Macroeconomics: The Week Ahead: 13 to 17 February

Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist

The new week brings a barrage of top tier economic data from the US, UK and Japan, headlined by CPI in the USA, which also has Retail Sales, Industrial Production, PPI, Import Prices, NFIB, NAHB Housing, NY & Philly Fed Manufacturing surveys. The UK looks to labour data, CPI & PPI along with Retail Sales, while Japan has Q4 prov. GDP, Trade Balance and Private Machinery Orders (also remember that China aggregates January & February activity data as one release due to LNY distortions). There are no major central bank policy meetings, but a further barrage of speakers, with rates seen unchanged in Indonesia, but rising 25 bps in the Philippines. The US earnings season is well past its peak, but it will still be a busy week both in the US and elsewhere. In the commodity space, and with oil markets focussed on the potential boost to demand from China’s re-opening, OPEC and the IEA publish monthly oil market reports, there is the joint IEA-IEF-OPEC symposium, Oslo Energy Forum, while Singapore hosts the Steel & Raw Materials conference; there are also earnings reports from Albemarle, Glencore and Vale. In the agricultural arena, France’s Farm Ministry reports on 2022 Output & 2023 Winter Plantings, and a close eye will continue to be kept on weather conditions in Argentina and Brazil, while Russia holds its annual Sochi Grains conference. Politically there are Eurozone and EU Finance ministers meetings to start the week, which will continue to focus on the impact of the war in Ukraine and energy market measures, while the debt ceiling debate continues to simmer in the US, along with tensions with China. The toll from the devastating earthquakes in Turkey and Syria will be the other focal point, with the loss of life now close to 30,000 and business group Turkonfed estimating the economic damage at around $84 Bln or around 10% of GDP. As the first anniversary of the Russian invasion of Ukraine nears, there will also be a lot of focus on an expected major Russian offensive.

Markets have again tripped up over their over enthusiasm for a Fed and other central bank rate pivots, with this week’s CPI and Retail Sales expected to suggest that inflation has picked up in m/m terms and that US consumer spending is proving rather more resilient. CPI is expected to dip in y/y terms to 6.2% from 6.5% y/y headline and 5.5% y/y from 5.7% core, but to accelerate in m/m terms to 0.5% headline and 0.4% core, which would leave headline 3-mth annualized at 3.2%, and core rising to 4.4% from 4.0%. The path lower on inflation was always going to be bumpy, and rising gasoline and used car prices (the latter also indicating core goods disinflation is ebbing), and continued sticky core services inflation exercising upward pressures (perhaps most notably medical care), along with easing but continued pressure from shelter/housing. PPI is also seen higher in m/m terms, while Import Prices are expected to ease a little after an unexpected bump higher in December. After two months of contractions, both headline and the core ‘Control’ group Retail Sales measures are seen rebounding sharply at 2.0% and 0.8% m/m respectively, with the deceptively robust auto sales (mostly seasonal adjustment) and price driven rise in gasoline sales pacing headline, but also an expectation that the Cost of Living Adjustment (COLA) to social security payments help at the core level, as well as the rebound in the ISM Services (though this will likely give more of a boost to PCE). Ahead of CPI there is the NFIB Small Business Optimism, that is seen rebound modestly to 91.0 from December’s sharpish drop to 89.8, with the pick-up in compensation and Vacancies suggesting some upside risk. Manufacturing sector data takes shape of Industrial Production and NY/Philly Fed surveys, with the former seen recovering most of December’s 0.7% m/m decline, paced by Manufacturing Output (exp. 0.8% m/m vs. Dec -1.3%), but as with expectations of better, but still contractionary readings in the February NY & Philly Fed surveys, still overall pointing to lower demand, as higher rates, weaker global demand and cumulative cost and wage costs weigh on the sector. On balance, the data run, if in line with expectations, are likely to keep markets wary of the Fed adjusting its terminal rate expectations slightly higher.

As for this week’s run of major UK data, the labour report is seen showing modest increases in HMRC Payrolls (15k) and the less timely LFS Employment (43K), but hardly signalling an easing in tight labour market conditions with the Unemployment Rate seen unchanged at 3.7%. Rather more significant will be the Average Weekly Earnings with headline seen easing 0.2 ppt to 6.2% y/y, and ex-Bonus edging up to 6.5%, in both cases reflecting some modest base effects. The real test will come over Q1, given benign base effects, but with public sector pay settlements likely weighing quite heavily in the equation. CPI is seen falling 0.4% m/m on the back of petrol prices and seasonal discounting, though with considerable upside offset likely from food prices, seeing the y/y rates for headline dripping to 10.3% from 10.5% and core to 6.2% from 6.3%. PPI data are expected to suggest only modest pipeline pressures (Output 0.1% m/m, Input 0.2%), with base effects accounting for the sharp decreases in y/y rates, even if they remain historically very high. Retail Sales are seen marginally lower on the month, but the simple fact is that this would mean that there have been one increase, one flat reading and 12 m/m declines in the past 14 months if forecasts are correct. The dire forecasts for the UK economy were clearly out of place, but there is little to suggest that it is going to move out of stagnation any time soon, but the data run will likely leave the BoE with little choice other than at least one further 25 bps rate hike in March.

