The ISM Manufacturing PMI and the NFP report will be the most important releases.

CHINESE PMIS (MON)

The NBS and Caixin PMIs will be released on the same day, with the NBS manufacturing forecast to tick higher to 49.5 (prev. 49.1) but remain in contraction territory, whilst the Caixin Manufacturing is expected to tick higher to 50.5 (prev. 50.4). The data will be keenly watched for a prognosis of the Chinese economy, with the release also coming in light of the bazooka stimulus announced by the PBoC governor on Tuesday. The stimulus announcement came after a string of concerning Chinese metrics which overall underscored weak domestic demand. Analysts at ING look “for a slight recovery of the official manufacturing PMI to 49.3 from 49.1.” Note, that Chinese markets will be closed from Tuesday for the rest of the week due to the Golden Week Holiday.

EZ FLASH CPI (TUE)

Consensus (taken before French and Spanish inflation metrics) looked for headline Y/Y CPI to decline to 2.0% from 2.2%, core to pullback to 2.7% from 2.8% and super-core to hold steady at 2.8%. Note, if the headline prints at 2.0%, it will be at target for the ECB for the first time since June 2021. As a reminder, the August release saw a pullback in the headline print from 2.6% to 2.2% on account of energy inflation, whilst core inflation was dragged a touch lower by goods inflation and services inflation ticked higher to 4.2% from 4.0% due to the French Olympics. Ahead of the release, regional metrics from France and Spain came in notably lower than expected with the former slipping to 1.2% Y/Y from 1.8% and the latter printing at 1.5% vs. prev. 2.3%. As such, Capital Economics argues that the consensus is now effectively stale and headline EZ-wide inflation should “show a sharp decline to below the 2% target”.

From a core perspective, the consultancy notes that core inflation is also likely to have edged down. However, in their view, this should not come as a “big surprise” to the ECB and therefore on balance, they expect an unchanged rate in October. Market pricing disagrees with Refinitiv data indicating a circa 90% chance of a 25bps reduction next month. It is worth noting that recent source reporting via Reuters suggested that (contrary to commentary in the wake of the September meeting) that the October meeting is “wide-open” given recent data points. However, we are yet to see much in the way of rhetoric from policymakers backing such a move.

US ISM MANUFACTURING PMI (TUE)

The consensus looks for the ISM manufacturing survey to print 47.3 in September, little changed vs the 47.2 in August. As a comparison, S&P Global's flash data for the month showed the manufacturing output index at a two-month high (48.9 vs the prior 48.2), and the manufacturing PMI itself falling to a 15-month low (47.0 vs a prior 47.9), with the "solid" expansion of the service sector contrasting with the decline in manufacturing output, and signalling a deterioration in business conditions within the goods-producing sector for a third successive month. "The largest negative contribution to the PMI came from new orders, which fell at the fastest rate since December 2022, followed by employment, which fell at a pace not seen since June 2020.," the report said, "supplier performance also detracted from the PMI, with delivery times shortening to a degree not witnessed since February, indicating spare supply chain capacity)." S&P added that production acted as a drag on the PMI, though the decline moderated compared to August, while inventories were unchanged.

JAPANESE TANKAN SURVEY (TUE)

Large Manufacturers Index for Q3 is forecast at 13 (prev. 13), while the large non-manufacturers index is seen ticking lower to 32 (prev. 33), and the large industry Capex for Q3 is seen rising to 11.9% (over. 11.1%). Desks expect the services-led recovery to carry on amid cooling inflation and strong wage growth. Industrial production meanwhile is seen as somewhat flat with Toyota production only gradually recovering. “The Bank of Japan is likely to downplay the weak IP results, but if the Tankan survey describes positive business sentiment, it should support the BoJ's policy normalisation as early as December”, says ING.

OPEC+ JMMC (WED)

No recommendations are expected to be put forth by the JMMC, which is not the decision-making body for OPEC+ policy. OPEC+ will likely be more focused on addressing overproduction by some nations. Recent sources suggested OPEC+ is poised to go ahead with a December oil output increase as its impact will be minimal if there is a plan for some members to make larger cuts to compensate for overproduction. Russian Deputy PM Novak also recently suggested that there were no changes to the group’s plans to return some of the phased-out production in December. Note, that the FT reported that Saudi Arabia is reportedly prepared to abandon its unofficial USD 100/bbl crude target to regain market share, although this report was met with scepticism by OPEC watchers and subsequently denied by multiple sources. "Neither Saudi Arabia nor the wider OPEC+ group have any specific target for oil prices, and no member of the producers' alliance is about to abandon output discipline in favour of chasing market share", multiple OPEC+ sources have told Argus.

US ISM SERVICES PMI (THU)

Expectations are for the Services PMI to rise a touch to 51.7 in September from 51.5 in August. As a comparison, S&P Global's flash PMI report for September showed US services business activity at a two-month low of 55.4 (vs 55.7 prior). S&P said that inflows of new work in the service sector rose at a rate just shy of August’s 27-month high, while new export orders for services rose at an increased rate. Backlogs of orders consequently rose slightly at service providers, hinting at a lack of spare capacity. However, the survey compiler also noted that optimism about output in the year ahead deteriorated sharply, the survey’s future output index falling to its lowest since October 2022, and the second lowest seen since the pandemic; "the deterioration in confidence was led by the service sector amid concerns over the outlook for the economy and demand, often linked to uncertainty regarding the Presidential Election," it said.

US JOBS REPORT (FRI)

The consensus looks for 145k nonfarm payrolls to be added to the US economy in September (vs 142k in August), with the unemployment rate seen unchanged at 4.2% (NOTE: the FOMC's September projections see the jobless rate rising to 4.4% by the end of this year). Average hourly earnings are seen rising 0.3% M/M (prev. 0.4%), and average workweek hours are seen unchanged at 34.3hrs. Capital Economics says that although the job gains remain positive, they reflect a slowdown compared to recent years, adding that hiring expectations are decreasing, suggesting that payroll growth may average around 100k month for the remainder of the year. Consumer confidence in job security is also declining, with the Conference Board's survey highlighting risks that the unemployment rate could rise to 5% later this year. CapEco says that given the cooling labour market, if payroll data continues to underperform, the Fed might consider an additional 50bps rate cut in November, following its 50bps reduction in September. As this note goes to print, money market expectations are split with regards to a 25bps or 50bps cut in November.

Disclaimer

This material is provided for informational purposes only and does not constitute financial, investment, or other advice. The opinions expressed in this material are those of the author and do not necessarily reflect the views of Trive International. No opinion contained in this material constitutes a recommendation by Trive International or its author regarding any particular investment, transaction, or investment strategy. This material should not be relied upon in making any investment decision.

The information provided does not consider the individual investment objectives, financial situation, or needs of any specific investor. Investors should seek independent financial advice tailored to their individual circumstances before making any investment decisions. Trive International shall not be liable for any loss, damage, or injury arising directly or indirectly from the use of this information or from any action or decision taken as a result of using this material.

Trive International may or may not have a financial interest in the companies or securities mentioned. The value of investments may fluctuate, and investors may not get back the amount they originally invested. Past performance is not indicative of future results.

For more information about Trive International, please visit http://trive.com/int

Additional Information

Investing involves risk, including the potential loss of principal. Diversification and asset allocation strategies do not ensure a profit or guarantee against loss. The content in this material is subject to change without notice and may become outdated or inaccurate over time. Trive International does not undertake any obligation to update the information in this material.

By accessing this material, you acknowledge and agree to the terms of this disclaimer. If you do not agree with these terms, please refrain from using this information.