• MON: N/A
• TUE: US 2020 Election Debate; German Flash CPI (Sep); EZ Sentiment Survey (Sep); US Advanced Goods Trade Balance (Aug)
• WED: Chinese Official Manufacturing PMI (Sep) and Caixin Manufacturing Final PMI (Sep); UK GDP (Q2); German Retail Sales (Aug) and Unemployment (Sep); EZ Flash CPI (Sep); US ADP National Employment (Sep); GDP Final (Q2); Canadian GDP (Jul); US Chicago PMI (Aug); SNB Quarterly Bulletin (Q3)
• THU: RBI Monetary Policy Decision; EU Special Summit; Japanese Tankan Survey (Q3); EZ Unemployment (July); Swiss CPI (Sep); EZ, UK and US Manufacturing PMI Final (Sep); US PCE Price Index (Aug); US ISM Manufacturing PMI (Sep)
• FRI: EU Special Summit; Japanese Unemployment Rate (Aug); US Labour Market Report (Sep), Durable Goods (R/Aug), ISM NY Index

US 2020 ELECTION DEBATE (TUE): The first of three live televised Presidential debates will take place in Cleveland on Tuesday, beginning at 21:00 EDT, moderated by Fox News anchor Chris Wallace, a registered Democrat. The structure of the debate will be divided into six parts, each lasting 15 minutes: 1) Trump and Biden's track records; 2) Supreme Court; 3) COVID; 4) Race relations; 5) Election integrity; 6) The economy. Some political analysts have suggested that President Trump is a known quantity, so focus will likely be on how presidential hopeful Biden will perform, amid increasing scrutiny about his son's lucrative work gained while his father was Vice President. The polls at present haven’t shifted the narrative too much: Biden leads nationally, though in swing states the race is very close. In terms of the impact for traders, BNP Paribas says November's election could, of course, have major implications for fiscal and trade policy, particularly in the current environment; "however, we do not see a scenario which would derail a resumption of the USD’s current broad downtrend, as US real yields are likely to remain negative and cash rates close to zero regardless of the outcome," adding that "while a Democratic sweep of the White House and Congress would probably be more conducive to the smooth resumption of USD depreciation, even a Trump victory would be unlikely to provide a sustained lift for the USD."

US JOBS MARKET REPORT (FRI): The consensus looks for 875k nonfarm payrolls to be added to the US economy in September (range: 500k to 1.08mln), cooling from the prior 1.37mln; the unemployment rate is seen falling by 0.1ppts to 8.3%. Analysts state that the easing momentum will likely be a result of Census hiring going into reverse (government payrolls rose 344k in August, of which around 240k were attributed to Census hiring). The data is expected to reinforce the recent message of slowing economic momentum in the US, as fiscal stimulus fades and business investment faces uncertainties due to COVID and the upcoming Presidential Elections. The initial jobless claims data that coincides with the BLS survey period for nonfarm payrolls saw weekly claims rise slightly, against an expected decline, and Pantheon Macroeconomics warned that this might mean private payrolls rise by 500k (consensus expected 913k against the prior 1.03mln), and in October, could even tip negative. The consultancy argues that consumer spending - nearly 70% of the economy - cannot continue to increase at its recent pace in the aftermath of the ending of enhanced unemployment benefits, and the latest upturn in COVID cases and hospitalisations threatens to trigger renewed restrictions on economic activity, while inducing people to reduce their social interactions irrespective of state government action. It says that against this backdrop, the need for further fiscal action is obvious, but it does not expect any meaningful pandemic relief bill until February.

US ISM MANUFACTURING PMI (THU): The headline is expected to remain unchanged at 56.0 in September. The regional Fed manufacturing surveys and the Markit gauge of manufacturing PMI in the month all augur well for the ISM data. But analysts will be watching the New Orders and Production sub-indices closely for any signs of cooling economic momentum, as has been seen in some other US economic data points of late, with some analysts expecting that September's data may start showing that the economy has peaked. Credit Suisse explains that reopening businesses and recovery in supply chains led to an unsustainable surge in industrial production through the summer. However, fiscal support is now fading, and uncertainty around COVID and the upcoming Presidential elections will cool business investment. "The tailwind from continued reopening will remain strong and we expect sequential growth to remain positive; however, the pace of improvement will slow going into the end of the year," the bank writes. As always, it is worth remembering the survey is a diffusion index rather than a gauge of absolute output, thus consistent high headline readings can be interpreted as a continuation of growth/recovery. However, a record high ISM/PMI cannot be interpreted as record high output, rather just a vote of confidence from participants that things were better than the prior month, and provided New Orders remains firm (prev. 67.6), participants continue to expect that to be so.

