- Focus on busy run of inflation data - digesting 9-yr high in Japan PPI,
awaiting Sweden CPI, UK CPI/RPI, PPI & House Prices, US NFIB Small
Business Optimism and PPI; API Crude inventories also due
- Sweden CPI: some downside risks relative to forecast given pointers from
Norway, will reinforce Riksbank 'wait and see' stance on policy
- UK CPI/PPI: energy prices seen pacing gains in both; CPI should see less
pressure from recent food and clothing price pressures
- US PPI: Energy prices seen pushing up headline, Trade Services the key
wild card item again
- Charts: WTI, Brent, Gasoline, Heating Oil and NatGas
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** EVENTS PREVIEW **
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While the week's central bank events lie ahead on Wednesday on Thursday, today offers rather more in the way of potentially market moving data, with Swedish CPI warming the plate for the full gamut of UK inflation indicators and the ever trivial German ZEW, while the US has NFIB Small Business Optimism and PPI ahead of tonight's Japan Machinery Orders. on the govt auction front, Germany offers EUR 3.0 Bln of 2-yr and the US completes its refunding with $12.0 Bln of 30-yr. As ever the API weekly crude inventories will be released this evening, and are expected to see a further 3.8 Mln bbls fall (fourth consecutive drop), which in the wake of the North Sea Forties pipeline closure yesterday will likely provide further support for prices; Gasoline stocks are seen up 2.2 Mln and Distillates up 0.4 Mln.
** U.K. - November CPI, RPI & PPI, October House Prices **
- For the first of this week's three major sets of statistics, the UK looks initially to the gamut of inflation indicators, with headline CPI seen up a a modest 0.2% m/m, which would see the y/y rate edge back up to 2.9% (vs 2.8%), while RPI is seen rising 0.3% for an unchanged 4.0% y/y. Rising petrol and energy prices (and potentially airfares) are expected to be offset by an easing in food and clothing price pressures (the latter in part due to seasonal promotions), which have been elevated in recent months. Higher energy prices are also expected to be key in a 1.5% m/m rise in PPI Input, which would bump the y/y rate back up to 6.7% from its 2017 low of 4.6%. PPI Output measures are expected to remain subdued at 3.0% y/y headline and 2.2% y/y core. The ONS House Price measure continues to defy other house price measures and indeed anecdotal evidence, and is forecast to dip only marginally to 5.2% y/y from 5.4%, though the overall profile disguises disparate regional trends.
** Sweden - November CPI **
- Following from Norway's headline and core CPI miss yesterday, heavily predicated on a drop in airfares, the risks for today's Swedish CPI are likely to the downside of the expected 0.1% m/m headline and core readings for y/y rises of 1.8% headline and 1.7% CPIF (core). While not far from the Riksbank's target of 2.0%, headline and core CPI have both been significantly higher this year, and as such this will only reinforce the Riksbank that it should remain resolute in its resistance to hiking rate prematurely, and certainly not before the ECB.
** U.S.A. - November PPI **
- The consensus looks for a headline rise of 0.3% m/m which would edge the y/y rate up to 2.9%, while the ex-Food & Energy measure is seen up a modest 0.2% m/m for an unchanged 2.4% y/y. Energy and food price pressures are likely to be very modest, and it may well be the case that the key and very volatile Trade Services component also eases after jumps 0.8% and 1.1% m/m in prior months.
from Marc Ostwald