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Weekly Market Outlook (04-08 December)
There’s been lots of chatter on the SahmRule Indicator lately, so let’s seewhat’s that about. The Sahm Rule Indicator signals the start of a recessionwhen the three-month moving average of the national unemployment rate (U3)rises by 0.50 percentage points or more relative to the minimum of thethree-month averages from the previous 12 months. The minimum three-monthaverage from the previous 12 months is at 3.5%, so we will need a spike to 4.3%in the next report to bring the three-month average to 4.0% and reach the 0.50threshold. With such a spike though, we won’t need to look at the indicator toconclude that a recession might have already started.
Switzerland CPI YoY
Tuesday
The Swiss CPI Y/Y is expected to remainunchanged at 1.7% vs. 1.7% prior,while the M/M measure is seen at -0.1% vs. 0.1% prior. The inflation rate inSwitzerland has been in the SNB’s 0-2% target for a long time for both theheadline and core measures. The central bank is unlikely to hike even if weget a small beat as the data might be distorted due to temporary rent andenergy price increases.
US Jobless Claims
Friday
US ISM Services PMI
US Job Openings
Wednesday
The US Job Openings is expected to fall to9.350M vs. 9.553M prior.The labour market has been showing clear signs of weakening lately anddespite the volatility in Job Openings, the trend is self-explanatory. Thiswill be the first major US labour market report for the week and it’s highlylikely that it will be market moving.
The BoC is expected to keep interest ratessteady at 5.00% vs. 5.00% prior.This move is supported by the recent GovernorMacklem’s comments where he saidthat “interest rates may now be restrictive enough” and the CPIreport where all the figuresfell further, especially for the underlyinginflation measures, which is what the BoC is most focused on. Moreover, lastweek’s labourmarket report, despite being good,showed another increase in the unemployment rate.
The Average Hourly Earnings Y/Y isexpected to cool further to 4.0% vs. 4.1% prior, while the M/M measure is seenticking up to 0.3% vs. 0.2% prior. As a reminder, the last report missedexpectations across the board with all measures pointing to weakness like theincrease in the unemployment rate and the decrease in average weekly hoursworked.
Sahm Rule Indicator
US Unemployment Rate
University of Michigan Consumer Sentiment
منبع: https://www.forexlive.com/news/weekly-market-outlook-04-08-december-20231203/
The US Jobless Claims continue to be oneof the most important releases every week as it’s a more timely indicator onthe state of the labour market. Initial Claims keep on hovering around cyclelows, which shows us that layoffs have not yet picked up notably, butContinuing Claims are now rising at a fast pace and that’s indicative of peoplefinding it harder to get another job after being laid off. This week theconsensus sees Initial Claims at 223K vs. 218K prior,while there’s no estimate at the time of writing for Continuing Claims,although the last week’s number was 1927K vs. 1841K prior.
- Monday: Switzerland CPI.
- Tuesday: Tokyo CPI, China Caixin Services PMI, RBA Policy Decision, Eurozone PPI, Canada Services PMI, US ISM Services PMI, US Job Openings.
- Wednesday: Australia GDP, Eurozone Retail Sales, US ADP, BoC Policy Decision.
- Thursday: China Trade data, Switzerland Unemployment Rate, US Challenger Job Cuts, US Jobless Claims.
- Friday: Japan Wage data, US NFP, University of Michigan Consumer Sentiment.
Monday
The RBA is expected to keep the cash rateunchanged at 4.35% after they hikedby 25 bps in November. RBA’s GovernorBullock has kept a hawkish tone recently as the central bank is now moreworried about inflation expectations getting out of hand. The data, on theother hand, has been mixed but skewed towards weakness as the PMIsfell further into contraction and the MonthlyCPI missed expectations across the board,although the Trimmed Mean measure fell by just 0.1%.
US ADP
The US ISM Services PMI is expected toincrease to 52.0 vs. 51.8 prior.The recent S&PGlobal Services PMI beat expectations, butthe most notable take from the report was the line saying that “as a resultof subdued demand and decreasing backlogs, companies reduced their workforcefor the first time since June 2020, affecting both service providers andgoods producers. Cost pressures eased, with input prices rising at theslowest rate in over three years”.
The University of Michigan ConsumerSentiment is expected at 61.8 vs. 61.3 prior.This indicator measures how the consumers see their personal financescompared to the Consumer Confidence which is more weighted towards the labourmarket outlook. It’s been falling steadily since June while inflationexpectations spiked higher in the recent couple of months despite the huge dropin gasoline prices. Nevertheless, the NFP will overshadow this report, so it couldbe market moving only if it’s in line with the NFP release.
BoC