After three weeks packed with central bank decisions, economic data and political developments, we finally entered the Christmas week, with the agenda looking very light. The most notable releases we get are the German GDP for October and the Summary of Opinions from the latest BoJ gathering.
On Monday, the only noteworthy releases we get are Canada’s monthly GDP for October and the US new home sales for November. Getting the ball rolling with Canada’s GDP, expectations are for the economy to have grown +0.1% mom, the same pace as in September. The message we got from this month’s BoC gathering is that officials have quickly switched back to neutral, after flirting with the idea of easing at the prior meeting. Latest inflation data showed that the headline, trimmed and median CPIs accelerated in November, and thus, although subdued, a similar growth rate with September may allow policymakers to stay side-lined for more. As for the US new home sales for November, they are expected to have declined 0.5% mom after sliding 0.7% in October.
On Tuesday, markets will be closed, or close early, in most major economies in celebration of the Christmas Eve. The only important release on the agenda is the US durable goods orders for November. Headline orders are expected to have accelerated to +1.9% mom from +0.6%, but the core rate is forecast to have slowed to +0.1% mom from +0.6%.
Wednesday is Christmas! Apart from China and Japan, major bourses will be closed and the agenda is empty.
Thursday is also holiday for most nations we follow. The exceptions are US, Japan and China. However, we get data only from Japan and the US. From Japan we get housing starts YoY and retail sales for November. The retail sales are expected to have improved from the previous -7.1% to -1.7%. If the actual reading is close to the forecast, although that would be a good improvement, still, the figure would be below zero. From the US we have the initial jobless claims for the week ended on Friday 20th. Japan’s housing starts are forecast to have accelerated their October slide, from -7.4% yoy to -8.1%, while the US initial jobless claims are anticipated to have declined to 220k from 234k.
Finally, on Friday, during the Asian morning, we get the usual end-of-month data dump from Japan. The unemployment rate and the jobs/applications ratio are expected to have remained unchanged at 2.4% and 1.57. The core Tokyo CPI rate is expected to have held steady at +0.6% yoy, while no forecast is available for the headline print. The preliminary industrial production for November is expected to have declined at a slower pace than in October (-1.4% mom from -4.5%), while the yoy retail sales rate is forecast to have increased, but to have stayed in negative territory (-1.7% yoy from -7.0%).
The Summary of Opinions from the latest BoJ gathering is also due to be released. At that meeting, the Bank kept its ultra-loose policy and guidance unchanged, reiterating that they expect “short- and long-term interest rates to remain at their present or lower levels as long as it is necessary to pay close attention to the possibility that the momentum toward achieving the price stability target will be lost.” We will scan the summary to get an idea of how close policymakers are to hitting the cut button. However, as we noted several times, our own view is that with little space to do so, officials may prefer to wait for a while and perhaps rely on their signals to do the work for now. Following the gathering, even Governor Kuroda said that there were limits on how much they could deepen negative rates, enhancing our view that there is no urgency for extra stimulus.
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