Week Ahead: Inflation, Earnings & More Economic Data

This second week of 2024 might be eventful as a plethora of financial and economic releases is set to take place, reflecting the state of the global economies and providing valuable insights into the possible economic trajectory this year. 

From China, the US, and the UK, here are this week’s anticipated economic events and releases: 

CPI Releases in the US & China

Perhaps one of this week’s main events is the upcoming China and US Consumer Price Index (CPI) data on Wednesday, January 10, and Thursday, January 11, respectively.

Since CPI is one of the most referred-to gauges of inflation and deflation which can affect the central banks’ monetary policy, traders and consumers may want to keep tabs on this week’s releases. 

Wednesday’s China inflation data will show how the world’s second-largest economy is faring in the face of economic hurdles, especially after a tumultuous year in whereby the Chinese economy suffered losses and weakened. 

While recent Chinese inflation data showed declines, particularly in food and energy prices, many market experts predict a potential increase in core inflation in the first half of 2024 due to rising policy support.

Moreover, the US release may be crucial given that inflation made numerous headlines last year in many economies, and in the US, in particular. This led the Federal Open Market Committee (FOMC) to adopt a hawkish stance on rate hikes. As we approach this release, while the actual outcome remains uncertain, there is anticipation that if inflation demonstrates a much-needed decrease, the Fed may pivot to a dovish stance and consider rate cuts.

Evidently, many market watchers were hopeful that the Fed would cut rates recently, hence resulting in a market rally in the final weeks of 2023 as the S&P 500 even hit a record high. 

However, with the start of the new year, it seems that many market watchers have adopted a more cautious stance as they await further clarity on the trajectory of the world’s largest economy. Additionally, recent data, such as the employment report released last Friday, may have dampened hopes for actual interest rate cuts in 2024, as the US added more jobs to its labor market than initially anticipated. 

Only time will tell how this week’s release will affect the decisions of the world’s biggest economies' central banks.

UK GDP: Is a Recession on the Way?

The question of whether the UK’s economy will suffer a recession or not has been raised multiple times last year. (Source: Bloomberg)

Accordingly, Friday, January 12th’s, upcoming UK Gross Domestic Product (GDP) release for November, could serve as a valuable indicator of whether a recession is imminent. 

The GDP is anticipated to increase by 0.1% MoM in November. If this prediction proves accurate, it would signify a slight recovery from the declines in October, primarily driven by weak manufacturing activity. 

Additionally, recent data from the UK suggests a much-needed rebound in the services sector in December, providing further indications of a potential avoidance of a recession in the UK. 

Furthermore, many businesses are urging the Bank of England (BoE) to consider rate cuts. It will be interesting to observe what BoE governor Andrew Bailey will express in the upcoming testimony on Wednesday, preceding the GDP release.

Big Bank Earnings

Friday may be an interesting day for the banking and financial industry as many big banks and financial institutions are scheduled to report their earnings. 

JP Morgan Chase & CO. (JPM), Bank of America (BAC), Citigroup Inc. (C), and Wells Fargo (WFC) are all scheduled to report their earnings on Friday, January 12. 

Following last year’s banking sector woes and bankruptcies, it may be worth seeing what Friday’s earnings releases will reveal about this industry. 

Conclusion

This week may be interesting to traders, investors, and analysts alike as key financial data is set to emerge from some of the world’s biggest economies and financial institutions, hence providing valuable insight into the possible trajectory of the markets in 2024.