Week ahead: Economic data and a dovish Fed to support risk appetite
While markets are still waiting for cues about possible decisive ECB intervention evidence on the performance of the global economy remains in focus. Next week’s macroeconomic releases and events are, in our view, generally likely to give further support to risk appetite in financial markets.
Next week’s main US event is the FOMC minutes, where an expected dovish tone is likely to keep QE3 hopes alive in markets. On the US data front, we expect the news to generally surprise on the upside compared to consensus estimates, as opposed to the period March through June, when data surprises were more or less consistently negative.
In the Euro area next week’s most important key figure will be the flash Euro PMI estimate. We expect a slight drop. However, we believe the PMI surveys will show signs that the Euro PMI is close to the bottom, while at the same time supporting our call for a new ECB rate cut next month.
On the issuance front, upcoming auctions could put further pressure on German Bunds. In Germany EUR 5bn of 2-year notes will be sold on Wednesday. In the US, the main focus will be on the USD 14bn 5-year TIPS auction on Thursday.
Please read more in our Global Week Ahead (attached below).