Weekly Market Outlook (24-28 February)

UPCOMING
EVENTS:

• Monday: German IFO.
• Tuesday: US Consumer Confidence.
• Wednesday: Australia Monthly CPI.
• Thursday: Switzerland Q4 GDP, US Durable Goods Orders, US
  Q4 GDP (2^nd estimate), US Jobless Claims.
• Friday: Tokyo CPI, France CPI, Germany CPI, Canada GDP,
  US PCE.

Tuesday

The US Consumer
Confidence is expected at 103.0 vs. 104.1 prior. The last report showed Consumer Confidence dropping for the second
consecutive month although it remained in the range created since 2022.

Dana M. Peterson,
Chief Economist at The Conference Board said: “all five components of the Index
deteriorated but consumers’ assessments of the present situation experienced
the largest decline. Notably, views of current labour market conditions fell
for the first time since September, while assessments of business conditions
weakened for the second month in a row.”

“Meanwhile,
consumers were also less optimistic about future business conditions and, to a
lesser extent, income. The return of pessimism about future employment
prospects seen in December was confirmed in January.”

Wednesday

The Australian
Monthly CPI Y/Y is expected at 2.5% vs. 2.5% prior. Inflation has been
gradually falling towards the RBA’s target with the latest Australian Q4 CPI showing underlying inflation inside
the 2-3% target band on a 6-month annualised basis.

As a reminder, the
RBA cut interest rates by 25 bps as expected last week but it was
accompanied by a more hawkish than expected guidance. We’ve also got the Australian Employment report and once
again the data showed a solid labour market.

Thursday

The US Jobless
Claims continue to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing Claims
continue to hover around cycle highs although we’ve seen some easing recently.

This week Initial
Claims are expected at 220K vs. 219K prior, while there’s no consensus at the
time of writing for Continuing Claims although last week we saw an increase to
1869K vs. 1845K prior.

Friday

The Tokyo Core CPI
Y/Y is expected at 2.3% vs. 2.5% prior. The JPY strengthened recently on more
hawkish comments from BoJ officials, and solid wage growth and inflation data.
Last Friday, the JPY got another boost on some risk-off moves triggered by the
US stocks selloff following the weaker than expected US PMIs and long-term
inflation expectations in the UMich survey jumping to a new 30-year high.

The US PCE Y/Y is
expected at 2.5% vs. 2.6% prior, while the M/M measure is seen at 0.3% vs. 0.3%
prior. The Core PCE Y/Y is expected at 2.6% vs. 2.8% prior, while the M/M
figure is seen at 0.3% vs. 0.2% prior.

Forecasters can reliably
estimate the PCE once the CPI and PPI are out, so the market already knows what
to expect. Therefore, unless we see a deviation from the expected numbers, it
shouldn’t affect the current market’s pricing.