The week ahead - 9 - 13 December 2024
These are the Key Macro Events for the upcoming week.
United States – Wednesday sees the release of CPI inflation data, the final major data point before the FOMC meeting on December 18th. We expect core inflation to remain elevated at 0.3% m/m, leading to 3.3% y/y. Headline likely rose by 0.2% m/m raising the y/y rate to 2.7.
Eurozone – We expect the ECB to lower the deposit rate by 25bp to 3%. The ECB will also update its projections. We expect only a marginal downward revision to growth, but headline inflation for 2025 could see a more meaningful downgrade (our forecast is 2.0% compared to the September projection of 2.2%). Core inflation is less likely to be downgraded given still elevated wage growth. A key focus will be on whether the ECB changes its ‘sufficiently restrictive’ guidance. We think the ECB may alter this to signal the intent to further cut rates provided inflation moves in line with its forecast. But with current market pricing likely consistent with the median Governing Council view, the language will likely be carefully calibrated so as not to spur rate cut expectations too much.
Next Friday eurozone industrial production figures are released for October. Industrial production is expected to contract slightly (-0.4%) compared to September, which saw a decline of 2%. Already released regional data for October of France (-0.1%) and Germany (-1%) confirm this view. After the August (+1.5% m/m) and September (-2% m/m) volatility, industrial production in the eurozone resumes its trend downward and has yet to bottom out fully.
China – CPI inflation (Monday) is expected to pick up marginally, but to remain subdued. Annual growth of imports (Tuesday) is expected to improve a bit, while annual export growth is expected to slow (payback from last month). The annual Central Economic Work Conference, scheduled on 11-12 December, is expected to give some more signals about Beijing’s commitment to support growth in 2025. We expect ongoing piecemeal monetary easing and ‘stepwise’ fiscal support, to enable finetuning and the offsetting of headwinds from US import tariffs.