The week ahead - 9-15 March 2024

Eurozone

Industrial production probably contracted in January, largely as payback for the 2.6% mom jump in December, which was partly due to a 23.5% mom rise in production in Ireland that month. Looking beyond the monthly volatility in the data, the eurozone industrial sector seems to be bottoming out at the moment after activity contracted noticeably throughout 2023.

US

We expect CPI inflation to remain firm, but not alarmingly so, with ongoing pass-through of higher housing rents and medical costs offset by weakness in core goods. The rise in gasoline prices is also likely to keep headline inflation on the firm side. The rise in gasoline prices is also likely to support nominal retail sales. We also expect some payback following the very weak January retail sales data, but headwinds from high rates – and higher credit card delinquencies in particular – are expected to keep a lid on underlying retail sales growth. Industrial production is likely to rise modestly, as signalled by the manufacturing PMI.

China

CPI inflation (due on Saturday) is expected to have returned to positive territory in February, driven by a rise in food and transport prices around the Lunar New Year holiday. On Friday, consensus expectation including ours is for the PBoC to keep the 1-year medium-term lending facility rate unchanged at 2.50% for now, also taking into account recent cuts in the reserve requirement ratio for banks and the 5-year loan prime rate. Still, going forward we expect further piecemeal easing in the form of further mini cuts in policy rates and additional RRR cuts.