Macroeconomics: The Day Ahead for 24 Aug 23

  • Digesting weak French Business Confidence, ‘stand pat’ rate decisions in South Korea, Sri Lanka and Indonesia; awaiting UK CBI Retailing survey, US Durable Goods Orders and weekly jobless claims, expected Turkey rate hike; US 30-yr TIPS auction; Powell speech vigil

  • US Durable Goods Orders: Aircraft orders to drag headline sharply lower; core measures seen eking out small gains despite negative survey signals


The economic data schedule is again a mix of second division data along with surveys, there are the weaker-than-expected French Business Confidence surveys to digest ahead of the UK CBI Retailing survey, both of which follow the very weak PMIs in the Eurozone and UK. The US looks to Durable Goods Orders and weekly jobless claims, while Mexico looks to CPI, as a good many of its fellow Latin American countries start to embark on rate cutting cycles, whereby core CPI is seen falling again 6.24% y/y from 6.52%, and precedes the minutes of August Banco de Mexico policy meeting, at which it sounded overall rather hawkish, and ostensibly in no mood to start cutting rates anytime this year. As expected the Bank of Korea and Bank Indonesia held rates, as did Sri Lanka’s CBSL against expectations of a further 100 bps cut, with Turkey’s TCMB expected to hike a further 250 bps to 20.0%, though a sizeable minority look for a smaller hike. Evergrande Property Services, Meituan and Weibo top the run of Chinese earnings, while RBC and Toronto Dominion kick off the run of Canadian bank results, and the US will auction 30-yr TIPS. But with Powell’s much anticipated Jackson Hole speech ahead, today’s run of data and events are unlikely to have more than a passing impact, even if the much better-than-expected Nvidia results and the very downbeat Eurozone, UK and US flash PMIs have given a boost to risk asset sentiment.

** U.S.A. – July Durable Goods Orders **  

A steep fall in Boeing Orders (July 52 vs. June 304) is expected to pace a sharp -4.0 m/m drop in headline US Durable Goods Orders, with the ex-Transport measure forecast at 0.2% and Non-defence Capital Goods ex-Aircraft seen eking out just 0.1% m/m (vs. June 0.5%). While the core measure has clearly lost a lot of momentum, it continues to see a modest expansion, and suggests the contraction signalled by the Manufacturing ISM and PMI is overstating weakness at the current juncture, though that does not exclude a retreat going forward, particularly given the lagged impact of higher rates.

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