Week Ahead – Feb 20th

In the US, the focus will be on the FOMC Meeting minutes and speeches by Fed officials. Investors will also closely follow personal income, spending, PCE price index, and 2nd estimate for Q4 GDP growth rate. Also, the attention will be taken by fresh PMI manufacturing and services readings for major economies including US, UK, France, Germany, and Japan. Finally, central banks in South Korea, New Zealand, and Turkey will decide on the course of monetary policy.

In the US, FOMC Meeting minutes and speeches by Fed officials will be in the spotlight after hot economic data fuelled speculation of the Federal Reserve raising rates more than it did early this month and for longer. The Fed’s preferred inflation gauge will likely surprise on the upside in January, following last month’s hotter-than-anticipated CPI and PPI figures. Investors will also pay close attention to personal spending and income data, forecast to show resilient consumer spending after January’s blockbuster retail sales report. Apart from that, next week will feature a second estimate for the fourth-quarter GDP, with analysts expecting an upwards revision to 2.9% from a preliminary 2.8%. A final reading for the University of Michigan’s consumer sentiment and the S&P Global PMIs for February will also be on the radar. Meanwhile, existing and new home sales will offer insight into the real estate market. Market participants should keep a tab on quarterly results from Home Depot, Walmart, and Nvidia. Elsewhere in America, Canada will publish the January CPI report and retail sales figures for December.

In the United Kingdom, the GfK Consumer Confidence indicator is set to increase slightly in February as expectations for the next year should have improved further. Also, flash S&P PMIs are likely to show Britain’s private sector continued to contract but at a softer pace. Other data covers CBI gauges for industrial trends orders and distributive trades, as well as public sector net borrowing.

Elsewhere in Europe, flash S&P PMIs for the Eurozone, Germany, and France will probably point to another month of growth in the private sector in February due to rises in manufacturing and a slower decline in service activity. Meanwhile, the German ZEW indicator of economic sentiment, the GFK consumer confidence, and the Ifo business climate indicator are all set to improve for the fifth month. Other data to monitor is Eurozone final inflation figures for January and the flash consumer survey; Germany’s Q4 GDP and consumer prices update; European Union car registrations; Sweden’s home prices; France’s business and consumer survey; and Switzerland’s balance of trade. On the monetary policy front, Turkey will be deciding on interest rates.

In China, key loan prime rates will be announced. Markets expect the one-year LPR to remain at 3.65% and the five-year tenor at 4.3%, especially after new bank loans jumped more than projected to a record CNY 4.9 trillion last month and as the PBoC left the medium-term lending facility rate steady the previous week.

In Japan, all eyes will be on flash PMIs for February, providing a first assessment of economic conditions during the month. Inflation figures are also due, with the core rate seen accelerating to 4.2%, which would be the highest reading since 1981, from 4% in December.

Elsewhere in Asia, the central bank of South Korea is forecast to pause its tightening cycle and keep interest rates unchanged when it decides on monetary policy on Thursday. It will also be interesting to follow releases for Malaysia trade and inflation; Hong Kong final GDP growth for Q4 and inflation; Singapore inflation and industrial production; and Taiwan export orders and industrial production.

In Australia, flash PMIs, wage price index, construction, and private investment for Q4 will be in the spotlight. In New Zealand, the RBNZ is widely expected to deliver a smaller 50bps rate hike after a 75bps increase in November.