Economic data in the spotlight!
The market is optimistic, especially after a phone call between the US and China and Thursday's Initial Jobless Claims. And while last week the most major central banks had their monetary policy meeting, in the week ahead, Inflation and Retail Sales numbers will be the most important data to watch. Let's see while the virus development is one of the main market concerns, which economic data and events are important to watch and follow.
#1- OPEC Monthly Report – Monday
The week will start with attention to the energy market. At the previous report on Thursday, 12 August OPEC was still more optimistic. World oil demand growth expectations for 2021 remained unchanged by around 6.0 mb/d increase to an average of 96.6 mb/d. For 2022, world oil demand still was projected to increase by 3.3 mb/d also unchanged from the previous month’s estimates. In this meeting, we have to check the latest decline in the stock markets and economic growth. Can the OPEC report remain optimist or not? With all marker cautions and risks, for the week ahead also we are expecting a price between 67 and 70 US dollars.
#2- US Inflation – Tuesday
With the latest producer inflation rising by 8.3%, and while a shortage in the labor market adds the suffering of supply chain damages, calling it "transitory" is a bit optimistic, at least now! On the other hand, the market expectation for headline and core CPI to increase 0.4% and 0.2%, respectively in August, telling us that the alert level is not too high as well. Anyway, as long as we do not have the balance between supply and demand, inflation is set to remain elevated. With this outlook, continuing volatility with a slow downtrend is our weekly expectation for US leading indices.
#3- Chinese Retail Sales and Industrial Production – Wednesday
While the Chinese 2021 GDP Outlook downgraded several times, and even the current 8.2% outlook also is still suspicious. Slower GDP growth means we need to see lower Retail Sales numbers. The latest ease in August service PMI also increases our pessimism. August retail sales are expected to slow to 7.0% year-over-year. And while a decrease in industrial data is also predicted, this will add pressure on Chinese Stock Markets.
#4- US Retail Sales - Thursday
Increasing the concerns of rising COVID cases with pricing on tapering in 2021 is expected to affect the Retail Sales of August as well. On the other hand, stimulus Checks for unemployment benefits ended on September 6 and since we were in its last month, psychologically it is normal to see less expending and more saving which directly affects retail sales. We saw this disappointment with the general situation, in consumer expectations and sentiments numbers as well, which fell to the multi-year low. Since tapering is already priced for the end of 2021, now weaker than expected data, will put the US stocks under pressure and hold the overall bullish trend of the US Dollar index.
#5- Eurozone inflation - Friday
Along with other economies, inflation in Eurozone also became hotter. Above 3% market expected inflation for August, is way above the central bank's 2% target. While last week we had a central banks meeting, the ECB, like other central banks, has made it very clear, that economy still needs help, and government and banks supports will continue. This is increasing inflation, while by end of 2021 we are not waiting for monetary policy changes, for now, is supposed to put more pressure on Euro.