Macroeconomics: The Day Ahead for 29 Aug 2023

  • Busier day for statistics as UK Shop Prices, German and French Consumer Confidence and Japan labour data digested; Turkey Trade, US House Prices and Consumer Confidence; some central bank speakers, Hungary rate decision; US small bank capital proposals; StatCan crop report; German 5-yr, US 7-yr
  • UK BRC Shop Prices: Food price pressures continue to ease, but non-food prices looking sticky
  • Germany: GfK Consumer Confidence, Ifo Employment barometer reinforce downbeat economy picture
  • US Consumer Confidence: modest setback expected, mortgage rates and gasoline prices may weigh, focus on labour differential as JOLTS Job Openings seen easing yet again; labour market less tight rather than loosened


A busier day for statistics awaits, as the UK returns from its late summer bank holiday, with UK BRC Shop Pries, German GfK consumer Confidence, Japan’s unexpected rise in Unemployment (paced by an increase in women joining the workforce) and Vietnam’s run of monthly activity indicators are digested. Ahead lie Turkey’s trade along with US HFHA and CS House Prices, Consumer Confidence and Dallas Fed Services. There is a smattering of ECB and RBA speakers, Hungary’s MNB is again seen holding rates at 13.0%, while US bank regulators are due to proposals for smaller US banks to issue long-term debt to cover potential capital losses. Germany sells 5 -yr and the US 7-yr, with Cosco Shipping, Country Garden Services, Trina Solar head the busy run of corporate earnings in China, and Bank of Montreal and Bank of Nova Scotia round off the run of major Canadian bank earnings. In the commodity sector, StatCan publishes its monthly reports on crops. The overarching themes of concerns about Fed’s higher for longer and US debt levels, along with China’s property sector contagion effects into the broader economy remain very much extant, even if markets appear to have taken a dose of ‘hope-ium’ on the back of the latest official measures, which again look to be more a case of tinkering, than taking decisive action, though the fall in US long-term Treasury yields is perhaps the more important driver of somewhat improved market sentiment.

In terms of overnight news flow, UK BRC Shop Prices fell further to 6.9% y/y from 7.6%, thanks largely to a slide in Fresh Food Prices pacing a further drop in food prices to 11.5% y/y from 13.4%, with Non-Food Prices unchanged at 4.7%. While the trend is clearly lower, the stubbornly high level of non-food prices will probably be a point of concern for the BoE, particularly given the ongoing services price pressures. The mood in Germany continues to darken, with Consumer Confidence reversing after a steady improvement since the turn of the year, with a further marginal drop in the Ifo Employment index to a two-and-a-half-year low only adding to a persistently downbeat picture.

As noted in the Week Ahead, it is the array of US labour market indicators this week, which will inform how much the labour market is or is not loosening, with the focus today on the Consumer Confidence’s Labour Differential (Jobs Plentiful minus Hard to Get) and JOLTS Job Openings seen at 9.50 Mln vs. 9.58 Mln. Headline Consumer Confidence is seen slipping to 116.2 from 117.0, though rising mortgage rates may weigh along with still elevated gasoline prices, suggesting some downside risks relative to the consensus.

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