• SUN: German Regional State Elections
• MON: Chinese Retail Sales and Industrial Output (Feb); Eurogroup Meeting
• TUE: RBA Minutes (Feb); German ZEW Survey (Mar); US Retail Sales (Feb); Japanese Trade Balance (Feb)
• WED: FOMC Policy Announcement; BCB Policy Announcement; EZ Final CPI (Feb); Canadian CPI (Feb); New Zealand GDP (Q4); IEA MOMR; Dutch General Election
• THU: BoE Policy Announcement; Norges Bank Policy Announcement; CBRT Policy Announcement; Indonesian Policy Announcement; Australian Labour Market Report (Feb); Japanese CPI (Feb); US-China meeting
• FRI: Quad Witching; BoJ Policy Announcement; CBR Policy Announcement; Canadian Retail Sales (Jan); US-China meeting

NOTE: Previews are listed in day-order

GERMAN REGIONAL ELECTIONS (SUN): Not necessarily a market-mover, but one event to keep an eye for European traders will be Sunday’s regional German elections. Given the national elections in Germany in September, the upcoming results will offer some insight into the nation’s current political landscape. ING highlights that the state-level elections in Rhineland-Palatinate and Baden-Württemberg will cover around 1/5 of Germany’s total electorate. The former is currently led by a ‘traffic light’ coalition including the Social Democratic Party (SDP), the Free Democratic Party (FDP), and the Greens, whilst the latter is the only German state to be headed up by a minister-President from the Green Party (as part of a coalition with the CDU). Polling leans towards an extension of the current status quo, however, ING flags three key issues to watch on Sunday; 1) Rhineland-Palatinate could be viewed as a litmus test for the SPD who outperformed national trends in 2016. 2) The Green Party maintaining their position in Baden-Württemberg could support the parties’ efforts at a national level. 3) A solid performance for the CDU could bolster the chances of the recently appointed party leader, Laschet to lead the CDU into the September elections; a disappointing outturn could see odds tip in favour of CSU’s Söder. The outcome of Sunday will likely be a by-product of events on both the national and local level, however, any significant departure from current polling could see a reassessment of the current narrative ahead of September.

CHINESE RETAIL SALES AND INDUSTRIAL OUTPUT (MON): The latest economic activity data from China is scheduled for release on Monday with Industrial Production for February expected to grow Y/Y by 30.0% vs. Prev. 7.3% increase for December. The expectation for a surge in the data is mostly due to a low base the year before whereby Industrial Production slumped 13.5% in January-February 2020 for its sharpest pace of decline in 30 years due to virus-related shutdowns as China was experiencing the peak of its COVID-19 outbreak. Since then, the country has benefited from being the first in and first out of the pandemic, as well as its status as the world’s factory amid increased demand for pandemic-related goods and shifts in orders as other key exporters continued to struggle with infections and lockdowns. This resulted in China being the only major economy in the world to expand in 2020 with annual growth of 2.3%, while the base effects were clearly evident in the recent Exports data from China which surged by a record 154.9% Y/Y for February and by 60.6% Y/Y for the Jan-Feb period. The release will also coincide with Chinese Retail Sales data which is expected to jump by 32.0% compared with the previous increase of 4.6% in December and the 20.5% decline during Jan-Feb last year, with this year’s data also likely to be bolstered by the Lunar New Year/Spring Festival whereby consumption for the holiday period rose by 28.7% Y/Y.

RBA GOVERNOR LOWE (MON)/RBA MINUTES (TUE): Both these events are likely to be somewhat stale given RBA Governor Lowe’s most recent speech, in which he reiterated that rates would stay at 0.1% until inflation is in the 2-3% band. Lowe also noted that the RBA does not share market expectations for rate increases in 2022 and 2023, comments which came against the backdrop of rising yields and as OECD upped its Real-World GDP growth forecast alongside Australia's which brought forward expectations of policy tightening. Furthermore, the jobs data will be released on Thursday and would provide a timelier update on the health of the labour market – one of the RBA’s mandates. With the next policy update due on April 6th, Westpac suggests the RBA will continue to be well pleased with the economic progress down under - “It is unlikely to make any changes to its current policy settings or signal any likelihood of changes in the near future”, the bank says, but caution that some worries are materialising over a housing bubble.

