• MON: --
• TUE: Bank of Indonesia Monetary Policy Decision; UK Labour Market Report (Aug); German ZEW Survey (Oct); US CPI (Sep); OPEC Monthly Oil Market Report
• WED: BoK Monetary Policy Decision; Singapore MAS, IEA Oil Market Report
• THU: UK's de-facto deadline for UK-EU deal; European Council Summit (Day 1); US Second Presidential Debate; Australian Labour Force Report (Sep); Chinese Inflation (Sep); OPEC+ JTC Meeting
• FRI: European Council Summit (Day 2); EZ CPI Final (Sep); US Retail Sales (Sep); University of Michigan Survey Prelim (Oct)

Q3 CORPORATE EARNINGS: The 3rd-quarter corporate earnings season kicks off next week, with major banks getting proceedings underway. On an annualised basis, both earnings and revenues are seen lower by 22% y/y and 4% y/y respectively. However, there will likely be notable divergences between different sectors; for instance, Tech earnings are projected to be just 1% lower y/y, while Cyclicals' EPS are seen lower by 66% y/y. But even with Tech, there will be wide differences, with strong growth in software and semiconductor names likely to be offset by hardware, services and internet retail. And heading into this earnings season, there have been a number of positive pre-announcements -- notably NXPI and MCD -- and because analysts have been more upbeat heading into the quarter, the scope for positive surprises driving significant price action seems limited, some have suggested. Indeed, even in Q2, we saw upside surprises although price action was more muted than we would normally be accustomed to. For earnings, much will hinge on the outcome of the US Presidential election, particularly given the candidates’ different views of taxation (Biden wants to boost corporation tax from 21% to 28%; Goldman Sachs has suggested this will reduce S&P 500 earnings by roughly 9%, but is something that would likely be phased in from 2022, and accordingly it estimates that the boost from fiscal stimulus and reduced tariffs would more than offset the expected tax policies in 2021 and 2022, before the policies become a modest net earnings drag in 2023 and 2024). Finally, it may be worth keeping a closer eye on expectations for FY21 EPS; currently Eikon data shows analysts look for S&P 500 FY21 EPS at USD 162 (it has been around this level over the last couple of months), rebounding from expectations of USD 129 for the FY20 period -- some have suggested that a more constructive view for FY21 is more likely to result in meaningful price action. (Note: a full weekly earnings schedule, with expectations, can be accessed here).

 SALES (FRI): Headline retail sales are seen rising 0.5% m/m in September, a slightly cooler pace than +0.6% in August. RBC's analysts say the data will be supported by strong vehicle sales data in the month, where unit sales rose to a rate of 16.4mln SAAR, from 15.2mln the previous month -- this leads RBC to forecast an above consensus +1.3% m/m for the headline. "Beneath the surface, sales should also look very decent," the bank writes, noting that credit card transaction data will be supportive in September. The bank also sees an above consensus +0.8% m/m for the Control Group metric; "all in, this would round out our 40% (q/q annualised) estimate for real personal consumption in 3Q."

US CPI (TUE): US CPI is seen rising 0.2% m/m in September, from +0.4% m/m in August, and slowing after a three-month run of rebounding. However, Credit Suisse is more pessimistic than the consensus, forecasting a rise of just 0.1% m/m, which should still be enough to drive the y/y rate higher by one-tenth to 1.4%; gasoline prices are likely to drag, as is the continued moderation in food prices as supply chains normalise. The bank argues that core goods prices will slow down, following the boost seen last month in the used vehicle and apparel prices. The bank notes that industry data showed wholesale prices for used vehicles have begun to decline, and this should pass through to retail prices in the next few months. "The sharp recovery in core inflation so far has been driven by pick-ups in the hardest-hit sectors of spending, including travel-related services," it writes, and "further recovery is likely, although growth should decelerate visibly," adding that "more importantly, shelter inflation, one of the largest and most stable categories in core CPI, is showing early signs of disinflation." It says that the immediate disinflationary shock from COVID is unwinding in the hardest-hit categories. "However, a trend slowdown in shelter prices would be a major headwind to core inflation, while the current lapse in fiscal relief measures adds downside risks."

UK LABOUR MARKET REPORT (TUE): The upcoming labour market report from the UK will be of increased interest. The data will cover the three-month period up until the end of August, which marks the point at which employers in the UK were required to start covering pension and national insurance contributions. RBC highlights that the data for the three months up until July showed redundancies rose 48k compared to the prior equivalent period; a trend that the Canadian bank expects to continue into August with the unemployment rate set to rise to 4.3% from 4.1%. Looking further ahead, the employment picture will likely provide greater cause for concern as the government contribution to employee wages is reduced further before the scheme switches to a less generous one at the end of October, albeit economists will need to factor in the recent unveiling of an additional furlough scheme that will be available in areas subject to localised lockdowns.

