Macroeconomics: The Day Ahead for 23 December

  • This will be the final update for 2022, and we would like to wish all our readers a Merry Christmas (where applicable) and all the very best for a happy and prosperous New Year. Updates will resume gradually from 4 January 2023 **
  • Relatively busy day for statistics with many Europe and N. America markets set for early close; Japan, Malaysia & Singapore CPI to digest; Brazil IPCA-15 inflation, US Personal Income/PCE, Durable Goods, New Home Sales & final Michigan Sentiment ahead
  • US Personal Income/PCE: Income seen boosted by state tax rebates, Spending to post tepid gain, deflators likely to smaller fall than CPI
  • US Durable Goods Orders: aircraft orders to weigh on headline, core measures to signal CapEx spending fading
  • US New Home Sales set to echo other housing indicators with sharp fall after unexpected October rebound

EVENTS PREVIEW

A shortened trading day in Europe and North America and very thin but occasionally choppy trading volumes, still has a relatively busy schedule of data, with Malaysia, Singapore and Japan’s national CPI to digest. Ahead lie Italian confidence surveys, the first national CPI reading for December from Belgium, Brazil’s IPCA-15 Inflation, and a flurry of US data: Personal Income/PCE, Durable Goods Orders, New Home Sales and final Michigan Confidence.

U.S. Personal Income may turn out somewhat stronger than the anticipated 0.3% m/m due to payments of state tax rebates, while PCE is seen up a subdued 0.2% m/m echoing the downbeat Retail Sales, but supported by spending on Services. As ever the PCE deflators will garner most attention with a 0.1% m/m rise seen for headline and 0.2% m/m for core, i.e. higher than CPI due to lower weightings for energy and autos in PCE, which thanks to base effects would see y/y rates drop to 5.5% from 6.0%, and 4.6% from 5.0% respectively. As for Durable Goods Orders, a sharp drop in aircraft orders is expected to drag headline Orders down by 1.0%, though core measures are expected to be weak (echoing the ISM and other manufacturing surveys), with the ex-transport measure seen flat m/m and Non-defence Capital Goods ex-Aircraft up 0.2% m/m. As with the rest of this week’s housing sector data, New Home Sales are seen posting another sharp drop of -5.1% m/m, with falling mortgage applications, high mortgage rates and still relatively high prices continuing to weigh heavily, and likely to continue to do so. The series is notoriously volatile, as was evidenced in the past 3 months (+7.5%, -11.0% and 21.7%), and a sharp outlier relative to forecasts is a strong possibility.

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ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

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