US RETAIL SALES (TUE): Consensus analysts estimates see US Retail Sales for February falling by 0.5% M/M on Tuesday, on the back of a chunky 5.3% rise in January; the core (ex-auto) is also seen falling 0.5% and the control seen down 1.2%. However, Credit Suisse is more pessimistic, forecasting a 2.5% fall in the headline, 1.7% fall in the ex-auto, and 2% fall in ex-auto and gas, "Although mobility indicators suggest a small increase in activity, high-frequency spending data have shown a sharp decline in expenditure for the month of February." A big driver behind the forecasted decline is that the January print was supported by the one-time USD 600 stimulus payments. Furthermore, CS notes that tax data suggests that refunds have come in more slowly than usual in February. The headline is likely to feel the brunt after unit vehicle sales fell from 16.8mln SAAR in January to 15.9mln in February, although gasoline prices rose 6.4% M/M "and should contribute to sales growth. For control group sales (total ex-auto, gas, restaurants, and building materials sales), we expect spending to decline by 2.0% after rising sharply by 6.0% in January." While the February print is expected to be lacklustre, Credit Suisse sits in the majority view that consumer spending from March is expected to rise on the back of the latest stimulus bill passing and reopening measures.

FOMC POLICY ANNOUNCEMENT (WED): Wednesday's FOMC will see rates left unchanged and most likely see the Fed affirm its asset purchases at USD 120bln/month. The statement is set to be a copy/paste job, although might give a nod to the improving growth outlook on the back of the just-passed USD 1.9trln stimulus bill. However, the gravitas of the event will be the SEPs, the proverbial "Dot Plot", where market pricing - Eurodollars continue to imply rate hikes as soon as 2022 - sits at odds with the December forecasts. The median dot plot saw no hikes at all out through 2023 last time, although there were five (out of 18) members who did in 2023. For the Fed to become more in line with market pricing, five additional members would need to forecast hikes in 2023 for the median dot to imply a hike, something which SGH Macro views as unlikely. Note that under the new AIT framework the Fed has said it would not consider hikes until inflation sustainably overshoots the 2% target "for some time" and full employment is reached. While the market has been eager to price in a reflationary outlook, embedding more term premia across the curve, the Fed has been vocal in its views that it does not see inflation picking up meaningfully in a sustainable fashion; Fed members have been quick to attribute any near-term pick-ups as a result of low base levels (Y/Y) and transitory supply chain factors. Moreover, while growth forecasts are almost certainly to get a boost, especially on the back of fresh stimulus, this is unlikely to apply upward pressure in terms of the inflation forecasts (last core PCE median dot only hit 2% in 2023) owing to structural deflationary forces that the Fed is confident about. Aside from the SEPs, we could see some "technical" adjustments. On rates, with the short-end of the curve flirting with negative, we could see a hike of the IOER and RRP facility rate by 5-10bps, although with the EFFR holding above 5bps, this seems less likely, especially with little lip service from Fed members; some analysts have also been calling for an un-capping of the maximum usage of the RRP facility, in order to provide participants with a place to park cash at a non-negative rate. On QE, after Powell's last public appearance in the WSJ, he did not want to get into specifics or indicate any imminent changes to the current programme, and when pressed, said he doesn't want to speculate on "operation twist". Nonetheless, with the bond sell-off catching policymakers' attention across the globe, there is still some attentiveness regarding the chance that the Fed could make some adjustments, whether that be a "twist" or a maturity extension of its purchases, although again it seems unlikely. Lastly, with much attention on whether or not Treasuries and reserves will continue to be excluded from banks' SLR calculations (set to expire at the end of March), it is unlikely we get an update at the FOMC, given it is an inter-agency decision with the FDIC and OCC, although Powell is likely to get pressed on the issue in the presser.

