Week ahead: Traders eye key inflation data

Here are the week’s key events:

Inflation data takes the centre stage again as market participants remain hooked on whether central banks are done with rate hikes. A sharp reversal in yields and the best run for equities in a couple of years last week betrayed a belief that the Fed et al won’t raise rates again. Earnings season starts to wind down with attention on Walmart and Alibaba towards the end of the week.

Monday

Not the brightest start to the week but some inflation data from Japan and German may be of interest. German wholesale prices are the main focus early on, amid signs of disinflation in the Euro area. German WPI fell by 4.1 per cent in September year-on-year, the sharpest decline since May 2020. EU economic forecasts and the US Federal budget balance are among the other releases.

Earnings: British Land (BLND), BAE Systems (BA.)

Tuesday

All eyes fall on the US CPI inflation report. Core inflation ticked higher in September – a worrying sign for the Fed and equity bulls that more interest rate rises may be required. The headline CPI index rose 0.4% on the month and 3.7% from a year ago, which was above forecasts for 0.3% and 3.6%. Core CPI increased 0.3% on the month and 4.1% on a 12-month basis, in line with expectations. Sticky inflation could see the Fed raise rates again should it not start to come down enough. Meanwhile attention for GBP crosses is on the UK labour market data – recent signs of an increase in jobseekers points to fresh slack and supports the view of the Bank of England that it’s probably done with raising rates.

Earnings: The Home Depot (HD), Plug Power (PLUG), Upstart Holdings (UPST), Imperial Brands (IMB)

Wednesday

Australian wage growth data kicks off the APAC session ahead of a raft of Chinese data – industrial production, retail sales and more. UK CPI inflation is going to shape bond markets’ direction for the European session – does it offer further support to the belief the Bank of England has hit peak rates. Then it’s the turn of the US PPI inflation data, which again surprised to the upside last time. The producer price index increased 0.5% in September, coming after a hotter-than-expected +0.7% rise in August.

Earnings: Cisco Systems (CSCO)

Thursday

Attention shifts from inflation to employment data today. Australian employment change figures set the tone early for the RBA, whilst in the US the weekly unemployment claims report will be parsed as usual for signs of cracks in the remarkably resilient labour market. Some Fed speakers, the Philly Fed manufacturing index and US industrial production numbers will also be of note.

Earnings: Alibaba (BABA), Walmart (WMT), Applied Materials (AMAT), Palo Alto Networks (PANW),

Friday

Quiet end to the week – RBNZ statement of intent is one to watch for NZD crosses. UK retail sales will offer some scope for GBP crosses to move and the Eurozone’s final CPI inflation print will of course provide some interest. The US session will hinge on the latest building permits and housing starts data.