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Many on Wall Street are watching the Fed’s rate hike cycle and getting nervous about tipping the economy into a recession. With scorching inflation, the FOMC may consider a full point rate hike, but will likely settle for its third consecutive 75 basis point hike. At Wednesday’s policy meeting, Fed Chairman Jerome Powell will likely acknowledge that the downside risks to growth are there and that relentless inflation is forcing them to maintain an aggressive tightening pace. Inflation risks are still tilted to the upside and will probably prevent the Fed from giving any hints on the arrival of a “Fed put”.

EU

The ECB appears to be one of the few major central banks not to hold a monetary policy meeting next week, but that won’t stop them from grabbing headlines. Policymakers are expected to make regular appearances, including Philip Lane on Saturday, which could pose a risk at the weekend.

The flash PMIs on Friday could give an idea of ​​how the economy is doing and whether it is heading into a recession in the fourth quarter, as some fear.

UK

Monday is a bank holiday in the UK as the country honors Queen Elizabeth II on the day of her funeral.

After being pushed back a week due to the 10-day national mourning period, the BoE will meet on Thursday and they have a big decision to make. Inflation is extremely high – although it fell back below 10% last month – and although it has probably not peaked yet, the peak should be much lower now that the new government has announced a cap on energy bills.

This may relieve many, but it could mean core inflation and higher interest rates later. The BoE’s response to all of this without the aid of new economic projections is what will interest investors.

The week ends with PMIs on Friday.

Russia

Markets continue to watch the situation in Ukraine amid a strong counter-offensive that has seen Russia concede a lot of ground while raising the prospect of defeat and dwindling support for Vladimir Putin.

The only economic release next week is Wednesday’s PPI inflation.

South Africa

The SARB is expected to raise rates another 75 basis points to 6.25% on Thursday as inflation continues to rise. The CPI is currently well above the target range of 3-6% to 7.8% and the central bank will receive an update on this the day before its decision, which could play a role in its aggressiveness. this month.

Turkey

One central bank that is unlikely to raise interest rates next week is the CBRT. Last month, it unexpectedly cut rates another 100 basis points to 13% despite inflation nearing 80%. It has since increased further, but the central bank will not be deterred. No change is expected from the CBRT next week but clearly another rate cut cannot be ruled out.

Swiss

Inflation continues to climb, making a big rate hike on Thursday from the SNB very likely. Markets are pricing at least 75 basis points, possibly even 100, pushing the policy rate out of negative territory for the first time since the start of 2015. meeting scheduled to act. We’ll see how bold he is willing to be on Thursday.

China

China is expected to keep rates unchanged at 3.65%, as the 1-year LPR (lending prime rate) was recently adjusted lower from 3.7%. If the Chinese central bank unexpectedly adjusts rates lower again, it could be detrimental to the yuan.

The PBOC fixings are inescapable events now that the yuan has weakened past the key 7 against the dollar.

India

Traders will be paying close attention to the current account data for the second quarter. The current account deficit is expected to rise from $13.4 billion to $30.36 billion. India has weakened as trade balances swell and foreign investment takes a hit.

Australia and New Zealand

Traders await the publication of the minutes of the RBA’s meeting next Tuesday and forthcoming speeches from Kearns and Bullock of the RBA. The RBA looks set to move forward with smaller rate hikes, but traders will be looking to see if the RBA’s latest round of talk confirms the downside move discussed by the chief executive. Lowe’s central bank.

It will be a busy week in New Zealand as a steady stream of economic data is accompanied by some RBNZ speeches by Governor Orr and Deputy Governor Hawkesby. The big economic releases of the week are Wednesday’s credit card spending data and Thursday’s trade data.

Japan

The forex world closely monitors everything that comes out of Japan. Traders are waiting to see if policymakers will step in to provide relief to the Japanese yen. What might complicate their decision is that Japan has a public holiday on Monday.

The divergence between the Fed’s tightening cycle and the Bank of Japan’s steady approach continues to support the dollar against the yen. The BOJ is widely expected to keep rates unchanged even if core inflation rises above the BOJ’s 2% target.

