Final French and Spanish CPI, Eurozone GDP Estimate and US PPI in Focus Today
Key Takeaways
- •Final French and Spanish CPI prints and the second estimate of Eurozone Q3 GDP are unlikely to move markets or influence the ECB, with revisions being the only realistic source of surprise.
- •Risk-off sentiment strengthened after Trump stated that the US does not need a deal with Iran, positioning geopolitical headlines as the main potential driver of intraday direction given the sparse euro area calendar.
- •The US PPI report headlines the American session, with headline producer prices forecast at 6.6% year-on-year and core PPI expected steady at 5.0%.
- •Markets currently assign an 89% probability to a 25 basis point Fed rate hike in December and an 11% chance of a larger 50 basis point move, with most hawkish repricing already completed.
- •Remarks from voting Fed officials Williams and Bowman may attract the most scrutiny for signals on the December decision, while non-voter Daly's comments carry less direct weight.
European Session
The European session brings the final French and Spanish CPI readings, along with the second estimate of Eurozone Q3 GDP. Final inflation prints rarely move markets, as trading activity tends to concentrate around preliminary figures, and the same applies to second GDP estimates. As a result, the data is unlikely to change anything for the ECB, and the market reaction will probably remain muted. For the euro area, the releases mainly serve to confirm the preliminary figures, so any revisions would be the only realistic source of surprise.
Attention will stay fixed on the Federal Reserve and, in particular, on US-Iran developments. Risk-off sentiment strengthened in the previous session after Trump stated that the US does not need a deal with Iran. With little in the euro area calendar likely to shift sentiment, geopolitical headlines could remain the main driver of intraday direction.
American Session
The US PPI report is the main release of the American session. The headline PPI is expected at 6.6% year-on-year, up from 6.3% previously, while the month-on-month measure is seen at 0.4%, down from 1.3%. Core PPI is forecast at 5.0% year-on-year, unchanged from the prior reading, with the month-on-month figure seen at 0.3%, down from 0.7%. As a gauge of prices at the producer level, the report offers a read on upstream inflation pressures at a time when policymakers and markets are focused on the path into the December meeting.
The report is unlikely to alter the picture significantly, since most of the hawkish repricing has already taken place following Fed Governor Waller's remarks and the hotter-than-expected US CPI. Markets are currently pricing an 89% chance of a 25 basis point hike in December and an 11% probability of a larger 50 basis point move. A material deviation from forecasts would be the main factor capable of shifting those expectations.
Central Bank Speakers
- 08:30 GMT / 03:30 ET – ECB's Zigman (neutral – voter)
- 14:10 GMT / 09:10 ET – Fed's Williams (neutral – voter)
- 15:50 GMT / 10:50 ET – Fed's Bowman (dovish – voter)
- 17:00 GMT / 12:00 ET – Fed's Daly (neutral – non-voter)
With Williams and Bowman both holding votes, their remarks may attract the most scrutiny for signals on the December decision, while Daly's comments carry less direct weight given his non-voting status.
Source: Investinglive