US PERSONAL INCOME, SPENDING, PCE (THU): The rate of personal income is seen rising +0.1% m/m (prev. +0.4%) in August, while personal consumption is seen rising +0.7% m/m (prev. +1.9%). At the end of July, enhanced USD 600/week jobless benefits expired, and while President Trump's order to give USD 300/week will help offset the blow, the distribution was uneven, and the measure was still temporary. However, analysts note that retail sales and unit auto sales have returned to pre-COVID levels, although services spending is still lacklustre; personal spending still could have room to improve in the months ahead, given the elevated savings rate, although this will likely hinge on how perceptions of pandemic length evolve, and whether fiscal authorities come to the table with any more stimulus. Core PCE prices, meanwhile, are expected to rise by +0.3% m/m in the month, matching the prior rate. Fed officials have constantly warned that inflation risks remain to the downside, and the FOMC has now implemented its new average inflation targeting regime, which will allow it to keep inflation running hot while the economy is at full-employment, to offset shortfalls during downturns; that, however, remains a debate for the future, given the Fed has indicated it is keeping rates at low levels for the foreseeable future.

CHINA'S XI SPEECH (THU): Ahead of the Golden Week Holiday (October 1-8), China President Xi will deliver remarks on Thursday, the 71st anniversary of the founding of the People’s Republic of China. Analysts note that the speech will come after tense exchanges between the US and China at this week's UN General Assembly.

CHINESE OFFICIAL MANUFACTURING PMI (WED): The NBS Manufacturing PMI headline is anticipated to show a seventh consecutive month of expansion in factory activity, with expectations at 51.5 vs. the previous 51.0. The release coincides with the official Non-Manufacturing PMI, expected at 54.9 vs. the prior 55.2, and the Composite PMI which stood at 54.5 prior. The private Caixin gauge of PMIs, which tends to focus on smaller businesses, is scheduled for the same day; the prior was 53.1, the highest since January 2011, as Export Orders grew for the first time this year. Consensus for continued expansion in the PMI data is not much of a surprise given the ongoing improvement in economic releases from China, with the world’s second largest economy seen benefiting from being the first in and first out of the COVID fallout. This is evident in the latest key activity data such as industrial production for August, which rose to an 8-month high, and even in the retail sales data, which registered growth for the first time since the outbreak. Analysts expect to see improvements continue; Oxford Economics suggests that China’s economic rebound was on a reasonably firm footing and should persist through to next year, citing strong solid investment growth, a recovery in consumption and resilient exports. Further, some also point to a further relaxation of pandemic restrictions this month compared to August in some of China’s major trading partners as another factor likely to benefit the data.

JAPANESE TANKAN SURVEY (THU): The quarterly release is expected to show a less pessimistic view among large manufacturers compared to Q2, as COVID-related lockdowns earlier in the year dragged business sentiment to an 11-year low. Attention will also be on the capital expenditure aspects of the release after BoJ Governor Kuroda said he will be closely monitoring the survey to gauge trends in capex, as it has been shrinking somewhat. In terms of expectations, the Large Manufacturers Index is seen at -23 from -34, whilst the sentiment index for the Large Non-Manufacturers index is seen rising to -9 from -17. Desks note that the broader industries’ business sentiment improved amid the demand recovery after social and economic activity resumed, albeit the recovery is expected to be somewhat limited, with the outlook from Large Manufacturers expected to remain in negative territory at -17 vs. -27 in the previous quarter. Capital expenditures for large companies are expected to be revised lower from the second quarter (from 3.2% to 1.3%), in fitting with the shrinkage Kuroda cited. Analysts at Mitsubishi UFJ noted that companies will stay cautious as corporate earnings have worsened due to the spread of the coronavirus infection, and it is uncertain how the situation will develop.

EZ FLASH CPI (WED): Headline HICP is seen falling by 0.2% y/y in September, matching the August print, which was the first negative reading since 2016, with the super-core figure expected to remain unchanged at 0.4% y/y. The ECB has flagged energy prices as the main driver for the downside in September HICP, albeit analysts have suggested that this effect is fading. Meanwhile, ECB commentary on inflation has been abundant, with notable comments focusing on the EUR effect on medium-term inflation, with Chief Economist Lane highlighting a firmer EUR rate is dampening the inflation outlook, whilst Governing Council member Rehn said there was a risk that inflation will continue to remain low, and the Eurozone could fall into a trap of low growth and low inflation for a long time. More recently, as the EUR declined from its recent highs, the Chief Economist noted that rather than deflation risk, the ECB’s primary concern is inflation remaining below our aim for an excessive period. Meanwhile, RBC notes that the fall in the super-core measure last month was an eye-catcher that “reflected some pandemic- related effects, most notably the later start of the sales season for clothing and footwear and lower prices for tourism-related items such as airfares and package holidays.” The bank expects headline inflation to pick up to 0.1% y/y in September amid less drag from energy and effects of later-summer sales fading, but look for the super-core figure to remain subdued.

EZ LABOUR MARKET DATA (THU): The street expects the unemployment rate to rise to 8.1% in August, from July’s 7.9%. However, some analysts expect a more unchanged reading, given that the furlough and shortened hours work scheme may have a capping effect. Looking ahead, analysts note that Spain’s decision to extend its furlough last week may prove to be significant since Spain itself accounts for just over a quarter of unemployment in the bloc. Slightly more longer-term focussed analysts still argue that the recovery in the Eurozone is petering out, and the rate of joblessness is likely to continue rising in the months ahead.

