UPCOMING
EVENTS:

• Tuesday: Japan Unemployment Rate, US Job Openings, US
  Consumer Confidence.
• Wednesday: UK Budget, Australia Q3 CPI, Germany CPI, Eurozone
  Q3 GDP, US ADP, US Q3 GDP.
• Thursday: Japan Industrial Production and Retail Sales,
  Australia Retail Sales, China PMIs, BoJ Policy Decision, Switzerland
  Retail Sales, French CPI, Eurozone Flash CPI, Eurozone Unemployment Rate,
  Canada GDP, US PCE, US Jobless Claims, US ECI.
• Friday: Australia PPI, China Caixin Manufacturing PMI,
  Switzerland CPI, Switzerland Manufacturing PMI, US NFP, Canada
  Manufacturing PMI, US ISM Manufacturing PM.

Tuesday

The US Job
Openings is expected at 7.990M vs. 8.040M prior. The last report surprised to the upside with the quits rate ticking
slightly lower and the hiring and layoffs rates remaining stable. It’s a labour
market where at the moment it’s hard to find a job but there’s also low risk of
losing one.

The US Consumer
Confidence is expected at 99.3 vs. 98.7 prior. The last report surprised with a big miss. Dana M. Peterson, Chief
Economist at The Conference Board said: “Consumer confidence dropped in
September to near the bottom of the narrow range that has prevailed over the
past two years. September’s decline was the largest since August 2021 and all
five components of the index deteriorated.”

“Consumers’
assessments of current business conditions turned negative while views of the
current labour market situation softened further. Consumers were also more
pessimistic about future labour market conditions and less positive about
future business conditions and future income.”

“The deterioration
across the Index’s main components likely reflected consumers concerns about
the labour market and reactions to fewer hours, slower payroll increases, fewer
job openings—even if the labour market remains quite healthy, with low unemployment,
few layoffs and elevated wages.”

“The proportion of
consumers anticipating a recession over the next 12 months remained low but
there was a slight uptick in the percentage of consumers believing the economy
was already in recession.” Watch also the Present Situation Index as it generally leads the Unemployment Rate.

Wednesday

The Australian Q3
CPI Y/Y is expected at 2.9% vs. 3.8% prior, while the Q/Q measure is seen at
0.3% vs. 1.0% prior. The RBA though is focused on the underlying inflation
measures, so the Trimmed Mean figure will be the one to watch. The Trimmed Mean
CPI Y/Y is expected at 3.5% vs. 3.9% prior, while the Q/Q measure is seen at
0.7% vs. 0.8% prior.

As a reminder, the
RBA delivered a slightly less hawkish hold at the last policy decision, which
is a tiny move towards a more dovish stance, although they don’t see inflation
returning to target for another year or two.

The US ADP is
expected to show 115K jobs added in October vs. 143K in September. The last report surprised to the upside triggering a hawkish
repricing in interest rates expectations. Although the ADP has a poor track
record in predicting the NFP data, the recent market’s sensitivity to labour
market data makes it a bit more important.

Thursday

The BoJ is
expected to keep interest rates unchanged. The central bank toned down its
hawkish stance since the last policy decision and the economic data has yet to
show inflationary threats. Therefore, it’s unlikely that we will see a rate
hike anytime soon and the JPY faith will be shaped by what happens in the US in
the next two weeks.

The Eurozone Flash
CPI Y/Y is expected at 1.9% vs. 1.7% prior, while the Core CPI Y/Y is seen at
2.6% vs. 2.7% prior. The market’s pricing is already very dovish for the ECB,
so we will likely need a very soft report to see the market price in some more
easing.

A hot report
though will likely take off the table the 16% probability of a 50 bps cut in
December. We will also see the Eurozone Unemployment Rate which is expected to
remain unchanged at 6.4%.

The US PCE Y/Y is
expected at 2.1% vs. 2.2% prior, while the M/M measure is seen at 0.2% vs. 0.1%
prior. The Core PCE Y/Y is expected at 2.6% vs. 2.7% prior, while the M/M
figure is seen at 0.3% vs. 0.1% prior.

Forecasters can
reliably estimate the PCE once the CPI and PPI are out, so the market already
knows what to expect. Besides, this report won’t change anything for the
Fed as they are going to cut by 25 bps at the November meeting no matter what.

The market’s
focus is now on the US election.

The US Jobless
Claims continues to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing Claims
after an improvement in the last two months, spiked to the cycle highs in the
last couple of weeks due to distortions coming from hurricanes and strikes.

This week Initial
Claims are expected at 233K vs. 227K prior, while Continuing Claims are seen at
1880K vs. 1897K prior.

The US Q3
Employment Cost Index (ECI) is expected at 0.9% vs. 0.9% prior. This is the
most comprehensive measure of labour costs, but unfortunately, it’s not as
timely as the Average Hourly Earnings data. The Fed though watches this
indicator closely.

Although wage
growth remains high by historical standards, it’s been easing for the past two
years, and it’s expected to continue to do so given the fall in the job quit
rate.

Friday

The Swiss CPI Y/Y
is expected at 0.8% vs. 0.8% prior, while the M/M measure is seen at 0.0% vs.
-0.3% prior. Although inflation in Switzerland has been within the SNB’s 0-2%
target for more than a year, it keeps on falling steadily with the Core measure
standing around 1% now.

The market is
pricing at 27% chance of a 50 bps cut in December and a soft report will likely
raise those probabilities to roughly 50%. The central bank mentioned that the
CHF strength has been a major drag on inflation but hasn’t taken any real
action to address this problem yet.

The US NFP is
expected to show 123K jobs added in October vs. 254K in September and the
Unemployment Rate to remain unchanged at 4.1%. The Average Hourly Earnings Y/Y
is expected at 4.0% vs. 4.0% prior, while the M/M measure is seen at 0.3% vs.
0.4% prior.

This is going to
be a tricky report given the distortions from hurricanes and strikes in
October. Thankfully, the market is unlikely to care that much given the focus
on the US election.

The US ISM
Manufacturing PMI is expected at 47.6 vs. 47.2 prior. The New Orders index
should be the one to watch as it should be the first to respond to the recent
developments. The latest S&P Global Manufacturing PMI improved a little with new orders ticking higher
albeit remaining in contractionary territory.

Businesses
continue to mention uncertainty around the US election, so you can see why the
market is so much focused on it. Although the data will still have an
impact this week, everything hinges on the US election.