Japan’s provisional Q4 GDP is expected to rebound 0.5% q/q (2.0% SAAR) after contracting 0.2% q/q in Q3, with a solid 0.6% increase in Private Consumption and a 0.4 ppt contribution from Net Exports seen offsetting a relatively modest setback in CapEx (-0.3% q/q after +1.5% in Q3). However more timely January Trade data are forecast to show a very abrupt deceleration in Exports (-1.5% y/y vs. Dec 11.5%), with Imports still running at +21.1% y/y, mostly due to energy prices, but implying a sharp drag in Q1. Private Machinery Orders remain volatile, with a 2.8% m/m rebound expected after an 8.3% m/m decline in November, but the underlying trend remains sluggish at best, though there will be some hope that China’s re-opening may offer a boost, even if the tech sector is likely to be a drag. Last but not least Australia has its labour data, with expectations centering on a 20K rebound in Employment after an unexpected 14.6K drop in December, with the Unemployment and Participation Rates seen unchanged at 3.5% and 66.6% respectively, thus implying that while the labour market is tight, employment growth is around pre-Covid trend, in contrast to the US and Canada. But the RBA will be focussed more on much stronger than expected inflation readings, and on next week’s Q4 Wage Price data, above all any further acceleration in q/q readings (Q3 1.0%). Outside of the detailed Eurozone provisional Q4 GDP data (seen unrevised from the flash 0.1% q/q), there are national Q1 GDP readings for various CEE countries and Germany’s PPI in terms of EU statistics.

France (EUR 11.5 Bln mediums & q.75 Bln I-L) and Italy (EUR 8.5 Bln 3.6 & 15-yr) head the run of govt bond auctions, with the US selling 10-yr, UK 10-yr, Germany 30-yr and Japan 5-yr.

The US earnings season is starting to wind down, and a key aspect to bear in mind is that according to Factset, earnings guidance for Q1 2023, has seen 58 S&P 500 companies issue negative EPS guidance, and 13 have issued positive EPS guidance, and yet the forward four-quarter (Q1 2023–Q4 2023) P/E ratio for the S&P 500 has risen to 18.3. Bloomberg News suggest that earnings highlights are likely to include: Air Liquide, Airbnb, Albemarle, Allianz, America Movil, AIG, American Water Works, Analog Devices, Applied Materials, Arista Networks, AutoNation, Barclays, Barrick Gold, Biogen, Bridgestone, Cadence Design Systems, Cenovus Energy, Cisco Systems, Coca-Cola, Commonwealth Bank of Australia, CSL, Datadog, DBS Group, Deere, Devon Energy, Digital Realty Trust, DoorDash, DraftKings, Ecolab, Electricite de France, Energy Transfer, Equinix, Eversource Energy, Exelon, Fidelity National Information Services, Fortescue Metals, Glencore, Globalfoundries, Goodman Group, Heineken, Hermes International, Hyatt Hotels, Japan Post, Japan Post Bank, Japan Tobacco, Kering, Koninklijke Ahold Delhaize, Kraft Heinz, Manulife Financial, Marriott International, Mercedes-Benz Group, Naturgy Energy Group, NatWest Group, Nestle, Nutrien, Orange, Pernod Ricard, PTT, Recruit, Relx, Republic Services, Restaurant Brands International, Roku, Safran, Schneider Electric, Seagen, Shake Shack, Shopify, Sika, SMC, Southern, Suncor Energy, Swiss Re, Synopsys, TC Energy, Telstra Group, Tokio Marine, Trade Desk, Uniper, Vale, Wal-Mart de Mexico, Waste Connections, WEG, Welltower, Wesfarmers, Zillow Group and Zoetis.

To view the full report and to sign up for daily market commentary please email

The information within this publication has been compiled for general purposes only. Although every attempt has been made to ensure the accuracy of the information, ADM Investor Services International Limited (ADMISI) assumes no responsibility for any errors or omissions and will not update it. The views in this publication reflect solely those of the authors and not necessarily those of ADMISI or its affiliated institutions. This publication and information herein should not be considered investment advice nor an offer to sell or an invitation to invest in any products mentioned by ADMISI.

© 2023 ADM Investor Services International Limited.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

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.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now