 3.45% for the 1-Year LPR. With China’s economy having faced multiple hurdles from unemployment to property crisis and deflation, China’s Central Bank’s decision can be especially impactful this time around.
Furthermore, the BoE will announce its rate decision on Thursday. According to Reuters’ economists, the BoE is expected to hike rates by 25bps.
Moreover, on the same day, the Eurozone’s CPI is expected to be released. Also, given the fact that inflation in the Eurozone in July showed a decrease and June’s GDP report showed growth, it will be worth seeing whether these favorable trends will persist this week. Additionally, this week Eurozone’s Flash PMI is scheduled to be revealed on Friday and is believed to show a drop in August.
Finally, Japan’s BoJ will also hold an announcement on Friday before Japan’s CPI release. The bank is expected to keep its rates unchanged at -0.10%, but only time will reveal if this prediction will come to fruition.
In addition to the aforementioned economic data reports, American multinational transportation and e-commerce giant, FedEx (FDX) is scheduled to release its earnings on Wednesday, September 20th, after the ring of the bell. (Source:Nasdaq)
The predictions stand at an EPS of $3.73 which would be 8.4% higher YoY, while the revenue is expected to be 7.6% lower YoY and stands at $21.8 billion. According to Jordan Alliger, a Goldman Sachs (GS) analyst, FedEx is dealing with some challenges that make its performance “a bit difficult to asses.”
These factors range from rival, Yellow’s bankruptcy and contract negotiations between rival UPS (UPS) and the Teamsters Union. Alliger stated that “the question remains how each of these events offset one another for FDX in their fiscal first quarter and how it will shape for the remainder of the year.”
Still despite these factors and the global economic hurdles like inflation, recession fears, and rate hikes, FedEx has interestingly had a strong 2023 so far as its stock rose by over 43% since the beginning of the year.
To summarize, this week can be crucial to those who seek some much-needed information about where the global economy may be headed in the months to come especially in light of the fact that 2023 is approaching its end. As such, keeping tabs on market news, these events’ results, and any other upcoming economic data may also be helpful.