Head of Macro Analysis
Summary: As fears of a global recession ratchet higher, the economic calendar for the week ahead offers a bunch of key indicators that may provide further fuel to the thinking that bad times lie ahead.
This week, there are three themes that are likely to dominate the thinking of investors and traders.
(1) In Germany, we expect a couple of negative prints, notably the GfK consumer confidence indicator and the Ifo business climate index. The adverse bias for soft data remains due to the risk of a global trade recession and China’s slowdown. The perspectives for the automotive sector, which represents roughly 14% of German GDP, are very gloomy as the two main car markets at the global level – the United States and China – are showing signs of deep weakness. We consider that this negative momentum in Germany could have a positive outcome in the second half of 2019 as it might push the German government to adopt an expansionist fiscal policy.
(2) In France, Q4 GDP is due on Tuesday. It should confirm that quarterly growth reached 0.3% which is still a decent performance considering the negative consequences on business and consumer confidence of the Yellow Vest movement. Based on INSEE’s estimates, the Yellow Vest’s negative effect on growth was rather limited, around 0.1 point of GDP. The economic momentum for 2019 is positive due to measures to support purchasing power that represent a fiscal stimulus of 10 billion euros. France’s GDP growth forecast for 2019 is at 1.3% vs 0.6% for Germany.
(3) Finally, the last theme this week is de-dollarisation. We had new gold data from the Central Bank of Russia a few days ago. Russia bought 31.1 tons in February, bringing the al to 2,149 tons. As we wrote in January, de-dollarisation is a long-term process that will be key to monitoring developments this year. Interestingly, we're starting to hear from Washington that the Trump administration is trying to set up a plan to counter this phenomenon. Stay tuned.
Today's Calendar (All times GMT)
9:00 Germany, Ifo business climate indicator
10: 00 USA, Harker (FOMC)
12:30 USA, Chicago Fed national activity index
14:30 USA, Texas manufacturing outlook survey
21:45 New Zealand, trade balance
Brexit is supposed not to be on the agenda today but there is noise that PM May could face a cabinet revolt by midday.
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