Singapore

The focus for Singapore will be the August inflation report which should show that price pressures remain intense. The year-over-year reading is expected to drop from 7.0% to 7.2%.

Economic Calendar

Saturday September 17

Economic data/events

  • Thousands of people pay their respects to Queen Elizabeth II in Westminster
  • European Central Bank Chief Economist Lane speaks at the Dublin Economics Workshop in Wexford, Ireland

Monday, September 19

Economic data/events

  • World leaders attend the funeral of Queen Elizabeth II at Westminster Abbey in London
  • UK bank holiday
  • Public holiday in Japan
  • New Zealand Performance Services Index
  • RBA Head of Domestic Markets Kearns delivers the keynote address at the Australian Financial Review Property Summit in Sydney
  • ECB’s De Guindos speaks at the annual meeting of Consejos Consultivos

Tuesday, September 20

Economic data/events

  • Housing starts in the United States
  • IPC Canada
  • Prime rates for Chinese loans
  • CPI Japan
  • Mexico’s international reserves
  • Trade of Spain
  • Sweden rate decision: expected to raise rates by 75 basis points to 1.500%
  • British Parliament in session
  • United Nations Annual General Assembly in New York
  • Dockworkers at the UK port of Liverpool are set to begin a two-week strike
  • Norges Central Bank Deputy Governor Borsum speaks
  • German Economy Minister Habeck speaks at the congress of municipal energy suppliers
  • The RBA publishes the minutes of its September policy meeting.
  • BOC Deputy Governor Beaudry lectures on ‘pandemic macroeconomics’ at the University of Waterloo in Ontario

Wednesday September 21

Economic data/events

  • FOMC Policy Decision: Fed Should Hike Rates 75bp
  • Sales of existing homes in the United States
  • Unemployment, trade in Argentina
  • Australia Leading Index
  • Credit card spending in New Zealand
  • IPC South Africa
  • Big bank CEOs testify before the U.S. House Financial Services Committee in a hearing called “Holding Megabanks Accountable.”
  • RBA Deputy Governor Michele Bullock speaks at a Bloomberg event in Sydney
  • ECB’s De Guindos to speak at the 2022 Insurance Summit hosted by Altamar CAM in Cologne, Germany
  • EIA Crude Oil Inventory Report

Thursday September 22

Economic data/events

  • U.S. Conference Board Leading Index, Initial Unemployment Insurance Claims
  • China Swift Global Payments
  • Eurozone consumer confidence
  • BOJ Rate Decision: No Change Expected with Rates and 10-Year Yield Target
  • Japanese department store sales
  • New Zealand trade, consumer confidence
  • Norway rate decision: expected to raise rates by 50 basis points to 2.25%
  • South Africa rate decision: expected to raise rates by 75 basis points to 6.25%
  • Swiss Rate Decision: Anticipated 75bp Rate Hike to 0.50%
  • Taiwan unemployment rate, rate decision, money supply
  • Trade of Thailand
  • Turkey Rate Decision: Expected to Cut Rates by 100bps to 12.00%
  • UK BOE rate decision: Markets remain split between expectations of a half-point or three-quarters-point hike.
  • United States Treasury Secretary Janet Yellen addresses the Atlantic Festival in Washington.
  • UN Security Council holds meeting on Ukraine
  • The BOE’s Tenreyro speaks at a seminar at the San Francisco Fed on “Climate Change Pledges, Actions and Results.”

Friday September 23

Economic data/events

  • Flash US PMIs
  • Australia Preliminary PMI
  • Retail sales in Canada
  • Flash European PMIs: euro zone, Germany, France and United Kingdom
  • Singapore CPI
  • GDP of Spain
  • Taiwanese industrial production
  • Foreign exchange reserves of Thailand, forward contracts
  • Central Bank of Norway Governor Wolden speaks

Sovereign Ratings Updates

  • Germany (S&P)
  • Hungary (Moody’s)
  • Sweden (Moody’s)
  • European Union (DBRS)
  • Finland (DBRS)

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