BCB POLICY ANNOUNCEMENT (WED): Market expectations are now skewed towards a larger hike to the 2.00% Selic Rate after Brazil’s annual inflation topped 5% (5.20% vs prev. 4.56%) for the first time in four years, and notably above its 3.75% target. That being said, hiking bets began to be priced in following the hawkish tone in the minutes – with some surprised at the discussion of potential tightening at the same meeting forward guidance was dropped. The inflation metrics have upped the hike forecasts to as much as +75bps. Analysts at CapEco have pencilled in a hike to 2.50%, but note that 75bps looks more likely after the inflation figures. The Bank's latest weekly survey of economists suggested it will be raised to 4.00% by the end of this year and to 5.50% next year.

CANADIAN CPI (WED): The consensus is not currently available, although analysts at RBC expect a 0.7% M/M rise, taking the Y/Y rate to 1.2% driven by a rise in gasoline prices and seasonal effects such as household operations, furnishings and clothing/footwear, although the usual travel seasonal push this month will be lower. In January the BoC core metrics (average of the median, trim and common) ticked up slightly to 1.5% from 1.4%, due to a revision lower on the median metric; RBC suggests the trim and median measures could have a slight downward bias this month. Looking ahead CPI metrics will be distorted due to the base effects from deep price declines last year and the rise in gasoline prices. The BoC highlights inflation is likely to move temporarily to around the top of its 1-3% inflation target in the next few months before falling again once the base effects have been removed, RBC expect it to fall to a 1.6% Y/Y rate by the end of the year.

NEW ZEALAND GDP (WED): Headline QQ GDP is expected to wane in Q4 from following the 14% YY rebound in Q3 – namely due to a lower base effect and catch-up spending as the Kiwi economy reopened. New Zealand has been one of the countries that has efficiently controlled the outbreak of COVID-19 – with desks suggesting that domestic activity has returned to pre-pandemic levels, but tourism-related activity remains pressured as international borders remain closed. Analysts at Westpac expect a 0.3% drop in the December quarter alongside another decline in the March quarter amid this - but note that this does not imply a second recession as the country would still be in the downturn that began last year.

DUTCH GENERAL ELECTION (WED): The Netherland’s goes to the polls for the House of Representatives regular elections. Currently, Mark Rutte is the incumbent PM following the entire government resigning in mid-January over the day-care allowance affair – while this event garnered significant coverage, it is not regarded as having fundamentally altered the political landscape. The House of Representatives consists of 150 seats, 76 needed for an absolute majority which is what the current coalition has – formed of Rutte’s VVD (33 seats) alongside the CDA, D66 and CU parties. Currently, the primary polling indicator Peilingwijzer has VVD with 36-40 seats (current 33), CDA 16-18 (current 19), D66 14-16 (current 19) and CU 5-7 (current 5); therefore, the main inference going into polls is seemingly the continued and perhaps growing dominance for Rutte’s VVD and an apparent clear path to another term for the incumbent government, should Rutte wish for this. Given the dominance of current PM Rutte’s VVD and the clear possibility of the existing coalition remaining in power the election is unlikely to alter the domestic/fiscal narrative much, if at all; though, this is of course dependent on the final composition of the coalition. Finally, the typical time between the polling day and a coalition being formed is around 3-months so it will likely be some time before we know for certain the final outcome of the House elections.

