• MON: Swiss Unemployment Rate (Oct), EZ Sentix (Nov), Mexican Inflation (Oct), US Employment Trends (Oct)
• TUE: Norges Bank Financial Stability Report & EIA STEO; Chinese Inflation (Oct), Australian NAB Business Confidence (Oct), UK Unemployment (Sep), Norwegian CPI (Oct), German ZEW (Nov), US NFIB (Oct), Chinese M2 Money Supply & New Yuan Loans (Oct)
• WED: RBNZ Rate Decision, ECB Central Banking Forum, Riksbank Financial Stability Report & OPEC MOMR; Swedish Unemployment (Oct), Japanese Corporate Good Price (Oct)
• THU: Banxico Rate Decision & IEA Oil Market Report; German CPI (Oct, Final), UK GDP (Q3 Prelim), Norwegian GDP (Q3 & Sep), Swedish CPIF (Oct), US CPI (Oct), Initial & Continued Jobless Claims (w/e November 2nd & October 26th), New Zealand Manufacturing PMI (Oct)
• FRI: G20 Finance Officials Extraordinary Meeting, BoC Senior Loan Officer Survey, CNB Minutes (Nov) & Fitch reviewing France; EZ Employment (Q3, Flash) GDP (R), US University of Michigan (Nov, Prelim)
• SUN: Brazilian Municipal Elections (Round-1)

(Previews are listed in day-order)

CHINESE INFLATION (TUE): Next week sees the release of the Chinese inflation figures, with headline CPI YY forecast to cool to 0.8% in October from September’s 1.7%, whilst PPI is seen at -2.0% vs. Prev. -2.1%. The prior month saw a slowdown in headline consumer prices on the back of pork prices falling as the country replenished its pig population after being hit by the African swine flu and summer flooding. Desks note that while the price of pork has fallen recently, it remains at a high level compared to previous years. However, some warn that China’s official CPI figures significantly underestimate overall price pressures in China’s economy as they give too little weight to house prices, which have continued rising in the last decade across the nation. “With infrastructure-led stimulus still being ramped up and consumption rebounding, demand-side pressures on prices will probably strengthen in the coming months, pushing up underlying inflation” said analysts at CapEco following the prior month’s release, “But the rebound in core consumer price inflation will still leave it relatively subdued and food price inflation looks set to drop back further in the near-term as pork supply continues to recover from last year’s African swine fever outbreak. The benign outlook for inflation means it is unlikely to be a major driver of policy decisions in the coming quarters.”

UK UNEMPLOYMENT (TUE): The latest labour market report from the UK will once again only offer limited insight into the domestic employment landscape. The unemployment rate is forecast to rise to 4.7% in September from 4.5% on a 3M/3M rolling basis. The government’s furlough scheme has provided significant support to the jobs market, however, as of August this began to dwindle as employers had to begin covering pension contributions and national insurance. The September report will reflect a further tightening of the scheme as the government’s contributions to employee wages was curtailed to up to 70% from a prior level of up to 80%. Accordingly, over the past few months there has been a surge in redundancies with analysts at RBC highlighting that “the number of redundancies between June and August 2020 rose to 227k compared with 153k in the previous three-month period to the end of July (and a pre-pandemic level of around 107k)”. This allied with lower levels of vacancies available compared to pre-pandemic levels leads to a relatively dour outlook for the labour market. However, some of this pain may be eased by an extension of the original furlough scheme until March 2021 in lieu of the recent national lockdown announcement. As it stands, in its latest MPR, the BoE expects unemployment to peak at 7.75% in Q2 2021.

