Sentix Confidence, NY Fed Inflation Expectations and Central Bank Speakers Headline Today's Calendar
Key Takeaways
- •The Eurozone Sentix investor confidence index is forecast at 2.1, down from the prior 2.7, indicating cooling sentiment that remains above zero and is not expected to alter ECB policy.
- •Markets are pricing a 78% chance of a Federal Reserve rate hike in December, and only very soft CPI data or vocal resistance from key officials would likely lower those odds to around 50%.
- •Fed speakers Bowman and Goolsbee give markets their first opportunity to hear whether any officials challenge current rate hike expectations following the stronger-than-expected jobs report.
- •As long as the US-Iran conflict and related energy disruptions persist, markets are likely to keep pricing in an economic slowdown, with a resolution needed to revise growth expectations higher.
- •Five central bank officials are scheduled to speak, including Fed voters and non-voters, ECB voter Cipollone, and Bank of England Governor Bailey, offering a same-day view of three major central banks' policy framing.
European Session
The Eurozone Sentix investor confidence index is the only European release of the day, with the reading forecast at 2.1 compared with the prior 2.7. The Sentix survey asks retail and institutional investors each month how they assess the Eurozone economy, and readings above zero indicate net optimism, so a print at the forecast level would point to cooling sentiment rather than outright pessimism. The data is not expected to change anything for the European Central Bank, so the market reaction is likely to be muted.
Attention remains focused on developments between the United States and Iran and on the fallout from the US midterm elections. A Democratic Congress is viewed as a net negative for growth given the constrained fiscal expansion, but much hinges on the US-Iran conflict.
Markets would need a resolution to price out the most negative outcomes and revise growth expectations higher amid improving inflation and reduced rate hike bets. As long as the conflict and the accompanying energy disruptions continue, markets will likely keep pricing in an economic slowdown.
American Session
The New York Fed's consumer inflation expectations survey is the sole US release on the agenda. The monthly survey polls a rotating panel of households on where they expect inflation, income, and spending to head over the year and three years ahead. The report has never been a market-moving release, so the market reaction should be muted.
Following the much stronger-than-expected nonfarm payrolls report, attention has shifted to the US CPI data due tomorrow. Markets are already pricing in a 78% chance of a rate hike in December, so very soft data would be needed to bring the probabilities down to 50%, or for key Federal Reserve members to push back against current expectations. Today's scheduled remarks from Fed speakers Bowman and Goolsbee give markets the first chance to hear whether any officials challenge those expectations.
Given the overall set of economic data, the view presented is that the Federal Reserve has little reason not to keep tightening. Its main fear is described as a bear market in stocks, since that would slow the economy significantly. Long-term yields are no longer tracking inflation, moving instead in lockstep with the stock market amid growth concerns.
Central Bank Speakers
Voter status flags officials whose views carry direct decision-making weight on policy, while non-voting speakers can still shape expectations through their remarks. With the Fed, ECB, and Bank of England all represented, the slate offers a same-day sample of how three major central banks are framing policy.
- 13:40 GMT/08:40 ET - Fed's Bowman (dovish - voter)
- 15:00 GMT/10:00 ET - Fed's Goolsbee (hawkish - non voter)
- 16:00 GMT/11:00 ET - ECB's Cipollone (neutral - voter)
- 17:15 GMT/12:15 ET - Fed's Barkin (neutral - non voter)
- 17:25 GMT/12:25 ET - BoE Governor Bailey (neutral - voter)
Source: ForexLive