BOE POLICY ANNOUNCEMENT (THU): Policy settings are expected unchanged with the Base Rate to be held at 0.1% and APF at GBP 895bln (GBP 875bln Gilts, GBP 20bln corporates). Since the prior meeting, January M/M GDP saw a contraction of 2.9% amid the imposition of the most recent national lockdown. However, focus in the UK is very much geared towards looking ahead rather than backwards given the significant progress in the nation’s vaccination efforts and the recent budgetary announcements. On the latter, the extension of the furlough scheme will have been met with open arms by the MPC and as such, expectations for a 7.75% peak in the unemployment rate are likely to be nudged down. Additionally, in February the MPC forecast that CPI would “rise quite sharply towards the 2% target in the spring”, however, the extension to the VAT reduction for the hospitality sector could see an adjustment to this view. Commentary from policymakers has been somewhat mixed with Chief Economist Haldane suggesting that “risks to inflation in the UK are skewed to the upside, rather than being balanced”. Conversely, external member Haskel has cautioned that he “sees relatively little risk of sustained above-target inflation over this period”. Governor Bailey suggests that risks "are still on balance distributed on the downside, though less so as time goes by". On the policy front, with the prospect of negative rates no longer a live issue at the BoE beyond carrying out technical work on NIRP to potentially be used in a future cycle, policymakers are likely to sit on their hands for the coming months. Thereafter, in August, UBS expects policymakers to slow the pace of weekly Gilt purchases from GBP 4.44bln currently to GBP 2.75bln with purchases to run until December 2021.

NORGES BANK POLICY ANNOUNCEMENT (THU): Rates are likely to be left unchanged at 0.00%, as are other policy parameters while focus will be on any further tweaks or conversation around the rate path given a ramping up in ‘hawkish’ factors recently. The last decision saw policy measures unchanged and a reiteration of the usual guidance that rates will likely remain on-hold for some time ahead along with commentary acknowledging the NOK’s larger than expected appreciation and the rise in oil prices. This time, while policy is likely to be maintained given the inherent uncertainty still present, the improving outlook – which was well reported in the Q1 Regional Network release – alongside continued advances in the NOK and oil since the last meeting add to the growing narrative for a further hawkish tweak to the rate path. Currently, the path implies a 10bps increase in June’22 while a ‘full’ 25bps move is not envisaged until ~September’22. While the likes of Nordea now call for two hikes this year it is unlikely the Norges Bank would have enough conviction in the short/medium-term environment to make an alteration of this magnitude now; however, they could present a more modest tweak to rate guidance.

CBRT POLICY ANNOUNCEMENT (THU): There is currently no expectations as to what the CBRT could opt to do, but participants note that expectations for a hike increased following the publication of the Central Bank survey – which forecasts annual CPI to rise to 11.54% vs 11.23% a month ago – reinforcing the notion of tightening. That being said, some suggest that the central bank could resort to linking short-term inflation increases (like G10 central banks) to temporary factors and hold policy steady. Credit Suisse acknowledges that headline inflation has surprised to the upside in recent months, with the steep increase in TRY oil prices likely to further deviate headline inflation from the CBRT’s target and pave the way for tightening. “We think the policy rate should be 150-250bps higher than its current level of 17.00% in order to strengthen the attainability of the central bank’s interim inflation target/forecast of 9.4% for end-2021” Credit Suisse suggests. As a reminder, at the Feb meeting, the CBRT stood pat on its rate, but maintained a hawkish bias. Meanwhile, Turkish President Erdogan was vocal on Friday whereby he stated that he will be forming a price stability committee that will increase the effectiveness of the fight against inflation.

AUSTRALIAN LABOUR MARKET REPORT (THU): Headline employment is expected at +30k (vs prev. +29.1k), with the unemployment rate seen easing to 6.3% from 6.4 %, whilst the participation rate is expected to tick higher to 66.2% from 66.1%. Desks expect the momentum seen in January to seep into February, suggesting that the State of Victoria is still running behind in the recovery stakes and should rebound from the temporary lockdowns imposed in January. “So far the improvement in unemployment has not been as solid as the improvement in employment”, Westpac says, adding that the positive impacts from the rebound in Victoria “are tempered by the payrolls data which suggests overall employment growth slowed in February". Other desks suggest that gains this month could be more modest, but contingent on how far Victoria is catching up.

