This week, the eyes of global markets are turning to US jobs data for September, which will be a key factor in assessing the strength of the economy and its ability to withstand a new increase in interest rates, at a time when inflation fears are intertwined with rising energy costs, and the continuing wave of selling in global bond markets.
Labor market data comes at the forefront of indicators that investors are monitoring after the Federal Reserve raised interest rates in September, leaving the door open for another increase. In Europe, attention is focused on inflation data, while in Asia the focus is on activity indicators in China and the decision of the Reserve Bank of Australia.
United States
On Friday, markets await the release of non-farm payrolls data for September, in a new test of the strength of the labor market and the ability of the US economy to withstand a successive increase in interest rates.
The Federal Reserve raised interest rates by 25 basis points in September, after a sharp rise in oil prices, amid uncertainty related to developments in the Middle East, and also indicated the possibility of raising them again.
Recent surveys showed stronger-than-expected activity in the US private sector reinforced investors' bets on a new rate increase in October. LSEG data showed that financial markets finally priced the probability of raising interest on October 28 at 64 percent.
James Knightley, an economist at ING, said that the September jobs report and inflation data scheduled for October 14 will be major factors in determining the Fed’s next direction, according to what was reported by the Wall Street Journal.
Before the jobs report, the job vacancy data (JOLTS) for August will be released on Tuesday, followed by private sector jobs data from ADB on Wednesday, and then weekly unemployment claims on Thursday.
The personal consumption expenditures price index data for August, scheduled to be released on Wednesday, receives special attention as the index is the Fed’s preferred measure of inflation. On the same day, the final reading of the gross domestic product for the second quarter will be issued.
The week's agenda also includes the Consumer Confidence Index issued by the Conference Board for September on Tuesday, and factory orders for August on Friday.
Eurozone
All eyes in the Eurozone are on September's inflation estimate, with a particular focus on the extent to which higher energy prices are passed on to the rest of the price components, particularly core inflation.
Spain's data will be released on Tuesday, and France, Italy and Germany's data will be released on Wednesday, before the euro zone reading is released on Friday.
The European Central Bank raised interest rates at its meeting in September, while financial markets are pricing in up to four additional increases of 25 basis points over the next year, according to LSEG data.
Tuesday will also release data on business and consumer confidence in the region, while on Thursday it will be followed by purchasing managers’ indices for the manufacturing sector in Spain, Italy, France, Germany and the euro zone, in addition to unemployment data.
Christine Lagarde, President of the European Central Bank, is scheduled to appear on Monday before the Committee on Economic and Monetary Affairs in the European Parliament.
In the bond market, Belgium will hold an auction on Monday, followed by Italy on Tuesday, while Germany will offer bonds maturing in August 2036 on Wednesday, and auctions will be held in Spain and France on Thursday. The Netherlands also intends to issue new bonds that mature in January 2048 on Tuesday.
Britain
British markets are monitoring economic data for indications of the Bank of England's direction in November, especially if energy prices remain at high levels.
The revised reading of the gross domestic product for the second quarter will be issued on Wednesday, followed on Thursday by the final reading of the purchasing managers’ index for the manufacturing sector in September. Also Tuesday, the Bank of England will release data on mortgage lending and consumer credit for the month of August.
The Labor Party conferences are receiving the attention of the markets, in light of public financial pressures and the approaching October 28 budget, while monitoring the impact of any pre-budget tensions on government bond yields.
Britain also intends to issue government bonds maturing in 2036 on Tuesday.
Japan
Attention in Japan is turning to activity indicators and monetary policy expectations, with the release of the Tankan Business Confidence Survey on Thursday, along with a summary of the Bank of Japan’s views from its meeting in September, during which it raised the interest rate to 1.25 percent.
Industrial production and retail sales data for August will be released on Wednesday, while inflation data in the Tokyo region and the jobs report for the same month will be released on Friday.
Japanese government bond yields are particularly closely watched after they rose to their highest levels in several years, coinciding with the rise in bond yields in advanced economies.
The yen's movements also remain a subject of interest, in light of the return of talk about the possibility of Japanese authorities intervening in the exchange market after a new wave of currency weakness.
On Monday, the Bank of Japan is conducting direct purchases of government bonds maturing within one to three years, and from 10 to 25 years, in addition to inflation-linked bonds. The Ministry of Finance is also offering 40-year bonds on Tuesday, and two-year bonds on Wednesday.
China
China is witnessing a shortened week due to a public holiday, but it includes the release of purchasing managers' indexes and industrial company earnings.
Activity indicators are expected to show a slight improvement in the manufacturing and services sectors, while investors are monitoring the impact of the artificial intelligence boom on exports, in contrast to the pressures imposed by rising input costs due to the war in the Middle East.
Economists at ING expect the official purchasing managers index to record 50.1 points for the manufacturing sector and 49.2 points for the non-manufacturing sectors on Wednesday.
On the same day, the Rating Dog Purchasing Managers' Index (PMI) was released, which tends to show a stronger performance due to its sample's greater focus on exporting companies.
On Monday, industrial companies' earnings data for August were also released, amid expectations of a slowdown in profits, despite their improvement compared to previous years.
Canada
On Tuesday, Canadian markets awaited GDP data for July, after data showed a decline in retail sales of 1.1 percent on a monthly basis during the same month.
Markets are watching the possibility of the Bank of Canada raising interest rates in the coming months, especially if energy prices remain high. Financial markets are pricing in more than 4 interest increases over the next year, according to LSEG data.
Australia
The Reserve Bank of Australia will conclude its monetary policy meeting on Monday and Tuesday, amid expectations that it will raise interest rates for the fourth time since the beginning of the year, in light of continuing inflation pressures.
Investors are awaiting the press conference of the bank's governor, Michelle Bullock, in addition to the distribution of the votes of the nine members of the board of directors, while inflation data for August will be released on Wednesday.
If the bank approves another increase before the end of the year, the cash interest rate will reach its highest level since 2008.
South Korea
On Thursday and Friday, markets await South Korea's trade and inflation data, with semiconductor-led exports remaining strong.
Jin-wook Kim, an economist at Citigroup, expects the trade surplus in September to reach $42.7 billion, compared to $34.79 billion in August, exceeding the previous record of $35.91 billion recorded in June.
It is also estimated that exports increased by 68.4 percent on an annual basis during September, compared to a 21 percent increase in imports.
Regarding inflation, Citigroup expects a reading of 3 percent in September, compared to 3.1 percent in August, to remain higher than the central bank’s target of 2 percent.
Indonesia
Indonesia on Thursday releases trade data for August and inflation for September, with inflation expected to rise to 3.3 percent from 3.2 percent in August, mainly driven by higher food prices.
In trade, Indonesian exports may slow during the second half of the year; As a result of weak global demand and a decline in the prices of coal, crude palm oil, and nickel, in conjunction with restrictions on domestic supply. Imports of capital goods and raw materials may outpace weak export growth.
