Daniel LQDFX

Trader
Jul 21, 2023
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Week of 7th - 11th AUGUST 2023



9 August 2023​

Wednesday​

On August 9th, two high-impact announcements are scheduled:​


  • China CPI y/y
  • New Zealand Inflation Expectations q/q


China CPI y/y​

In June, China experienced a slide into deflationary territory as consumer prices remained flat, recording 0% year-on-year—the lowest rate in over two years. At the same time, producer prices at the factory gate continued to decline, reaching the worst level since December 2015. These developments have raised concerns about the potential risk of deflation and have sparked speculations regarding the necessity for economic stimulus measures.

The Chinese CPI y/y announcement is scheduled for August 9, 2023, at 02:30 AM GMT+1.

The forecast for China's CPI y/y reads a decrease of -0.3%, compared to the earlier actual of 0%.


The New Zealand Inflation Expectations q/q​

In the latest survey, expectations for inflation in the next one and two years declined to 4.28% and 2.79%, respectively. The expectation for inflation five years ahead remained steady at 2.35%, while expectations for inflation ten years ahead slightly increased to 2.28%. Survey respondents anticipated the OCR to reach a mean of 5.47% by the end of the June quarter, decreasing to 4.84% in one year. Expectations for house price inflation one year ahead showed a mean of -2.89%, a significant rise from the -6.27% expected in the previous quarter. Annual wage inflation was predicted to rise to 4.8% next year and slow to 3.53% after two years. Expectations for the unemployment rate increased to 4.36% and 4.83% for the next one and two years, respectively. Annual GDP growth was expected to be 0.48% in one year, followed by a rise to 1.66% for the subsequent year.

The upcoming Inflation Expectations q/q is scheduled for August 9th, Wednesday, at 04:00 AM GMT+1.


TL;DR


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10 August 2023​

Thursday​

The US is set to make announcements on August 10th regarding CPI m/m, CPI y/y, Core CPI m/m, and Unemployment Claims:​



CPI m/m​

In June 2023, consumer prices in the United States rose by 0.2% month-over-month, which was slightly below the market consensus of a 0.3% advance, following a 0.1% increase in the previous month. The primary contributor to the increase was shelter, accounting for over 70%, but it rose at a slower pace compared to May (0.4% vs. 0.6%). There were also observed price increases for motor vehicle insurance (1.7%), apparel (0.3%), and energy (0.6% after falling 3.6% in May), driven by a 1% rise in gasoline and a 0.9% increase in electricity, while prices for natural gas dropped by 1.7%. Food costs rose by 0.1%, below the 0.2% increase seen in May. Conversely, prices declined for airline fares (-8.1%), communication (-0.5%), used cars and trucks (-0.5%), and household furnishings and operations (-0.1%). This data indicated the evolving trends in consumer prices and could have implications for the economy and financial markets.

The upcoming announcement for CPI m/m is scheduled on August 10, 2023, at 13:30 PM GMT+1.


TL;DR

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CPI y/y​

In June 2023, the Consumer Price Index (CPI) in the United States showed a 3.0 percent year-on-year increase, reaching 305.109 points. This growth marked a slowdown compared to the 4.0 percent increase recorded in the previous month.

The release of US CPI y/y on August 10th will be an important event for investors. If the CPI continues to fall, it could be a sign that inflation is starting to come under control. This could lead to lower interest rates, which would be positive for stocks and other assets. However, if the CPI starts to rise again, it could put pressure on the Fed to raise interest rates, which could weigh on economic growth.

The upcoming announcement for CPI y/y is scheduled on August 10, 2023, at 13:30 PM GMT+1.

The forecast for CPI y/y for the US reads a decrease to 304.6 for the announcement on the 10th of August.


Core CPI m/m​

In June 2023, the annual core consumer price inflation rate in the United States, which excluded volatile items such as food and energy, fell to 4.8%. This marked the lowest rate since October 2021, showing a decline from the previous month's reading of 5.3%. The figure also fell below market expectations, which had anticipated a rate of 5%.

Additionally, on a monthly basis, core consumer prices rose by 0.2% in June compared to the preceding month. However, this rise was less than the forecasted 0.3% increase.

The latest data provided insight into the ongoing fluctuations in consumer prices and had implications for the country's economic outlook and monetary policy decisions.

The upcoming announcement for Core CPI m/m is scheduled on August 10, 2023, at 13:30 PM GMT+1.

The forecast for Core CPI m/m for the US reads a decrease to 4.6%, compared to the previous actual of 4.8%.


