Macroeconomics: The Day Ahead for 29 August

A much busier day for statistics awaits with the focus on German and Spanish provisional CPI, with Australia’s Q2 CapEx (much weaker than expected) and Swedish Q2 GDP to digest ahead of the Eurozone EC Confidence surveys, South African PPI, Canada’s Q2 Current Account and a raft of US data: revised Q2 GDP, weekly jobless claims, Goods Trade Balance, Retail & Wholesale Inventories and Pending Home Sales. There is a light run of central bank speakers, while North America looks to earnings reports from Dollar General, Gap Marvell Technology, CIBC and Lululeon Athletica. Govt bond supply see the end of month Italian auction and US 7-yr.

** Germany/Spain – August prov. CPI / EC Confidence surveys **

– Spain’s CPI undershot on the headline HICP (unchanged/2.4% y/y), but core fell less than expected on core CPI (2.7% vs. 2.8% y/y), while German CPI is expected to fall sharply as a combination of a falling of petrol prices this year and base effects from a sharp rise in August 2023 pace an anticipated drop to flat m/m 2.2% y/y from 2.6%. If correct it suggests that tomorrow’s Eurozone CPI may undershoot expectations of 0.2% m/m rise, restrained by the fall in petrol prices and base effects above all in package holidays, which would see the y/y rate slide close to target at 2.2% from July’s 2.6%. That said core CPI is only expected to dip 0.1 ppt to 2.8%, though there are some downside risks from hotels, restaurants as well as the aforementioned package holidays. The EC’s Confidence surveys are likely to paint a mixed picture, with Services getting a likely short-lived boost from the Olympics in France, with Consumer Confidence edging back to -13.4 after reaching a cyclical high of -13.0 in July, but Industrial Confidence easing to -10.9 from -10.5 echoing national sector surveys, above all Monday’s dismal Ifo survey.

** U.S.A. – Q2 GDP, July Goods Trade Balance **

–  Q2 GDP is expected to be unrevised at a solid 2.8% SAAR, though Personal Consumption is seen revised marginally lower to 2.8% on the back of revisions to Retail Sales, while the Goods Trade Balance is forecast to widen modestly to $-97.9 Bln. The risk on the latter for Q3 is for a wider deficit, given indications from port and logistics traffic of importers front loading purchases, in anticipation of increased trade tariffs.