US PPI in focus on a busy day for events; digesting China credit aggregates, BoJ Himino comments; awaiting French PM speech on budget, World Bank forecast update, EIA Short-term Energy Outlook and rash of central bank speakers; Dutch, German, UK and US debt auctions
China: better than expected credit aggregates hints at stimulus measures getting some traction, but loan growth still slower in yr/yr terms
US PPI: headline and core PPI seen accelerating, only in part due to base effects; Fed likely to be wary of potential pipeline pressures building
EVENTS PREVIEW
The day’s data schedule features the first leg of this week’s US inflation reports via way of PPI, with a very busy run of central bank speakers, the World Bank’s semi-annual forecast update, the first of this week’s monthly Oil Market Report in the shape of the EIA’s Short Term Energy Outlook, and new French PM Bayrou outlining his policy agenda to parliament, with the focus on the left’s response to his budget proposals. The overnight run of data and events had some significant items, with China’s credit aggregates proving to be a lot stronger than forecast, even though New Yuan Loan growth still slowed modestly in yr/yr terms, but nevertheless signalled a tentative pick-up in credit demand relative to prior months, implying that recent stimulus measures are getting some traction. Comments from hawkish BoJ deputy governor Himino stated that there will be a discussion about raising rates, though much will depend on the latest economic forecasts, but without suggesting that rates will rise, and again noting the need to assess the outlook for the US economy as the Trump regime delivers its policy agenda. Other newswire reports suggest that the BoJ may raise its inflation forecast, which would tip the balance in favour of a rate hike next week, though much may depend on the performance of the JPY.
** U.S.A. November PPI **
While all eyes are on tomorrow’s CPI, today’s PPI will not only offer some pointers for CPI and PCE deflators, above all healthcare and portfolio management fees, with Trade services as ever a sizable wildcard. Headline PPI is forecast to rise 0.4% m/m, bumping the y/y rate sharply higher to 3.5% from 3.0%, with core PPI seen up 0.3% m/m to push the y/y rate up to 3.8% from 3.5%, the highest level since February 2023, which would serve to heighten Fed concerns about emerging pipeline pressures. Ahead of PPI NFIB Small Business Optimism is expected to build on its post-election gains, edging up to 102.1 from 101.7, with the already published Employment sub-indices seeing a slight uptick in hiring intentions.
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