Key Events This Week: All Eyes On CPI And The 10Y Auction

With the ***** stimulus narrative now behind us, earnings season effectively over, econ data entering the usual post payrolls lull and the Fed in their blackout period ahead of next week’s FOMC, it’s a relatively quiet week, however there are several key events that traders will be keeping a close eye on: the highlights this week will be US CPI (Wednesday) and PPI (Friday), the ECB meeting on Thursday and given the pretty sizeable volatility in US rates at the moment the success of a $58bn 3yr auction (tomorrow) and a $38bn 10yr auction (Wednesday) will also be very important. And with all eyes on inflation – and this week’s 10Y TSY auction – and Fed speakers offline, there won’t be much support (or market damage) from central planners this week, so volatility may be acute.

With regards to the ECB meeting the focus will be all about whether the council feel that the recent rise in bond yields is proportional to the improving global economic prospects or an unwelcoming tightening of financial conditions. As DB’s Jim Reid writes, economists expect them to emphasize their commitment to preserving favorable financing conditions, which encompasses sovereign yields, and its willingness to use the PEPP’s capacity and flexibility.

In terms of other releases to look out for this week, there will be industrial production numbers from the Euro Area and its major economies, a final reading of Euro Area GDP, along with February’s preliminary University of Michigan sentiment indicator for the US on Friday. See the day by day week ahead for more at the very end as usual

Finally, earnings season grinds to a crawl with just 3 companies from the S&P 500 and 50 STOXX 600 companies announcing results. The main highlights to look for are Deutsche Post and Continental tomorrow, while Wednesday brings releases from Adidas, Campbell Soup, Oracle, and Industria de Diseno Textil. On Thursday, the market will get results from Assicurazioni Generali, Ulta and then EssilorLuxottica on Friday.

Here is a day-by-day calendar of events, courtesy of Deutsche Bank

Monday March 8

• Data: Japan January household spending, labour cash earnings and final 4Q GDP; Germany January industrial production; US January wholesale trade sales and wholesale inventories; Bank of France February sentiment
• Central Banks: BOE Governor Bailey Speaks on Economic Outlook

Tuesday March 9

• Data: Japan February machine tools orders; France final 4Q private sector payrolls, Germany January trade balance, January current account balance; Italy January industrial production; Spain 4Q house price index; Euro Area final 4Q employment and GDP, 4Q Govt expenditures, household consumption; US February NFIB Small Business Optimism
• Earnings: Deutsche Post, Continental
• Other: The OECD publishes its interim economic outlook

Wednesday March 10

• Data: China February CPI, PPI; France January industrial production; Italy January PPI; US February CPI, weekly MBA mortgage applications, February real average earnings, and monthly budget statement; Japan February PPI
• Central Banks: Bank of Canada rate decision
• Earnings: Adidas, Campbell Soup, Oracle, Industria de Diseno Textil

Thursday March 11

• Data: Germany 4Q labour costs; US weekly initial jobless and continuing claims, January JOLTS job openings, 4Q household change in net worth
• Central Banks: ECB rate decision and President Lagarde briefing
• Earnings: Assicurazioni Generali, Ulta, DocuSign, JD.com

Friday March 12

• Data: Euro Area and UK January industrial production; UK January construction output, January index of services, January trade balance, January monthly GDP; Germany and Spain final February CPI; US February PPI and University of Michigan sentiment survey
• Earnings: EssilorLuxottica

Finally, Goldman agrees that the key economic data release this week is the CPI report on Wednesday:

Monday, March 8

• There are no major economic data releases scheduled.

Tuesday, March 9

• 06:00 AM NFIB small business optimism, February (consensus 96.8, last 95.0)

Wednesday, March 10

• 08:30 AM CPI (mom), February (GS +0.34%, consensus +0.4%, last +0.3%; Core CPI (mom), February (GS +0.16%, consensus +0.2%, last flat); CPI (yoy), February (GS +1.69%, consensus +1.7%, last +1.4%); Core CPI (yoy), February (GS +1.36%, consensus +1.4%, last +1.4%): We estimate a 0.16% increase in February core CPI (mom sa), which would narrowly leave the year-on-year rate unchanged at +1.4% on a rounded basis. Our monthly core inflation forecast reflects a rebound in airfares and a further rise in apparel prices. We also expect a modest pickup in shelter categories reflecting stabilization in our shelter tracker and a slower pace of rent forgiveness related to Phase 4 fiscal support. On the negative side, we forecast another decline in used car prices off of elevated levels and normalization in healthcare services prices following start-of-year price increases (including renewed weakness in the health insurance component). We estimate a 0.34% increase in headline CPI (mom sa) due to higher oil prices.

Thursday, March 11

• 08:30 AM Initial jobless claims, week ended March 6 (GS 715k, consensus 725k, last 745k): Continuing jobless claims, week ended February 27 (consensus 4,201k, last 4,295k): We estimate initial jobless claims decreased to 715k in the week ended March 6.
• 10:00 AM JOLTS Job Openings, January (consensus 6,650k, last 6,646k)

Friday, March 12

• 08:30 AM PPI final demand, February (GS +0.5%, consensus +0.4%, last +1.3%); PPI ex-food and energy, February (GS +0.3%, consensus +0.2%, last +1.2%); PPI ex-food, energy, and trade, February (GS +0.3%, consensus +0.3%, last +1.2%): We estimate that headline PPI increased by 0.5% in February, reflecting increases in energy prices. We expect a 0.3% increase in the core measure excluding food and energy, and also a 0.3% increase in the core measure excluding food, energy, and trade.
• 10:00 AM University of Michigan consumer sentiment, March preliminary (GS 79.5, consensus 78.0 last 76.8): We expect the University of Michigan consumer sentiment index increased by 2.7pt to 79.5 in the preliminary March reading.

Source: Deutsche Bank, BofA