Week Ahead Watch List

The beginning of Federal Reserve tapering on Wednesday and a Bank of England rate hike on Thursday look to provide historical signposts for the withdrawal of emergency stimulus. No change is expected from the Reserve Bank of Australia on Tuesday which began its tapering move earlier in the year. For economic data, the most dramatic result that looks to underscore the need to withdraw stimulus is expected to be Eurozone producer prices on Thursday where further and yet more severe acceleration is expected. Consumer inflation data in the week will be limited to the Swiss CPI where subdued results are the call, in contrast to what is expected to be a very strong Swiss PMI for October. Chinese manufacturing PMIs, whether the CFLP on Sunday or the Caixan on Monday, are expected to come in dead flat once again. Other PMIs to watch will be the ISM manufacturing and services reports, both expected to be strong. Further improvement is expected for German retail sales and a snapback is seen for Japanese household spending. Eurozone retail sales on Friday, in contrast, are expected to be soft. German production has been weak with no more than limited recovery seen whether for manufacturers’ orders on Thursday or industrial production on Friday. The week closes with US and Canadian employment reports, both expected to show solid, respectable gains.