Week Ahead: highlights include OPEC+, RBA, BoC, China Trade/CPI, Uni. of Mich.

OPEC is likely to continue production policy. Opinion data from the University of Michigan in the US is examined in relation to consumer inflation expectations. China publishes trade and consumer price indices. With the RBA hiking at 25bps, analysts are more divided on the BoC. Newsquawk Analysis Newsquawk Analysis Saturday, 03.12.2022 | 19: 7 GMT 1 0 Reserve Bank of Australia December 2020 Decision MA: Eurogroup; China Caixin Services PMI (Nov), EZ, UK and US Composite / Services PMI ends (Nov), EZ Retail Sales (Oct), US ISM Services PMI (Nov). SUPPORT: RBA policy notice; Norges Bank Regional Network (Q ), US Georgia Runoff, EIA STEO; German industrial orders (October), EZ and UK construction PMI (November), Canadian Ivey PMI (November). KE: BoC, BCB and NBP policy announcements; Australia Real GDP (Q3), China Trade Balance (Nov), Switzerland Unemployment (Nov), Germany Industrial Production / Output (Oct), EZ Adjusted GDP (Q3), Employment (Q3). THU: RBA Bulletin; Australian Trade Balance (October), US IJC (December 3). FRI: ECB TLTRO.III Refund Notice; China CPI (Nov), Norway CPI (Nov), US PPI Final Demand (Nov), Uni. From the Michigan premiers. (December). NOTE: Forecasts are listed in date order JMMC / OPEC (Sun): Market expectations are currently divided on whether the group of oil producers will keep their production targets unchanged or opt for another cut. The latest sources lean towards an unchanged production policy in December. A Nov. 28 Bloomberg survey found that 16 of 16 respondents expect production cuts between 250,000 BPD and 2 million BPD. The December meeting is expected in practice, suggesting little change in policy, the sources suggested. Given the high volatility and uncertainty in futures markets, some believe the group could return to monthly meetings. In the previous meeting, OPEC decided to reduce production targets by 2 million BPD from the August 2022 production requirements. The group also adapted the frequency of monthly meetings to every two months. The release also recommended that the JMMC be empowered to hold additional meetings at any time or convene meetings of OPEC and non-OPEC ministers to address market developments as needed, with members reiterating that „full compliance is of the utmost importance.” Looking at the schedule, OPEC canceled the meeting of the Technical Committee (JTC). The JTC assesses oil market developments and communicates its findings to the Joint Ministerial Committee (JMMC). The schedule for the JMMC and OPEC meetings has not been released at the time of writing. The main factors considered by the group are 1) the recent drop in oil prices, 2) the smoothness of China’s zero-covid policy and 3) the upcoming EU oil embargo on Russia on Monday 5 December. Market sentiment leans towards unchanged production policy as OPEC awaits clarity on China’s COVID position and Western Russia’s price ceiling. Desks suggest that a small cut is also possible as oil prices have fallen since last October’s meeting. US ISM Services PMI (Monday): The broker SandP Global flash US Services business index rose to 6.1 from 7.8 in November, the second decline on record. According to SandP, „panelists often noted that the impact of inflation and interest rates on customers’ disposable income weakened demand conditions,” and in line with weak demand, „new business fell steadily in November,” marking the second consecutive monthly decline. , and the steepest since May 2020. Meanwhile, on the price side, SandP noted that input costs were slower in the middle of the fourth quarter. „Cost-burden growth was the softest in almost two years as businesses saw lower prices for some key inputs,” but added that services inflation slowed for a seventh straight month and was the weakest since October 2020. RBA-Political Statement (Tuesday): The RBA is likely to raise interest rates next week after money markets were pricing in a 70 percent chance the central bank would raise its cash rate target by 25 basis points to 3.10 percent and a 30 percent chance. the central bank would keep the base rate at the current 2.85 per cent. Expectations that the central bank will raise interest rates follow a previous meeting where it supported a slower rate cut of 25 basis points, which was widely expected, despite outside calls for a return to a more aggressive move due to higher inflation data from Australia. There were also no big surprises in the central bank’s comments at the meeting, as it reiterated that it expects further interest rate hikes in the coming period, and future data will continue to determine the size and timing of future interest rate hikes. and the government’s assessment of the outlook for inflation and the labor market. In addition, RBA governor Lowe reiterated shortly after the meeting that interest rates are not on a predetermined course, saying the board thought it was appropriate to raise rates at a lower level, but added that they would return to higher rates if they think it is necessary. and to hold interest rates when the situation calls for it. Governor Bullock also stated that they see broader CPI pressures in the economy and that interest rates will have to be raised to affect demand, but specifically noted that they are approaching a point where they could stop and watch. . The latest data on the change in employment is better than expected, 32.2 thousand against. Exp. 15,0000 (ed. 0.9 t) and the unemployment rate fell to 3. percent vs. Exp. 3.6% (previously 3.5%). In contrast, retail sales showed a surprising monthly contraction of -0.2% in October vs. Exp. 0.5% (ed. 0.6%) and also disappointed in Q3 0.2% vs. Exp. 0. % (previously 1. %), while the increase in wage prices in the third quarter accelerated to 3.1% against Exp. 3.0% (previously 2.6%), which increases already high inflationary pressure and supports the view that interest rates will continue. However, there are different views on the extent of interest rate hike, as the CBA predicts only one more rate hike.

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