Unemployment Claims​

In the week ending July 29, the US Labor Department reported that the seasonally adjusted initial claims rose by 6,000 to 227,000, compared to the previous week's unrevised level of 221,000. However, the 4-week moving average declined to 228,250, showing a decrease of 5,500 from the unrevised average of 233,750 from the previous week. Despite the increase in initial claims, the seasonally adjusted insured unemployment rate remained stable at 1.1% for the week ending July 22, unchanged from the previous week's unrevised rate. The number of seasonally adjusted insured unemployed individuals increased to 1,700,000 during the same week, showing an uptick of 21,000 from the previous week's revised level. It is worth noting that the previous week's level was revised down by 11,000 from 1,690,000 to 1,679,000. The 4-week moving average for insured unemployment registered at 1,712,250, indicating a decrease of 4,500 from the previous week's revised average. Similarly, the previous week's average was revised down by 2,750 from 1,719,500 to 1,716,750. These figures demonstrated mixed trends in the US job market during July, reflecting ongoing fluctuations and uncertainties in the economy. Analysts closely monitored the data to assess the labor market's resilience and potential impacts on economic recovery in the coming weeks.

The next upcoming news event is scheduled for August 10, 2023, at 13:30 GMT+1.

The forecast for the Initial Jobless Claims reads an increase to 229,000 compared to the actual of 227,000.


TL;DR


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11 August 2023​

Friday​

On August 11th 2023, several significant economic announcements are expected.:​


  • The United Kingdom will release the GBP GDP m/m data
  • The United States will reveal the US Core PPI m/m and PPI m/m figures
  • The US Prelim UoM Consumer Sentiment data will also be announced

Investors and analysts will closely monitor these reports as they provide crucial insights into the economic performance of both countries and may influence market sentiment and trading decisions.


United Kingdom GDP m/m​

In May, the UK economy contracted less than expected, demonstrating resilience despite having faced challenges such as strikes and an additional bank holiday to mark King Charles’ coronation. According to the Office for National Statistics (ONS), economic output declined by 0.1% from April, following a growth of 0.2% in the previous month. Economists had previously predicted a steeper contraction of 0.3% for May. This performance indicated that the anticipated recession, attributed to high inflation and surging interest rates, may not have materialized as previously forecasted. The UK economy seemed to have been on track to avoid a Q2 contraction, displaying signs of durability in the face of adverse circumstances.

The upcoming UK GDP m/m is scheduled for August 11th at 07:00 AM GMT+1.

The forecast for UK GDP m/m reads a flat 0.1%, staying level with the previous month, continuing the trend of resilience.


United States will reveal the US Core PPI m/m and PPI m/m figures​

In the latest report, wholesale prices in the United States decelerated again last month, signaling a potential easing of inflationary pressures amid the Federal Reserve's streak of interest rate hikes. The government's producer price index, which measures inflation before it reaches consumers, rose by a mere 0.1% in July 2022 compared to June 2022, marking the smallest increase since August 2020. Similarly, from May to June, prices rose by an identical 0.1% following a decline of 0.4% from April to May. The index, issued by the Labor Department on Thursday, reflects prices charged by manufacturers, farmers, and wholesalers, providing an early sign of potential consumer inflation trends. In a report released on Wednesday, consumer prices in June only rose by 3% over the previous 12 months, marking the mildest pace since early 2021. The slowdown was driven by easing prices for gasoline, airline fares, used cars, and groceries, with year-over-year consumer price inflation showing a steady drop since reaching a four-decade high of 9.1% in June 2022. Excluding the volatile categories of food and energy, core wholesale inflation, also known as the underlying inflation rate, rose by 0.1% from May to June and 2.4% from the same period in the previous year. The year-over-year gain in core wholesale prices was the smallest since January 2021. Gasoline prices, however, rose by 3.4% from May to June, offsetting a drop in the prices of other goods, including iron and steel scrap. These fluctuations indicate potential volatility in the market. The latest data release comes amidst ongoing efforts by the Federal Reserve to tame inflation through a series of interest rate hikes. Despite these measures, the report indicates that inflationary pressures may be moderating, which could impact future monetary policy decisions.

On Friday, August 11, 2023, at 13:30 PM GMT+1, the next Core PPI m/m and PPI m/m will be announced.

The forecast for PPI m/m reads an increase of 0.2%, compared to the actual of 0.1% in June 2023.

The forecast for Core PPI m/m reads an increase of 0.2%, compared to the actual of 0.1% in June 2023.


TL;DR

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Prelim UoM Consumer Sentiment​

In July, consumer sentiment in the US continued to improve, as indicated by the University of Michigan's (UoM) Consumer Confidence Index, which rose to 72.6 from 64.4 in June. This reading exceeded the market expectation of 65.5. Further details of the publication revealed that the Current Conditions Index rose to 77.5 from 69.0, and the Expectations Index climbed to 69.4 from 61.5. The one-year inflation outlook edged higher to 3.4% from 3.3%, while the 5-year inflation outlook ticked up to 3.1% from 3%.

The upcoming announcement for Prelim UoM Consumer Sentiment is scheduled to take place on Friday, August 11, 2023, at 15:00 PM GMT+1.

The forecast for UoM Consumer Sentiment reads a decrease with 71.3, compared to the earlier actual of 71.6.








Disclaimer: The market news provided herein is for informational purposes only and should not be considered as trading advice.