The week ahead
The forthcoming week presents crucial inflation data that will directly influence Fed policy deliberations, alongside key economic indicators from China and Australia that may reshape growth expectations across major economies.
Tuesday’s US producer price index (PPI) assumes particular significance as it is likely to be the final critical inflation gauge available before the Fed’s December policy meeting. Markets anticipate a 0.3% MoM increase in September’s PPI, reversing the previous month’s 0.1% decline. This rebound would reflect businesses adjusting pricing structures to accommodate persistent cost pressures, particularly in the goods sector. The reading carries heightened importance following the postponement of October’s personal consumption expenditures (PCE) report, originally scheduled for 26 November, which removes a key datapoint from policymakers’ assessment framework. A substantially stronger-than-expected PPI outcome could reinforce concerns that inflationary pressures remain entrenched, potentially constraining the Fed’s capacity to reduce rates in December despite recent labour market softening.
Australian inflation data on Wednesday will clarify the Reserve Bank of Australia’s (RBA) policy path — the trimmed mean inflation unexpectedly rose to 3% in Q3. The central bank is expecting the inflation rate to peak in the next few months and is therefore in a wait-and-see mode before considering further rate reduction.
Sunday’s China PMI readings will shed light on the domestic economy after a range of lacklustre trade, retail and investment data two weeks ago. The manufacturing component has remained below the 50 expansion threshold since April, registering 49.0 in October. The non-manufacturing index, which encompasses services and construction, hovers around 50, suggesting momentum is subdued despite policy support measures. Markets will scrutinise whether the extended US-China trade truce has stabilised export demand and whether domestic service activities have resumed following the Golden Week holiday. A further deterioration in either index would intensify concerns regarding China’s economic trajectory and its implications for global growth.
On the corporate front, Chinese technology companies deliver key earnings insights this week. Alibaba reports Tuesday, with investors scrutinising whether cloud computing momentum has sustained growth despite broader consumption challenges. Meituan’s Friday results will reveal how the food delivery sector leader is doing under extreme competitive pressures that drove profit down 97% previously.
Figure 4: China’s PMI trend