Key events to watch in the week ahead: 6 – 12 November 2023

This week’s overview

The aftermath of the Federal Reserve (Fed) meeting this week has brought about a retracement in longer-term Treasury yields, as markets continue to bask in the hopes that the Fed is likely done with its rate hiking process. While having a data-dependent Fed means that much may still easily shift over the coming months, there have clearly been more reservations from policymakers lately towards raising rates further, which provide the catalyst for extreme bearish sentiments to unwind.

With the US big tech companies having released their earnings, the earnings season will tone down into the new week. Nevertheless, there are still notable names on watch, such as Uber, Robinhood, Roblox, Disney and many more (as below).

Heading into the new week, here are five things to note.

7 November 2023 (Tuesday, 11.30am SGT): Reserve Bank of Australia (RBA) interest rate decision

At its meeting in October, the RBA kept its cash rate on hold at 4.10% for the fourth consecutive month. The RBA’s statement under new Governor Michele Bullock was little changed, and a tightening bias was retained.

Hawkish RBA communique, initially observed in the RBA October meeting minutes, has put the market on notice.

“The Board has a low tolerance for a slower return of inflation to target than currently expected. Whether or not a further increase in interest rates is required would, therefore, depend on the incoming data and how these alter the economic outlook and the evolving assessment of risks.”

Considering the RBA’s more hawkish rhetoric and the run of stronger-than-expected economic data, market expectations are leaning towards a 25 basis-point (bp) rate hike from the central bank next week to 4.35%. However, it is expected to be a close call, particularly given that global central bank peers, including the Fed and the Bank of England (BoE), appear to have ended their rate hiking cycles.

9 November 2023 (Thursday, 9.30am SGT): China’s inflation rate

In September, China's consumer prices growth stalled at 0% year-on-year, reflecting weak domestic demand. Ahead, expectations are for its October Consumer Price Index (CPI) to revert to deflation at -0.2% from previous 0%. Similarly, China’s producer prices are expected to turn in a deeper contraction in October at -2.9% from previous -2.5%, which will mark its 13th straight month of contraction.

The inflation data is likely to reinforce the weaker-than-expected Purchasing Managers' Index (PMI) figures seen this week, which continue to point to subdued growth conditions. The series of weak economic data may further add to calls for more policy support from authorities to support the economy.

China’s trade data will be released on the same week as well (7 November 2023, Tuesday). Expectations are for its exports to contract 3.5% from a year ago versus previous 6.2% contraction in September. Imports are expected to contract 4.0% versus the 6.2% contraction in September.

10 November 2023 (Friday, 3pm SGT): UK Q3 preliminary gross domestic product (GDP)

In the second quarter (Q2) of 2023, GDP in the UK increased by 0.2%, following an upwardly revised 0.3% in Q1. The number was boosted by household consumption and manufacturing output.

In Q3, the market is looking for growth to fall to 0.0%, reflecting the impact of the BoE’s aggressive rate rises and weaker than the BoE projected in their August report.

The softer growth profile, lower inflation and cooling labour market were behind the BoE's decision this week to keep rates on hold at 5.25%.

10 November 2023 (Friday, 11pm SGT): US preliminary University of Michigan (UoM) consumer sentiment

Consumption spending makes up two-thirds of the US economy on average. With still above-target inflation, tighter monetary policy and declining savings rate, the upcoming UoM consumer sentiment data will provide fresh views of how US consumers are holding up amid these challenges.

Expectations are for the preliminary consumer sentiment read for November to come in at 65.0, up slightly from the 63.8 in October. Historically, a sharp decline in US consumer sentiments tends to be a harbinger of recessions, therefore a continued trend of improving sentiments may potentially offer some pushback against recession fears, at least for now.