Macroeconomics: The Day Ahead for 8 September

After a quiet start to the week, today’s schedule has plenty of events and a still rather modest schedule of data to absorb, even if the market’s mindset has shifted back to “moar stimulus” (tempered by PBOC comments overnight, leaning against further easing) and ‘dovish taper’. Statistically, there are Japan’s Economy Watchers (services) survey (collapsing on the current measure, but far less on the outlook) and final Q2 GDP, French Trade and Sweden’s monthly GDP to digest, while ahead lie US JOLTS Job Openings and Consumer Credit. A busy day for central banks has policy meetings in Canada and Poland, the Fed’s Beige Book, the minutes of Hungary’s MNB policy meeting (with the latest CPI data offering context), BoE’s Bailey and many other MPC members testify on the August Monetary Policy and July’s Financial Stability reports, with the first round of Fed speak since last Friday’s labour data from Kaplan (hawk) and Williams (dove). Oil markets look to the EIA’s monthly Short-term Energy Outlook, while there are Govt bond auctions in the UK, Germany and US.

** Central Banks – NBP & BoC rate decisions **

– While Hungary’s central bank embarked on a relatively aggressive rate hiking cycle (thus far up 145 bps to 1.50%) to combat inflation pressures, Poland’s NBP, whose MPC is riddled with political appointees of the despicable PiS govt, has resisted and continues to resist hiking rates. This is despite headline CPI steadily climbing to 5.2%, and core to 3.7% (as against a mandated 2.0%), and Gross Wages running at 8.7% y/y, and now only slightly flattered by base effects. The fact that NBP governor Glapinski has actively made every effort to silence the opinions of dissenting minority pushing for an immediate rate hike, and continues to argue that inflationary are transitory, which as the attached chart of core CPI attests is just an outright lie. Be that as it may, rates will doubtless be kept at their low of 0.1%. As for the Bank of Canada, a more dovish policy narrative may emerge, with no further reduction in its already heavily reduced QE pace expected, both given the spike higher in infection rates, as well as the unexpected Q2 GDP contraction, with elevated headline inflation likely to persist through much of the year, while core measures remain above target, though much better contained than in the US.

** U.S.A. – July JOLTS Job Openings / Beige Book **

– July JOLTS Job Opening are expected to remain extraordinarily high at 10.0 Mln vs. June’s 10.073 Mln, but the question is when will these start to be filled at a more rapid pace, given skills mismatches and shortages. The Beige Book will be scoured for evidence on price, wage and labour pressures, supply chain disruptions impact on inventories of raw materials and finished goods, and above all on business outlooks.