EU SPECIAL SUMMIT (THU/FRI): European leaders will convene on October 1-2nd in Brussels, with the initial September 24-25th meeting pushed back after European Council President Michel began self-isolating. Leaders will focus on 1) going back to a fully functioning single market as soon as possible, 2) making the EU's industries more competitive globally and increasing their autonomy, and 3) accelerating the digital transition. The leaders will also discuss a range of issues, including Brexit, China and Turkey. The leaders put Brexit back on the agenda after the Internal Market Bill was put under review by the UK government, ahead of the October 15th ‘deadline’ to ratify a deal – which coincides with the next EU leaders’ meeting. Geopolitical issues up for debate include China – following the recent meeting between EU leaders and Chinese President Xi, whilst the situation in Turkey will also be discussed amid the Eastern Mediterranean standoff with Greece. Reports noted that the EU Parliament is to warn Turkey of the possibility for further sanctions, with a non-binding input to be discussed at the summit. Other topics that could be up for discussion could include Belarus and Russia, although this was not explicitly mentioned in the press release.

SWISS REFERENDUMS (SUN): On Sunday Switzerland is to undertake five-referendums, the most pertinent of which relates to immigration and explicitly the free movement of people; a policy Switzerland has signed up to with the EU in-spite of not being a formal member of the union. This vote to break from the pact was initiated by the right-wing Swiss People’s Party (SVP) which, in the event it is successful, could theoretically place a number of other treaties/agreements between Switzerland and the EU at risk; however, opinion polls heading into the vote show that ~63% of those surveyed are against this idea. The vote is motivated by the argument that such a policy is placing the jobs of older citizens at risk; however, opponents of the idea note the removal of this pact could negatively impact the talent pool for skilled workers regarding specialist companies such as Roche (ROG SW) or Novartis (NOVN SW). Aside from the immigration vote, there will also be referendums on army funding, the paternity system, federal tax deductions and animal protections.

UK GDP (WED): The final data for Q2 is expected to confirm the UK economy contracted at its worst rate on record in the quarter after COVID restrictions were imposed, with growth contracting by 20.4% q/q after a 2.2% contraction in Q1. Moody's analysts do not foresee any revisions to the numbers but are not ruling out the possibility given the scale of statistical imputing that had to be made during the crisis. The ratings agency notes that the fall in UK activity was much worse than elsewhere in Europe, but this was mainly a function of restrictions in the country lasting much longer; it says that this suggests that the rebound in Q3 will also be bigger in the UK than elsewhere.

CANADIAN GDP (WED): Canadian bank RBC forecasts July GDP will rise 3.0% m/m, which would be in line with the nowcast estimate provided by StatsCan in last month's data. "We thought it was on the high side at the time - and still see more downside than upside risks - but data has been solid, including strong gains in hours worked for hard-hit sectors in the payrolls employment report for the month," RBC writes, "the sales indicators have been mostly consistent with prior expectations, including about 4% sequential gains seen for manufacturing and wholesale trade GDP components." That said, RBC believes that O&G output will have declined in the month. If the monthly GDP does come in at 3.0%, it would put RBC's tracking estimate for Q3 growth slightly above its 40.0% annualised forecasts (+8.8% q/q).

RBI POLICY DECISION (THU): Analysts are mixed with regards to the outcome of the RBI’s meeting; many anticipate the central bank will keep rates unchanged, with the Repurchase Rate and Reverse Repo Rate likely to be maintained at 4.00% and 3.35% respectively, while the RBI is also expected to retain its accommodative stance. At the last meeting, the MPC defied the consensus for a 25bps cut, and instead unanimously decided to keep rates on hold in the face of rising inflation which surpassed the central bank’s 2-6% tolerance band. After that meeting, the RBI said that it will ensure inflation stays within the target, and noted that inflation risks remain, but may ease ahead on favourable base effects; Governor Das also reiterated that there was space for further monetary policy action, though impressed the need to keep some powder dry; Das also called for patience while the cumulative 250bps rate cuts already undertaken since February 2019 seep into the financial system, further reducing interest rates and spreads; the minutes from the confab stated that the MPC decided to stay on hold on rates and remain watchful for a durable reduction in inflation to use the available space to support the revival of the economy. These comments, therefore, point to a lack of urgency for the RBI to act in the immediate term, with the central bank also restricted by the latest inflation data which remained above target at 6.69%. That said, there are still risks the central bank could take action, and this would certainly be possible once inflation eases back to acceptable levels as there is a need for policymakers to support the domestic economy that has been ravaged by the coronavirus pandemic. Elsewhere, the focus will be on the statement to see if the central bank tweaks its stance, and for any clues on future policy. Participants will also be on the lookout for the central bank’s growth and inflation forecasts which it is mandated to publish once every six months and has refrained from since the last projections in February due to uncertainty from COVID, although it did state at the last meeting that it expects inflation to remain elevated and for Real GDP to contract in H1 and FY 20/21.