JAPANESE CPI (THU): Japanese National CPI for February is expected to remain subdued following the 0.6% decline in both the headline CPI and Core CPI (Ex. Fresh Food & Energy) figures for January. The cause of the downward pressure on prices continues to be the fallout from the pandemic with demand further impacted by the state of emergency which was declared in 11 prefectures including Tokyo from near the start of the year and although the declaration was lifted for the majority of those prefectures at the end of last month, this did not include the capital and surrounding areas where the emergency status was extended until March 21st. Furthermore, the price declines in January were led by utilities and domestic energy prices which fell by 6.3% and 8.6%, respectively, while transport and communication prices were lower by 1.8% which is expected to decline further in the months ahead as telecom providers reduce services fees to adhere to one of the main agendas of the Suga government and especially once Japan resumes its Go To Travel subsidy programme. In terms of Tokyo CPI, which is seen as a leading indicator for the incoming national inflation data, this remained pressured in February with headline Tokyo CPI at -0.3% vs. Exp. -0.4% (Prev. -0.5%) and Tokyo Core CPI at -0.3% vs. Exp. -0.4% (Prev. -0.4%). The soft readings were due to a continued decline in utility costs and with accommodation prices lower by 5.1% after hotels provided discounts to address weak demand, although Tokyo CPI Ex. Fresh Food & Energy, which is seen as a gauge of the underlying trend of inflation, matched expectations at 0.2% for its second consecutive month of growth.

US-CHINA MEETING (THU-FRI): The two sides will be holding a high-level meeting during the 18th and 19th of March in what would be the first significant engagement since the US President took office – and thus could set the tone for bilateral relations under the Biden admin. The meeting will be carried out in Alaska, where US Secretary of State Blinken and National Security advisor Sullivan will meet China’s Foreign Minister Wang Yi and the top Foreign Policy Official Jiechi. The meeting comes against the backdrop of sullied US-Sino relations under former US President Trump, although China’s human rights violations have been retaining focus under Biden – namely concerning Muslim Uighurs in Xinjiang whereby the issue was raised in a call with China’s President Xi. The US has also voiced concern with regards to the pro-democracy suppression in Hong Kong and the provocative military stance towards Taiwan. In response, China repeatedly warned the West to not get involved with China’s internal affairs. Other issues remain on the cards such as capital markets, tech, IP, trade, cybersecurity, the South China Sea – although these issues will likely not be resolved at the upcoming meeting as the two sides size each other up. Instead, this meeting could focus more on pandemic-related and geopolitical elements as economies attempt to overcome the pandemic and as Biden prepares to convene a “Quad” summit with some of China’s recent adversaries – Japan, India, and Australia. Sources told FT that the Biden admin does not want to completely side-line China, but Biden has said that he will not immediately remove the elevated tariffs imposed on China by the former US President. Therefore, the focus will be on the tone of the meeting and how diverged/converged each other’s views at this confab will likely be a precursor for future talks and potentially a new bilateral deal. It's also worth noting that recent reports suggested that US President Biden's second big bill could be a package of China-related measures pushed by Senate Majority Leader Schumer, according to WaPo. The bill would likely include action on semiconductors, supply chains, US manufacturing, and 5G; the piece said Infrastructure bill timing is unclear. The article noted that the plan may still be weeks away from being released.

