Here’s what to look out for this week

Monday, September 30^th

Fed chair Jay Powell is speaking on Monday as part of a discussion titled “A View from the Federal Reserve Board” at the National Association for Business Economics. Markets will be listening attentively to anything on the Federal Reserve’s likely next move on rates.

China’s massive stimulus package announced last week won’t be reflected in the latest round of PMI data, also due Monday. Germany’s inflation data will be watched very closely, with French and Spanish CPI rates dropping sharply last week offering a foretaste. The German rate dropped to 1.9% in August 2024, the lowest since March 2021 and below forecasts. Energy prices fell more than 5% but services inflation remained all too sticky at +3.9% for the fourth straight month. ECB president Lagarde is due to speak later.

Tuesday, October 1^st

Eurozone inflation data is the main economic event. It’s of even greater importance following the latest round of data which points to a slowing both in growth and inflation. The flash PMI for September shows average prices charged for goods and services in the eurozone rising at the slowest rate since February 2021. The decline pushes the PMI’s selling price index to a level below that consistent with the ECB’s 2% target…in other words why wait to cut more?

On Friday, September 27^th, data showed France’s combined goods & services CPI was the weakest on record for a September. And we have seen the softest Sep MoM goods inflation since ’09. It was also the weakest Sep MoM services inflation on record. Overall, prices fell by 1.2% in September from the prior month, though we can point to the Olympics as a potential cause. Nevertheless, it just adds to the rather gloomy picture emerging in Europe. Spain’s CPI data also came in soft. Markets moved to price in an 80% chance of a cut next month by the ECB, up from 60% before the data.

The US ISM manufacturing PMI is on the slate too. The index has continued to contract and the slowdown is accelerating, with the July report slipping to 46.8 from 48.5 in June. Jolts job openings have also been in steady decline and the latest report will provide a teaser for the nonfarm payrolls at the end of the week.

Wednesday, October 2^nd

British banks in focus early on with expected results from the Bank of England’s bank stress tests, as well as the latest FPC report. ADP private payrolls data will be watched ahead of the NFP – however imperfect a predictor of the BLS data it is. We hear from a couple more Fed speakers and the weekly US crude oil inventory report is due.

Thursday, October 3^rd

Swiss inflation data could move the Swissy after last week’s SNB decision to cut rates. The central bank left further cuts on the table and indicated even lower inflation.

Friday, October 4^th

The US nonfarm payrolls report is the highlight of the week – a deeper slowdown would undoubtedly shorten the odds on the Federal Reserve opting for another 50-basis-point cut at its next meeting. Last time out, payrolls came in weaker-than-expected at 142,000, whilst the prior month was revised down to 89,000. However, despite the evident slowdown in hiring, the unemployment rate edged lower to 4.2% whilst wage growth rose to 3.8% from 3.6% the month before.