The Week Ahead: Highlights

US Preview

US Consumer Sentiment Report is Lone Major Indicator with Government Shutdown

By Theresa Sheehan, Econoday Economist

With the US federal government shut down since October 1, data reports from the official statistical agencies will not be published in the week ahead, barring a miracle agreement between the warring parties. Even if the shutdown ends soon, it will take at least a few days to prepare and publish the reports.

The October 6 week already has a light report schedule. Now the only major report that is likely to be released is the preliminary University of Michigan consumer sentiment index for October at 10:00 ET on Friday. The index managed to climb up from the near-record lows of 52.2 in April and May - 50.0 in June 2022 - to 61.8 in July but has fallen in the past two months. The index is likely to decline further from the 55.1 reading in September. Consumer sentiment continues to decline for both current conditions and the six-month outlook. Consumers remain worried about price inflation for non-discretionary household items and about their job security.

The Federal Reserve is set to release the minutes of the September 16-17 FOMC meeting at 14:00 ET on Wednesday. However, the contents of the minutes are rendered moot. Whatever the FOMC thought about the economy three weeks ago has been superseded by subsequent events like the announcement of yet more punitive tariffs with major trading partners and the government shutdown. Without good data, making monetary policy decisions will become even more difficult when the FOMC next meets on October 28-29.

Asia-Pacific Preview

Watching for RBNZ Rate Cut

By Brian Jackson, Econoday Economist

The policy meeting of the Reserve Bank of New Zealand is the main focus of the Asia-Pacific data calendar in the week ahead. Officials continued their policy-easing cycle late August with another 25 basis point rate cut and indicated then that they will likely lower the cash rate further in coming months. Since then, there has been no further inflation data published but GDP data showed weak growth in the three months to June, suggesting further policy easing is likely at this meeting.

Recent policy decisions by the Reserve Bank of Australia will likely affect the consumer and business confidence survey scheduled for release. The RBA cut rates last month but left them on hold this week. The last of this month's round of PMI survey's will also be published early next week, followed by inflation and trade data from Taiwan.

The Week Ahead: Econoday Consensus Forecasts

Monday

Eurozone Retail Sales for August (Mon 1100 CEST; Mon 0900 GMT; Mon 0500 EDT)

Consensus Forecast, M/M: 0.1%

Consensus Range, M/M: -0.1% to 0.5%

Consensus Forecast, Y/Y: 1.3%

Consensus Range, Y/Y: 1.3% to 1.7%

Sales are expected up only 0.1 percent on the month in August after dropping 0.5 percent in July. On year, the consensus sees sales up 1.3 percent versus 2.2 percent in August.

Tuesday

Japan Household Spending for August (Tue 0830 JST; Mon 2330 GMT; Mon 1930 EDT)

Consensus Forecast, M/M: -0.3%

Consensus Range, M/M: -1.4% to 0.5%

Consensus Forecast, Y/Y: 1.0%

Consensus Range, Y/Y: 0.2% to 1.7%

Japan's real household spending is forecast to post a modest 1.0% increase on the year in August slowing from recent gains of 1.4% in July, 1.3% in June and 4.7% in May as the killer heat wave promoted many people to stay home or office during the day to avoid extreme heat and humidity. That is believed to have somewhat offset the uplifting impact of solid demand for beverages, summer clothing and air conditioners. The recent recovery in vehicle purchases has also run its course after last year's Toyota group output suspension over safety check scandals.

Easing but still elevated processed food inflation in the aftermath of severe domestic rice supply shortages has also kept many households cautious, spending less on non-essential items including gift money in line with simplified weddings and funerals during the pandemic.

On the month, real average expenditures by households with two or more people are expected to post a seasonally adjusted 0.3% drop after rising 1.7% in July and plunging 5.2% in June.

Germany Manufacturing Orders for August (Tue 0800 CEST; Tue 0600 GMT; Tue 0200 EDT)

Consensus Forecast, M/M: 1.3%

Consensus Range, M/M: 0.5% to 2.5%

Consensus Forecast, Y/Y: 3.0%

Consensus Range, Y/Y: 3.0% to 3.9%

Orders are seen rebounding by 1.3 percent on the month in August after a big 2.9 percent drop on the month in July. On year, the consensus sees sales up 3.0 percent after dropping 3.5 percent on year in July.

Canada Merchandise Trade for August (Tue 0830 EDT; Tue 1230 GMT)

Consensus Forecast, Balance: -C$5.4 B

Consensus Range, Balance: -C$6.0 B to -C$3.5 B

The consensus looks for a deficit at C$5.4 billion in August, up from C$4.9 billion in July.

United States International Trade in Goods and Services for August (Tue 0830 EDT; Tue 1230 GMT)

Consensus Forecast, Balance: -$61.0 B

Consensus Range, Balance: -$80.0 B to -$59.4 B

The trade gap is expected to fall to $61.0 billion in August from $73.8 billion in July.

