Key events to watch in the week ahead: 18 – 24 November 2024

This week’s overview

This week is marked by a continued surge in the US dollar, as the positioning for Trump 2.0 and a less-dovish Federal Reserve (Fed) continues to pan out. Perhaps with a slight surprise, Fed Chair Jerome Powell has taken on a less dovish guidance, with above-target inflation and a resilient labour market highlighted as the basis for more patience.

Market participants may have been somewhat prepared for that, but hearing it from the Fed Chair right now seems to suggest that a pause in rate cuts may come earlier than before. We have seen rate-cut bets for December pared down to 60%, versus the previous 80%.

Looking into the new week, here are five key events to watch.

US 3Q 2024 earnings season: Walmart, Target, NVIDIA, Baidu

The US earnings season will head into its final phase next week, with key focus to revolve around NVIDIA’s earnings. Market participants will be seeking reassurances from NVIDIA CEO Jensen Huang that the strong growth momentum remains intact. With its share price back at its record high, investors may once again have high expectations for NVIDIA to deliver, but the company also has a good track of surprising on the upside.

With the Q3 earnings season nearing its end, corporate earnings momentum remains robust. Out of the 92% of S&P 500 companies which have reported their results, 76% have beaten expectations.

19 November 2024 (Tuesday, 8.30am SGT): Reserve Bank of Australia (RBA) meeting minutes

The RBA has kept rates on hold at 4.35% for an eighth consecutive meeting, noting that while higher interest rates were working to bring demand and supply closer to balance, underlying inflation (as represented by the trimmed mean) at 3.5% is “still some way from the 2.5 per cent midpoint of the inflation target.”

The meeting minutes will be scrutinised for more details around scenarios where monetary policy might need to be held restrictive for a prolonged period or tightened further. And scenarios in which future financial conditions might need to be less restrictive than they are at present. For example, if the labour market weakened more sharply than forecast or inflation fell more rapidly.

As we approach the home stretch of 2024, the Australian rates market is pricing in just a 10% chance of an RBA rate cut before year-end, with a first 25 basis point (bp) reduction from the RBA not expected until August 2025.

20 November 2024 (Wednesday, 3pm SGT): UK consumer price index (CPI)

Last month (September), the annual inflation rate in the UK eased to 1.7% YoY, the lowest level since April 2021, down from 2.2% in each of the previous two months and below forecasts of 1.9%.

Meanwhile, the core inflation rate fell to 3.2% in September 2024 from 3.6% in August, marking the lowest figure since September 2021. Additionally, the CPI services annual rate eased to 4.9%, down from 5.6% in August.

This month (October), the preliminary expectation is for the rate of headline inflation to rise to 2%. The UK rates market anticipates the Bank of England (BoE) keeping rates on hold into year-end at 4.75% with the next 25 bp BoE rate cut expected to come in March.

22 November 2024 (Friday, 7.30am SGT): Japan’s core CPI

The core Tokyo CPI for October, which is generally a leading indicator of nationwide price trends, has eased to 1.8% year-on-year (YoY) from the 2.0% in September. Headline Tokyo CPI has also eased to 1.8% from the 2.2% prior.

However, Japan's wholesale inflation has accelerated to 3.4% in October, which is the fastest annual pace in more than a year, thanks to rising import costs from a weaker yen. This raises the risks of a cost pass-through from firms to consumers ahead, which may build the case for further policy normalisation from the Bank of Japan (BoJ). Japan’s consumer spending largely held up in Q3, while wage growth remains on track as well.

Thus far, market expectations for a December rate hike from the BoJ is priced at almost a coin flip (55% probability). Any inflation persistence reflected in the upcoming data may be in favour of more hawkish rate bets.

22 November 2024 (Friday, 10.45pm SGT): US flash manufacturing and services Purchasing Managers' Index (PMI)

The recent run in US data continues to point to a robust US economy, with services activities showing strong expansion (PMI at 56.0 versus 54.9 prior), job market holding up and consumer sentiments well-supported. The US economic surprise index is currently at its seven-month high.

Coupled with above-target inflation, that has called for a less dovish tone from Fed Chair Jerome Powell this week, who seems to cast some uncertainty over a December rate cut. Market expectations for a December rate cut are revised lower to a 60% probability, versus the 80% a week ago. Any improvement in the upcoming flash PMIs will reinforce the Fed Chair’s view that policymakers are not in a hurry to lower rates ahead.