MAS PREVIEW (WED): The Monetary Authority of Singapore is expected to maintain policy settings at its semi-annual policy meeting on Wednesday with all 13 economists surveyed unanimously forecasting the central bank to keep its FX-centred policy unchanged with the slope of the currency band to be maintained at the current zero percent per annum rate of appreciation. The MAS utilizes the exchange rate as its main policy tool in which it could tweak policy through either the mid-point, slope or width of the currency band. For example, the MAS could alter the mid-point of the SGD Nominal Effective Exchange Rate band which if lowered, would effectively be easing policy by weakening the SGD against a basket of currencies, while it could alter the slope to adjust the path of the currency; a measure it utilised during the past two consecutive meetings whereby it loosened policy through back-to-back reductions in the slope of the currency band, while the central bank could also widen the width of the trading band to allow the currency more room to fluctuate although this is seen as a neutral measure. Nonetheless, the central bank is not expected to act amid hopes for an economic recovery as COVID-19 restrictions are gradually eased and after the central bank extended its support measures for borrowers earlier this month, including temporary reductions to monthly instalments on mortgages, longer repayment periods for renovation and student loans, as well as partial deferrals and customised restructuring options on loans for SMEs. As usual, the announcement will coincide with the release of the latest Singapore GDP data which will be the advanced reading for Q3 and is anticipated to show a moderation in the economic contraction after the record slump in Q2 in which the economy declined by 42.9% Q/Q and 13.2% Y/Y.

AUSTRALIAN LABOUR FORCE REPORT: The headline employment change is expected to show 35k jobs being shed in September, with the unemployment rate seen ticking higher to 7.1% from 6.8%, although the participation rate is seen steady at 64.8%. The Australian Bureau of Statistics noted that last month’s rise in employment was on the back of a 50k increase in self-employed traders without employees, whilst employees increased some 2.6k. Westpac suggests a decoupling from the usual seasonal effects for employees and self-employed – with averages over the last five years showing employees fell by some 66.5k in August, whilst the number of self-employed rose 24k in the month. “So it was not the strength of the self-employed that was surprising, but rather the lack of weakness in employees,” it argues, also highlighting that over the prior month, the softness in Victoria’s labour market (due to lockdowns) was muted by a rise in participation across other states. “We have allowed the participation rate to round down to 64.7% from 64.8% which will hold the labour force flat in September. With this, our forecast for a 50k decline in employment is enough to lift the unemployment rate to 7.2% from 6.8%”, the bank predicts.

RBA GOVERNOR LOWE (THU): RBA Governor Lowe will be making an appearance at the Citi Australia and New Zealand Annual Investment Conference. The speech has not been given a title yet, but participants will be focused on any comments surrounding monetary policy as the November meeting is seen as “live” amidst increasing calls for the central bank to cut its Cash Rate by 15bps to 0.1%.

CHINESE TRADE BALANCE (TUE): China will release its September trade balance data on Tuesday, with the surplus expected to have widened to USD 59.95bln from the prior 58.93bln, whilst exports are seen rising some 10% (prev. 9.5%) and imports +0.1% (prev. -2.1%). Desks note that the Chinese economy has continued the upward trajectory following the post-restriction rebound. However, Moody’s notes that the recovery in foreign demand has been uneven and largely driven by increased orders for medical, electrical, and high-tech products. Thus, the analysts still expect a stronger trade position, but with exports to have increased below market forecasts, at 5% y/y, especially given August’s low-base effect and renewed restrictions across parts of Europe.

CHINA CPI (THU): Headline CPI is seen cooling to 1.8% Y/Y from August’s 2.4%, and PPI is expected to modestly rise to -1.9% from -2.0%. “Prices data indicated that inflationary pressures eased, with both input costs and output prices rising at softer rates at the end of the third quarter”, according to the latest Caixin PMI release, and it added that input costs rose modestly in September as the rate of inflation eased to a three-month-low, whilst prices charged increased only slightly.

EUROPEAN COUNCIL SUMMIT (THU/FRI): Brexit is set to dominate the summit on October 15-16 which coincides with UK PM Johnson’s de facto deadline for negotiations, albeit the EU said it will ignore this whilst affirming its own 31st October cut-off date, betting that the UK will back down. Brexit news-flow has been abundant to say the least, with the UK taking a more upbeat tone with regards to the most recent round of negotiations, sentiment that is not echoed by counterparts in Brussels. Long-story-short, key hurdles remain and particularly with regards to the level playing field (LPF), fisheries, and state aid/subsidies, with no signs of a landing zone on the former two according to an EU official. Additionally, EU sources noted that chances of leaders green-lighting major concessions on fishing or the LPF at next week’s summit are nil. Further on fisheries, sources noted French President Macron, was standing firm on his demand that the French fishing industry maintains its current level of access to British waters, whilst the German Agricultural Minister also said Germany is to take a hard line on the matter. More recently, EU’s Chief Brexit negotiator Barnier reportedly told ambassadors he does not envisage a deal by the de-facto mid-October deadline, with separate sources noting that Britain plans to end Brexit discussions if no deal is seen by this date. The Council will take stock of the implementation of the Withdrawal Agreement and review the state of negotiations. Leaders will discuss preparatory work for all scenarios after 1 January 2021, according to the Commission. Other topics up for debate include the epidemiological situation, climate change and relations with Africa.