United States Consumer Credit for August (Tue 1500 EDT; Tue 1900 GMT)

Consensus Forecast, Balance: $13.5 B

Consensus Range, Balance: $12.0 B to $15.0 B

Credit is seen rising a trend-like $13.5 billion after increasing $16.0 billion in July.

Wednesday

New Zealand RBNZ Announcement (Wed 1400 NZST; Wed 0200 GMT; Tue 2200 EDT)

Consensus Forecast, Change: -25 Bps

Consensus Range, Change: -50 Bps to -25 Bps

Consensus Forecast, Level: 2.75%

Consensus Range, Level: 2.50% to 2.75%

The Econoday consensus anticipates a 25 bp rate cut to 2.75 percent this week, as the economy remains weak and RBNZ guidance pointed to more rate reduction this year. Markets are pricing a good chance of a 50 bp cut on the view that there is no good reason for the RBNZ not to act aggressively headed into the year end holiday season.

Germany Industrial Production for August (Wed 0800 CEST; Wed 0600 GMT; Wed 0200 EDT)

Consensus Forecast, M/M: -1.0%

Consensus Range, M/M: -2.0% to 1.0%

Consensus Forecast, Y/Y: 0.0%

Consensus Range, Y/Y: -0.4% to 1.1%

Output is expected to fall back by 1.0 percent on the month in August after rising 1.3 percent in July. On year, output is seen flat after a 1.5 percent increase in July.

Thursday

Germany Merchandise Trade for August (Thu 0800 CEST; Thu 0600 GMT; Thu 0200 EDT)

Consensus Forecast, Balance: E15.2 B

Consensus Range, Balance: E14.0 B to E15.5 B

The trade surplus is expected at E15.2 billion versus E1.7 billion in July.

Brazil CPI for September (Thu 0900 BRT; Thu 1200 GMT; Thu 0800 EDT)

Consensus Forecast, Y/Y: 5.20%

Consensus Range, Y/Y: 5.20% to 5.24%

The consensus sees CPI up 5.20 percent on year in September versus 5.13 percent in August.

United States Jobless Claims for Week 10/9 (Thu 0830 EDT; Thu 1230 GMT)

Consensus Forecast, Initial Claims - Level: 235K

Consensus Range, Initial Claims - Level: 223K to 236K

Claims expected relatively flat at 235K.

United States Wholesale Inventories (Preliminary) for August (Thu 1000 EDT; Thu 1400 GMT)

Consensus Forecast, M/M: -0.2%

Consensus Range, M/M: -0.2% to 0.1%

The consensus sees no revision from the flash at minus 0.2 percent.

Friday

Japan PPI for September (Fri 0850 JST; Fri 2350 GMT; Fri 1950 EDT)

Consensus Forecast, M/M: 0.2%

Consensus Range, M/M: -0.3% to 0.5%

Consensus Forecast, Y/Y: 2.5%

Consensus Range, Y/Y: 2.4% to 2.8%

Producer inflation in Japan is forecast to post a 2.5% rise on the year in September after rising 2.7% in August and stabilizing under 3% in recent months thanks to summer fuel subsidies and easing domestic rice supply shortages.

The year-on-year increase in the corporate goods price index decelerated to a 15-month low of 2.5% in July (the slowest since 1.2% in April 2024) from 2.7% in June after having hit a recent peak of 4.3% in each of February and March this year (the highest since 4.5% in June 2023).

On the upside risk, however, the previous import cost-cost cutting effects of a firmer yen on the year has lost its shine as the yen's weakness seen in the first seven months of 2024 that peaked at Y158.06 to the dollar (Tokyo hours spot monthly average rate) in July last year vs. Y146.71 in July this year. In August, the dollar yen rate averaged at Y147.67, with the yen slightly weaker than the August 2024 rate of Y146.23.

On the month, the CGPI is forecast to post its first rise in two months, up 0.2%, after dipping 0.2% in August and rising 0.3% in July. The decrease in August was led by lower costs for utilities (electricity and natural gas) and farm produce (pork, chicken eggs and beef), items that had driven the July increase.

Canada Labour Force Survey for September (Fri 0830 EDT; Fri 1230 GMT)

Consensus Forecast, Employment - M/M: 10K

Consensus Range, Employment - M/M: -10K to 25K

Consensus Forecast, Unemployment Rate: 7.1%

Consensus Range, Unemployment Rate: 7.0% to 7.2%

After two months of huge job losses totaling more than 100K, the Canadian economy is expected to show modest job growth of 10K leaving unemployment flat at a high 7.1 percent.

United States Consumer Sentiment for October (Fri 1000 EDT; Fri 1400 GMT)

Consensus Forecast, Index: 54.0

Consensus Range, Index: 53.0 to 60.1

The first reading for October is expected to show another decline to 54.0 from 55.1 in September and 58.2 in August as consumers fret over rising prices and weakening employment prospects.