RBNZ RATE DECISION PREVIEW (WED): The RBNZ will conduct its final monetary policy meeting for the year in which the central bank is expected to keep the Official Cash Rate (OCR) unchanged with OIS pricing a 92.4% chance the OCR will be kept at 0.25%. The central bank is also likely to maintain its Large-Scale Asset Purchases (LSAP) at NZD 100bln but is anticipated to unveil its new Funding for Lending Programme which aims at lowering interest rates. The consensus for a hold on rates is unsurprising given that the central bank has stuck to its guidance to maintain rates through to March next year, although Governor Orr has stated that there is plenty of room left in the QE programme and that they will update on tools in November. The statement and minutes from the last meeting also noted  progress is being made on the Bank's ability to deploy additional instruments - with members agreeing alternative instruments can be deployed independently, and they reached a consensus to direct the bank to have a Funding for Lending Programme ready to launch by year-end. Furthermore, Assistant Governor Hawkesby remarked that some economic data points are surprising to the upside but the economy will require continued policy support, while Chief Economist Yuong Ha stated we'd rather be aggressive with stimulus and do too much too soon than too little too late. The data since the last meeting has been weak. This supports the case for further measures with monthly Business Confidence remaining in negative territory, Q3 CPI Y/Y printed softer than expected at 1.4% vs. Exp. 1.7% and Employment Change contracted by 0.8% Q/Q. As a hold on rates is seen as a forgone conclusion, focus will be on the statement for the details of the funding for lending programme and for any clues of an earlier launch of a rate cut as some had previously anticipated a potential move in February, while attention will also be on the central bank’s forecasts and the subsequent post-meeting press conference.

BANXICO RATE DECISION PREVIEW (THU): The Central bank of Mexico will meet next Thursday after cutting rates at its latest meeting by 25bps, while indicating any future moves will be data dependent, particularly on inflation, although the central bank was cognizant that the room for manoeuvre was narrow. Recent data has seen Markit manufacturing PMI pick up slightly, although remain in contractionary territory, while first half month inflation data in October saw a rise of 4.09% Y/Y, slightly above expectations, September’s 4% print, and the central bank’s 3% target. The rise in inflation has questioned whether the bank should start slowing its cutting cycle, although worries about the economy may outweigh the rise in inflation, given the lack of action on the fiscal side. Analysts at Credit Suisse believe inflation will remain above the central bank’s forecast for the next few months, and thus expect the central bank to stand pat at this meeting, barring major inflation surprises. Note, Mexican President Obrador believes Banxico should continue to cut rates. 

UK GDP (THU): From a growth perspective in the UK, Thursday’s prelim Q3 GDP print is expected to reveal a bounceback in growth to the magnitude of 15.9% vs. the 19.8% contraction seen in Q2. The August monthly growth outturn of just 2.1% vs. July’s 6.4% rate tempered some expectations of an even more pronounced recovery with the BoE pencilling in a 16.1% print vs. its initial expectation of 18.3% for Q3. September PMI metrics for the UK highlighted a fading of the rebound seen as lockdown measures were unwound and this will likely be reflected in the monthly print for September, which RBC forecast at just 0.8%. Given the recent imposition of a national lockdown in the UK, the data will likely pass with little fanfare given the more stringent measures now enforced upon the UK economy with market participants now more concerned with the damage incurred during Q4 and subsequent follow-through to 2021; this week the MPC cut its 2021 GDP forecast to 7.25% from 9.0%.

US CPI (THU): Both October CPI and Core CPI are expected to rise 0.2% M/M, the same pace as September. The headline Y/Y is expected to come in at +1.3%, down a notch from last month’s +1.4%, while the Core Y/Y figure is expected to remain unchanged at +1.7%. Credit Suisse, who see the core figure rising at a slower 0.1% M/M pace, notes that the tailwinds from used vehicle prices are likely to fade “or even reverse in October, as wholesale prices have stabilised.” The bank also believes shelter inflation is expected to moderate amid rent prices being more prominent in the composition than home price appreciation, with the former slowing as of recently despite the latter’s acceleration. “The price recovery in other hard-hit spending categories has started to lose momentum, making a slowdown in core CPI likely.” On the headline figure, which CS sees at +0.1% M/M (below consensus), “Gasoline prices should rise in seasonally-adjusted terms but food inflation should remain tame.” Rising virus cases heading into the winter and lacking fiscal support, on top of the “concerning headwinds” for core inflation, add to the downside risks, the bank concludes.

G20 FINANCE MEETING (FRI): G20 FINANCE MEETING (FRI): Finance Officials from the G20 will conduct a virtual confab to discuss and finalise a shared framework for addressing the debt pile of low-income countries stacked up by the pandemic, sources stated. G20 central bankers and finance ministers held a call last month and agreed in principle on such common framework to deal with low-income countries on a case-by-case basis, albeit endorsement by the countries are still needed. A source added that China asked for additional time to win approval for the framework.