Eurozone member states, Japan and the UK publish inflation statistics this week. The broad spectrum of inflation data will help financial market players assess to what extent higher oil prices translated into domestic price increases. Should there be obvious signs of second-round effects, fixed income assets might reprice – especially on the longer-end of the curve. In addition to inflation figures, the minutes of the September FOMC meeting will be released, which should provide guidance not only on the number of planned rate hikes in 2019 by the FOMC but also members’ sensitivity to macroeconomic data volatility, i.e. how easily rate-setter might change their mind, should actual data deter from their current projections. On the political front, markets will most certainly keep a close eye on the strains between Italy and the EU, as the Italian government is unlikely to back down from the idea of a large(r) fiscal deficit in 2019. Furthermore, financial markets can easily be disrupted by President Trump’s comments, should he keep expressing his discontent with the way Chair Powell conducts monetary policy.
Chinese macroeconomic data return to the limelight this week, as both consumer and producer price inflation figures from September are scheduled to be released. Later, Q3 GDP will be subject to scrutiny demonstrating to what extent trade tensions and adverse financial market sentiment weighed on China’s economic growth. Both metrics are likely to give impetus to financial markets to reprice risk. In Latin America, market players will evaluate Brazilian political polls and put the Argentine central bank’s credibility under scrutiny by assessing LELIQ auctions that will help to evaluate whether the central bank is sticking to its promise of keeping the nominal money supply stable. The release of the Mexican central bank’s minutes from its last monetary policy meeting or the policy rate announcement by the Chilean central bank will be of secondary nature. The African economic diary is very light this week. Consequently, financial markets will focus mostly on the news flow related to South Africa’s fiscal plans.