MON: Japanese Old Age Day, EZ Sentix (Jan), Unemployment (Nov), US Employment Trends (Dec), Wholesale Inventory/Sales (Nov), Chinese M2 /New Yuan Loans (Dec)

TUE: EIA STEO; Australian Retail Sales (Nov), Japanese Coincident Index/Leading Indicator (Nov), UK GDP Estimate (Nov), US NFIB (Dec), Redbook (w/e Jan 3rd)

WED: Chinese CPI (Dec), EZ Industrial Production (Nov), US CPI (Dec)

THU: US Initial/Continued Jobless Claims (w/e Jan 3rd/Dec 27th), US PPI Final Demand (Dec)

FRI: BoK Policy Announcement; UK Labour Productivity (Q3), EZ Eurostat Trade (Nov), US Retail Sales (Dec), Export/Import Prices (Dec), Industrial Production/Capacity Utilisation (Dec), University of Michigan Prelim. (Jan)

NOTE: Previews are listed in day-order

UK GDP ESTIMATE (TUE): Expectations are for the November M/M GDP print to show an expansion of 0.4% vs. the 0.1% outturn seen in October as activity picked up before the emergence of the Omicron variant. Ahead of the release, RBC reminds us that the disappointing print in October prompted the MPC to downgrade its Q4 growth forecast to 0.6% Q/Q from 1% around the time of the November MPR. Regardless, policymakers opted to move on rates at the December meeting given concerns over rising inflation with Y/Y CPI printing at 5.1% during November. Furthermore, within the minutes it was noted that "Bank staff expect inflation to remain around 5% through the majority of the winter period, and to peak at around 6% in April 2022". Given the inflationary outlook, markets assign a 72% chance of a 25bps hike at the February 3rd meeting, with a further three hikes priced in by year-end. As such, the upcoming release will likely take a backseat. Furthermore, more interest on the growth front will actually fall on the December release given the emergence of the Omicron variant and the subsequent implementation of Plan B COVID restrictions. Analysts at Pantheon Macro look for a 0.6% M/M contraction for December followed by an additional fall of 0.3% in January.

CHINESE INFLATION (WED): Chinese CPI and PPI Y/Y are both expected to have cooled from the prior month. Taking the recent Caixin PMI releases as proxies, the Manufacturing release suggested “Panel members indicated that lower prices for some raw materials, such as steel, helped to dampen cost inflation. Prices charged meanwhile fell for the first time since April 2020, albeit marginally. The Services release noted that “prices charged by service providers both dropped from the previous month, indicating lower inflationary pressure.” ING sees the PPI metric slowing to 10% from November 12.9% amid lower LNG and coal prices, whilst “CPI inflation on a yearly basis should also be slower due to the base effect of pork prices.” It’s worth bearing in mind that December saw a steady rise in crude oil prices – a large contributor to PPI.

US CPI (WED): Headline CPI is expected to rise 0.4% in December, slowing from the prior 0.8% pace, with forecasts ranging between 0.2 and 0.9%. The Y/Y previously rose 6.8%, but Credit Suisse expects this to rise to 7.1%. Core CPI is expected to rise 0.5% M/M, matching November’s pace with the range of forecasts between 0.4 and 0.6%, with the Y/Y previously rising by 4.9% and Credit Suisse expect this to rise to 5.5% in December. It is worth noting the Prices-Paid component on the December PMI surveys were mixed. In the manufacturing survey, prices remained in expansionary territory, but the acceleration saw a significant slowdown, falling to 68.2 from 82.4, meanwhile the services survey saw a minor rise to 82.5 from 82.3. On Core CPI, Credit Suisse suggests used vehicle prices are likely to jump higher while shelter inflation will remain strong following recent months of acceleration, and on the headline metrics, it expects gasoline prices to act as a drag, although food inflation will remain strong. In regard to Omicron, the desk expects it to temporarily drive inflation higher, but it is likely to slow down inflation in the sectors most sensitive to the pandemic, especially travel, but the warns there are now more risks related to negative shocks to supply chains, which could exacerbate the current, ongoing pressures.

US RETAIL SALES (FRI): Both the headline and core Retail Sales are seen rising by 0.3% again in December, matching November’s pace. Ex Gas and Autos previously rose 0.2%, while the Retail Control metric, which is used as a gauge of consumer spending and thus a gauge on US GDP, saw a 0.1% decline in November. Analysts at RBC suggest headline retail sales are likely to fall, largely due to gasoline and autos, with excluding those items, it should paint a better picture, while they also expect the Retail Control measure to rise 0.2%. The desk notes retail sales in general remain at significantly elevated levels due to an overshot of goods spending in comparison to a pre-pandemic baseline. Looking ahead, RBC expects “this goods-dominated report will come under pressure as ’22 evolves as the consumer begins to shift spending away from goods toward services”.

BOK PREVIEW (FRI): Expectations are split on whether the BoK will hike at the upcoming meeting on Friday, although the mood has been leaning more towards a 25bps increase to 1.25% following two hikes in 2021. Governor Lee continued to indicate that the hiking cycle has not peaked, with rates poised to increase again this quarter, although Omicron poses a risk. That being said, global markets have been downplaying the impact of the variant on financial conditions. The prior BOK meeting did not provide any explicit hat tips for a hike this time. Analysts at ING believe the hike will come at the end of this quarter as opposed to the start – coinciding with BoK Governor Lee’s final meeting before he steps down.