BOJ POLICY ANNOUNCEMENT (FRI): The BoJ is expected to maintain the bank rate at -0.10% and continue with QQE with Yield Curve Control to flexibly target 10yr JGB yields at around 0%, while much of the focus will be on the outcome of the March review which is aimed at sustaining its easy policy and where officials are said to discuss whether to expand the implicit band for the 10yr JGB yield target which is currently at 40bps or +/- 20bps on either side of the 0% target. The BoJ announced in December that it will conduct an examination of a more effective and sustainable monetary easing framework to achieve its price goal and will release the outcome of the examination at the March meeting but noted there is no need to change the YCC framework, while several members at the meeting thought the BoJ should seek ways to make ETF purchases more flexible as ultra-loose policy is prolonged. There has been plenty of commentary ahead of the review with the Summary of Opinions from the January meeting noting that an essential issue is to enhance sustainability of daily operations alongside making tools agile to respond to changes in a timely manner and that the BoJ must reconfirm the purpose of the 2% target in the review, while the key is to make YCC and ETF purchases more flexible and there was also the opinion that allowing 10yr JGB yields to move in a wider range around the target will help stabilize the financial system. Governor Kuroda recently weighed in on this in which he stated the BoJ will likely debate whether to expand the implicit band for the 10yr JGB yield target but then declared that he doesn’t think it is necessary or appropriate to widen the band and that now is the time to keep the yield curve stably low as the pandemic is still impacting the economy. However, Deputy Governor Amamiya pushed back on this in which he stated that Governor Kuroda was voicing his personal view, while Amamiya affirmed that the review will be discussing whether to increase the 10yr JGB target band and suggested they need to alter the perception that they cannot or will not ease further due to policy side-effects. Speculation in local press has been rife with reports stating the BoJ may look to clarify that it has room to lower negative rates further and sources suggested BoJ could tweak its three-tier deposit system to exempt a larger portion of reserves from negative rates, while other reports noted the BoJ is likely to insert clearer guidance on what it regards as acceptable levels of fluctuations for long-term yields. Furthermore, the BoJ could consider scaling back ETF purchases or may replace some numerical guidelines for its purchases of ETFs with a pledge to ramp-up buying in volatile conditions and there were even rumours the BoJ is planning to scrap its target of ETF purchases which is currently at JPY 6tln annually with the upper limit of JPY 12tln, although officials were previously said to be hesitant to do this as it could give the impression the central bank is dialling back stimulus and a prior survey also showed that only less than 30% of analysts were forecasting the central bank to scrap its ETF target. The potential market reaction to the review is difficult to gauge beforehand as there are a lots of moving parts to consider, although a widening of the implicit 10yr yield band will likely pressure 10yr JGBs and lift yields as it would signal the central bank is more comfortable with higher yields which would be welcomed by the domestic banks and could boost their respective shares. Participants will also be looking out for any tweaks to the BoJ’s current ETF purchases as scaling this back could result in a tantrum for stocks.

CBR POLICY ANNOUNCEMENT (FRI): The CBR is seen maintaining its key rate at 4.25% at its upcoming meeting after halting its easing cycle in February. The bank highlighted a quicker and more sustainable recovery in domestic demand and a lack of disinflation risks. That being said, the central bank will have to tackle the CPI overshoot vs its 4.00% target against the backdrop of higher oil prices and geopolitical risks - namely in the form of US and EU sanctions. The CBR noted that the return to the 4% inflation target is seen in early 2022 and further inflation dynamics will depend on how fast pro-inflationary factors recede. Desks expect the upcoming meeting to shed some light on the timing and pace of policy normalisation, with some suggesting that the 5.7% Feb CPI print risks bringing forward normalisation. “An increase in global nominal and real yields since the beginning of this year may also add to the pressure on the CBR to hike the policy rate at one of its next two rate-setting meetings.” Credit Suisse suggests.

CANADIAN RETAIL SALES (FRI): January retail sales are expected to print -3.3%, according to StatCan’s flash estimate, adding to the -3.4% decline seen in December. Analysts at RBC also expect a -3.3% decline as Ontario and Quebec entered lockdown once again in January, but the bank believes it will be followed by a large bounce back in February with the upcoming StatsCan estimate to show the majority of declines seen in both December and January will be reversed.