The week ahead - 26 February - 1 March 2024
These are the Key Macro Events for the upcoming week.
Eurozone - HICP inflation is expected to have declined in February. The core rate probably fell more noticeably than the headline rate, partly because there was a relatively large jump in core inflation in February 2023, which will result in a downward base effect this year. Meanwhile, the decline in the headline rate is moderated by the fact that energy price inflation probably became less negative in February than in January.
The Netherlands – CPI inflation is expected to decline further to 2.9% yoy in February (was 3.2% in January). The largest driver of the decline is a more negative contribution of energy and declining services inflation. That is, we expect the disinflationary trend that was observed in the final months of 2023 to continue.
US - PCE inflation will be in focus following the hot January CPI data, and given the recent rise in bond yields. We expect a m/m acceleration driven by housing rents and financial services, though our forecast is a bit below consensus. Annual PCE inflation should continue to edge lower. Markets will also likely be focused on commentary from Fed officials, though given the significant pricing out of rate cuts that has already taken place, we doubt officials will come with anything that spurs a further repricing at this stage
China - February PMIs are due on Friday 1 March. Consensus expectation is for a stabilisation of the manufacturing PMIs, with ongoing divergence between the official one (still below the neutral 50 mark separating expansion from contraction) and Caixin’s version (above 50). The official non-manufacturing PMI is expected to rise a bit further above the neutral mark. All of this is in line with our expectation of a stabilisation of the Chinese economy, on the back of ongoing piecemeal monetary easing and targeted support, particularly for the property sector.